The taxpayer company had received compensation for having been excluded from its business premises for a period until a compulsory purchase process failed. It treated the receipt as capital. The revenue said it was income.
Held: The court considered how to treat mistakes of law by lower courts.
Buxton LJ said: ‘We were assured on all sides that the present issue is one of law. So be it: but it is an issue of law of a rather special sort, not least because . . . the distinction between capital and income has to be determined from a practical and business point of view. . . For my part, and whatever the technical jurisprudential position, I would think that the time has now come to leave these practical and business issues principally in the hands of the specialist tribunal that has been constituted to decide them. Parties should in future hesitate long before contending that a view taken by that specialist tribunal is apt for reconsideration by the High Court, and much less by this court.’
Lawrence Collins LJ said: ‘There is much to be said for the view, expressed in a different context, that where the answer to a question is a matter of degree, taking account of all the circumstances, then an appellate court should show some circumspection before interfering with the decision at first instance: Beynon v Customs and Excise Commissioners [2005] 1 WLR 86 at [27]. In particular, once as a matter of law a receipt or an expenditure is capable of being regarded as capital or income (as the case maybe), then the Commissioners’ decision should be capable of review only on Edwards v Bairstow 1956 AC14 principals.’
Judges:
Buxton LJ, Moses LJ, Lawrence Collins LJ
Citations:
[2007] EWCA Civ 1207
Links:
Jurisdiction:
England and Wales
Citing:
Cited – London and Thames Haven Oil Wharves Ltd v Attwooll CA 1966
When asking whether a payment of damages was a capital or income receipt, the court should ask whether the sum which the trader ought to have received have been credited as an income receipt of the trade? . .
Appeal from – Able (UK) Ltd v Revenue and Customs ChD 19-Oct-2006
Appeal by way of case stated against a decision of the General Commissioners as to whether a certain compensation payment received by the appellant under section 31(3) of the Land Compensation Act 1961 was income or capital. The General . .
Cited – Able (UK) Holdings Ltd v HM Inspector of Taxes ChD 30-Jun-2006
. .
Cited by:
Cited – HM Revenue and Customs v Weight Watchers (UK) Ltd ChD 21-Jan-2008
The court was asked whether the weight-watchers program which included attendance at a course and a supply of supporting materials was one single standard-rated supply or separate supplies of zero-rated printed materials and standard-rated support . .
Lists of cited by and citing cases may be incomplete.
Corporation Tax
Updated: 12 July 2022; Ref: scu.261448