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These cases are from the lawindexpro database. They are now being published to the swarb.co.uk website in a better form. As a case is published there, an entry here will link to it. The swarb.co.uk site includes many later cases.  



Income Tax - From: 1930 To: 1959

This page lists 40 cases, and was prepared on 29 October 2014.

 
Leeming -v- Jones (Inspector of Taxes) [1930] 1 KB 279; [1930] 15 Tax Cas 333
1930

Rowlatt J
Income Tax 1 Cites
1 Citers
 
Fry (Inspector of Taxes) -v- Salisbury House Estate Ltd [1930] UKHL 1; [1930] AC 432; [1930] 15 TC 266
4 Apr 1930
HL
Income Tax
[ Bailii ]
Archer Shee -v- Garland; HL 15-Dec-1930
Rutherford -v- Lord Advocate; 1931
 
The Herald and Weekly Times Ltd -v- Federal Commissioner of Taxation (1932) 48 CLR 113; [1932] HCA 56
21 Nov 1932

Gavan Duffy CJ and Dixon J
Commonwealth, Income Tax 1 Citers
(High Court of Australia) The taxpayer newspaper sought to set off against its liability to income tax, sums which it had paid out in damages for defamation. Held: They were deductible. Such claims against a newspaper are a "regular and almost unavoidable incident of publishing it" and the damages are compensatory rather than punitive.
[ Austlii ]
Dewar -v- Commissioners for Inland Revenue; CA 1935
Carter -v- Sharon; 1936
Timpsons Executors -v- Yerbury; CA 1936
Inland Revenue Commissioners -v- British Salmson Aero Engines Ltd; CA 1938
Radio Pictures -v- Commissioners of Inland Revenue; ChD 1938
 
Copeman -v- Coleman (1939) 22 TC 594
1939

Lawrence J
Income Tax 1 Citers
A company had been formed to take over the taxpayer's business. He held the shares equally with his wife. Later the company created a class of preference shares of £200 each carrying a fixed preferential dividend, the right to vote if such dividend were in arrear for three years or more and the right in a winding up to a return of capital paid up. Some of the shares were taken up by his children on which they paid £10 per share. Dividends substantially in excess of the amounts paid up were then declared and the taxpayer, on behalf of his children claimed repayment of the tax paid in respect of the dividend to the extent of that child's personal allowance. Held: The claim was rejected: "In my opinion, it is impossible to come to any other conclusion but that this was not a bona fide commercial transaction, and it appears to me that there was a disposition within the meaning of the definition or an arrangement in the nature of a disposition within [that meaning]."
Commissioners of Inland Revenue -v- Payne; CA 1940
 
Beak -v- Robson (1942) 25 TC 33
1942
HL
Lord Simon
Income Tax 1 Citers
The issue was whether a payment to an employee in return for a restrictive covenant escaped tax. The obligations flowing from the contract of service and the remuneration to be received by the Respondent in respect of that service were entirely separate from the restrictive covenant and the consideration given for it. The sum was not paid for anything done in performing the services in respect of which the respondent was chargeable under Schedule F. "The consideration which he has to give under the covenant is to be given not during the period of his employment, but after its termination. He is giving to the company for a sum of £7,000 the benefit of a covenant which will only come into effect when the service is concluded." The payment to the employee escaped tax because the payment for the covenant was quite distinct from the payment for services under his contract for service.
 
London County Freehold and Leasehold Properties Ltd -v- Sweet (1942) 24 TC 412
1942

Income Tax 1 Citers
Expenditure by a property company on the issue of new debenture stock was not "expenses of management" because raising capital was not part of the business of acquiring and managing property.
 
Lomax -v- Peter Dixon & Son Ltd [1943] 2 All ER 255; [1943] KB 671; [1942] 25 TC 353
1942
CA
Lord Greene MR
Trusts, Income Tax 1 Citers
A substantial loan was made to be repaid on demand. An agreement was then made where the debtor issued to the creditor 680 loan notes of £500 each, amounting in total to £340,000 (a discount of 6%). The notes were to bear interest at a rate of about 5 per cent. 100 were to be repaid almost immediately and the rest over a period of 20 years. Each note was to be redeemed at a premium of 20% if the debtor’s profits reached a specified level. The issue was whether the discount and premium were capital or income for income tax purposes. Held: In considering what might be a normal return, it was necessary to consider the circumstances of the transaction or the terms of the security and each case had to be considered on its own facts. Lord Greene discussed the ordinary issue of debentures by a limited company. If the credit of the company was good and the security ample then the issue could be at par at a reasonable rate of interest. If the credit and the security were exceptionally good then the issue could be made at a premium, which would be capital because the subscriber would be getting a good security. Alternatively such a company could issue its debentures at par with a lower rate of interest. If the credit or security were not good then the company could issue the debentures at par but with a high rate of interest, or issue them at a discount with a normal rate of interest, or issue them at par with a premium on redemption. However, the premium on redemption and the premium on issue were the expression of the risk in terms of capital rather than in the terms of interest. Whether income tax was payable depended on the method chosen by the company. The discount and premium in that appeal were capital.
 
British American Tobacco Company Limited -v- Inland Revenue Commissioners [1943] AC 335
1943
HL
Income Tax 1 Citers
 
Wales (Inspector of Taxes) -v- Tilley [1943] UKHL 1; (1945) 25 TC 136
11 Feb 1943
HL
Lord Chancellor, Lord Atkin, Lord Thankerton Lord Russell of Killowen Lord Porter
Income Tax 1 Citers
The taxpayer was managing director of a company. The Revenue sought to tax him on two sums of £20,000 paid by to him by the company. The sums were paid in part as the price of compounding a pension, and in part in consideration of the reduction of the Appellant's annual salary. Held: A pension is not an emolument, and a lump sum paid to commute a pension is in the nature of a capital payment which is substituted for a series of recurrent and periodic sums which partake of the nature of income, but the same view should not be taken of an arrangement made between an employer and his servant under which, instead of the whole or part of a periodic salary, a single amount is paid and received in respect of the employment.
[ Bailii ]
 
Absalom -v- Talbot [1944] 1 All ER 642
1944
HL
Income Tax
Income Tax Act 1918
Norman -v- Golder (Inspector of Taxes); 1944
 
Blackwell (HM Inspector of Taxes) -v- Mills (1945) 26 TC 468
1945

Income Tax 1 Citers
Inland Revenue Commissioners -v- J Bibby & Sons Limited; HL 1945
 
Spofforth and Prince -v- Golder (Inspector of Taxes) (1945) TC 310
1945

Income Tax 1 Citers
 
Ayrshire Employers' Mutual Ins Co -v- Inland Revenue Commissioners [1946] UKHL 3; (1946) 79 Ll L Rep 307; 27 TC 331; 1946 SLT 235; 1946 SC (HL) 1
29 Mar 1946
HL
Scotland, Income Tax
[ Bailii ]
Nugent-Head -v- Jacob; HL 1948
 
Smith's Potato Estates Ltd -v- Bolland (Inspector of Taxes) [1948] AC 508
1948
HL
Income Tax 1 Citers
The taxpayer claimed to deduct the legal costs of contesting an assessment to tax. The dispute was about the computation of the taxpayer's profits. It assumed that those profits were ascertainable, one way or another, at the time when the dispute arose. The costs of the dispute could not therefore have been an element in the computation. They were logically as well as temporally subsequent to the profits having been earned.
Capital and National Trust Limited -v- Golder; 1949
Messrs. Mohanlal Hargovind of Jubbulpore -v- The Commissioners of Income Tax, Central Provinces and Berar, Nagpur; PC 28-Jul-1949
 
Bentleys, Stokes & Lowless -v- Beeson (HMIT) [1952] 33 TC 491
1952
CA
Romer LJ
Income Tax 1 Citers
The court considered whether the partners in a firm of solicitors could deduct from profits the expenses involved in entertaining clients to lunch. Held: They were deductible, notwithstanding the element of hospitality involved: " The relevant words of r 3 (a) of the Rules Applicable to Cases I and II—"wholly and exclusively laid out or expended for the purposes of the … profession"—appear straightforward enough. It is conceded that the first adverb—"wholly"—is in reference to the quantum of the money expended and has no relevance to the present case. The sole question is whether the expenditure in question was "exclusively" laid out for business purposes, that is: What was the motive or object in the mind of the two individuals responsible for the activities in question? It is well established that the question is one of fact: and again, therefore, the problem seems simple enough. The difficulty, however, arises, as we think, from the nature of the activity in question. Entertaining involves inevitably the characteristic of hospitality: giving to charity or subscribing to a staff pension fund involves inevitably the object of benefaction: an undertaking to guarantee to a limited amount a national exhibition involves inevitably supporting that exhibition and the purposes for which it has been organised. But the question in all such cases is: Was the entertaining, the charitable subscription, the guarantee, undertaken solely for the purposes of business, that is, solely with the object of promoting the business or its profit-earning capacity? It is, as we have said, a question of fact. And it is quite clear that the purpose must be the sole purpose. The paragraph says so in clear terms. If the activity be undertaken with the object both of promoting business and also with some other purpose, for example, with the object of indulging an independent wish of entertaining a friend or stranger or of supporting a charitable or benevolent object, then the paragraph is not satisfied though in the mind of the actor the business motive may predominate. For the statute so prescribes. Per contra, if, in truth, the sole object is business promotion, the expenditure is not disqualified because the nature of the activity necessarily involves some other result, or the attainment or furtherance of some other objective, since the latter result or objective is necessarily inherent in the act."
Newsom -v- Robertson; ChD 30-Apr-1952
 
Lindsay -v- Commissioners of Inland Revenue (1953) 34 TC 289
1953

Income Tax 1 Citers
The court was asked whether a building was a farmhouse for the purpose of deciding whether reliefs were available for capital expenditure.
Newsom -v- Robertson; CA 3-Jan-1953
Marshall (Inspector of Taxes) -v- Thomas; HL 20-Apr-1953
Commissioners of Inland Revenue -v- Lactagol; 1954
Camille and Henry Dreyfus Foundation Inc -v- Inland Revenue Commissioners; CA 1954
Heasman -v- Jordan; 1954
Inland Revenue -v- Broadway Cottages; CA 26-Jul-1954
Morgan -v- Tate & Lyle Ltd; HL 1955
 
Sharkey -v- Wernher [1955] 36 TC 275; [1956] AC 58
1955
HL
Income Tax 1 Cites
1 Citers
Where a trader takes stock from his business for private use or for use in another business which he owns, or where he transfers to his business stock which he owns in some other capacity than that of proprietor of that business, the transfer should be dealt with for taxation purposes as if it were a sale or purchase at market value. Thus, goods that a trader takes from his trading stock, for example, for the personal use and enjoyment of himself and members of his household, should be credited at market value.
Southern Railway of Peru Ltd -v- Owen; HL 21-Jun-1956
Thomson -v- Moyse; HL 1958
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