Emoluments paid under an office or employment are taxed under Schedule E as income of the year of assessment in which they were earned, and it was irrelevant when they were paid.

Citations:

[1954] Ch 744

Jurisdiction:

England and Wales

Cited by:

Cited – HM Inspector of Taxes v Dextra Accessories Ltd HL 7-Jul-2005
The taxpayer companies had paid funds into a trust for employees. They sought to set off the payments against their liability to corporation tax. The revenue argued that they were deductible only in the year in which they were paid to the employees. . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.228364

A taxpayer is entitled to stand on a literal construction of the words used regardless of the purpose of the statute.

Citations:

(1879) 4 App Cas 197

Cited by:

Cited – Commissioners of Inland Revenue v McGuckian HL 21-May-1997
Steps which had been inserted into a commercial transaction, but which had no purpose other than the saving of tax are to be disregarded when assessing the tax effect of the scheme. The modern approach to statutory construction is to have regard to . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.221019

The inland revenue claimed that several transactions had been arranged for the predominant purpose of obtaining a tax advantage, and that accordingly they should be disregarded. Lord Oliver: ‘[T]he transactions which, in each appeal, the Inland Revenue seeks now to reconstruct into a single direct disposal from the taxpayer to an ultimate purchaser were not contemporaneous. Nor were they pre-ordained or composite in the sense that it could be predicated with any certainty at the date of the intermediate transfer what the ultimate destination of the property would be, what would be the terms of any ultimate transfer or even whether an ultimate transfer would take place at all.’

Judges:

Lord Oliver

Citations:

[1989] AC 398, Times 22-Jul-1988

Statutes:

Finance Act 1965 19

Jurisdiction:

England and Wales

Citing:

Cited – W T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .

Cited by:

Cited – Inland Revenue Commissioners v Scottish Provident Institution HL 25-Nov-2004
The parties anticipated a change in the system for taxing gains on options to buy or sell bonds and government securities. An option would be purchased before the change and exercised after the change to create losses which could be set off against . .
Cited – Trennery v West (Inspector of Taxes) HL 27-Jan-2005
The House considered the application of the section to ‘flip-flop trusts’. The section allocated liability to charge on gains within a settlement under certain circumstances onto the settlor, and at his rate of tax. Assets were allocated to two . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.220161

The company sought to deduct from its trading profits a sum expended paying damages for personal injuries to a visitor to the taxpayer’s Inn. The claim had been rejected.
Held: The company’s appeal failed. Lord Davey said: ‘I think that the payment of these damages was not money expended `for the purposes of the trade’. These words are used in other rules, and appear to me to mean for the purpose of enabling a person to carry on and earn profits in the trade etc. I think the disbursements permitted are such as are made for that purpose. It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade, or is made out of the profits of the trade. It must be made for the purpose of earning the profits.’ and
‘for the purposes of the trade’ means ‘for the purposes of enabling a person to carry on and earn profits in the trade’: ‘These words are used in other rules and appear to me to mean for the purpose of enabling a person to carry on and earn profits in the trade, etc. I think the disbursements permitted are such as are made for that purpose. It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade, or is made out of the profits of the trade. It must be made for the purpose of earning the profits.’

Judges:

Lord Loreburn, The Lord Chancellor, Lords Macnaghten, Davey, James and Robertson

Citations:

[1906] AC 448

Statutes:

Income Tax Act 1842

Jurisdiction:

England and Wales

Citing:

Appeal from – Strong and Co of Romsey Ltd v Woodifield CA 26-Jun-1905
The compamy operated public houses. It became liable to pay damages for injuries paid to a visitor, and sought to set the cost off against income tax.
Held: The Commissioners had been correct to refuse to allow the company to set the sums off . .

Cited by:

Adopted – Morgan v Tate and Lyle Ltd HL 1955
The words ‘for the purposes of the trade’ in the statute mean ‘for the purposes of enabling a person to carry on and earn profits in the trade’. Money spent for the purpose of preserving the trade from destruction can properly be treated as wholly . .
Cited – David Robson v Eric Mitchell (HM Inspector of Taxes) ChD 8-Jul-2004
The taxpayer sought capital gains tax relief of a loan to a business.
Held: To succeed in his claim the taxpayer had to establish that the indebtedness created was to be used entirely to serve the borrower’s business. . .
Cited – David McKnight (Inspector of Taxes) v Sheppard CA 7-May-1997
Legal expenses incurred by a professional in defending disciplinary proceedings are deductible from taxable profits. . .
Cited – Robson v Mitchell (HM Inspector of Taxes) CA 18-May-2005
The company had taken out a loan to finance works on the farm. The loan was guaranted by the taxpayer. Years later when the farm was sold, part of the money was used to repay the loan, and the taxpayer sought to set it off against his liability for . .
Cited – Forthright (Wales) Limited v A L Davies (HM Inspector of Taxes) ChD 18-Mar-2004
The inspector disallowed a claim for enterprise investment relief, saying that not all the funds raised were to be used for a qualifying purpose.
Held: The proceeds of a share issue had been used in part to pay a dividend. The issue did not . .
Cited – Commissioner of Inland Revenue v Cosmotron Manufacturing Company Limited PC 28-Jul-1997
(Hong Kong) The taxpayer company was winding down its business. As it closed it made substantial redundancy payments to its employees. The Commissioners rejected a suggestion that such payments could be set off against income, saying that the . .
Cited – Carney v Inspector of Taxes SCIT 1-Nov-2002
CHILD CARE EXPENSES of a self-employed person – whether deductible – no – whether Human Rights Act 1998 applies to a tax year before coming into force where the act of disallowance took place afterwards – no – whether the point is covered by primary . .
Cited – Forthright (Wales) Ltd v Hm Inspector of Taxes SCIT 29-Sep-2003
. .
Cited – Mallalieu v Drummond HL 27-Jul-1983
The taxpayer was a barrister. To comply with Bar guidance on court dress, she wore, in court and in and to and from chambers black dresses, suits and shoes and white blouses. The clothing were perfectly ordinary articles suitable for everyday wear. . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.199762

The words ‘for the purposes of the trade’ in the statute mean ‘for the purposes of enabling a person to carry on and earn profits in the trade’. Money spent for the purpose of preserving the trade from destruction can properly be treated as wholly and exclusively expended for the purposes of the trade.

Judges:

Lord Morton of Henryton

Citations:

[1955] AC 21

Jurisdiction:

England and Wales

Citing:

Adopted – Strong and Co of Romsey Ltd v Woodifield HL 30-Jul-1906
The company sought to deduct from its trading profits a sum expended paying damages for personal injuries to a visitor to the taxpayer’s Inn. The claim had been rejected.
Held: The company’s appeal failed. Lord Davey said: ‘I think that the . .

Cited by:

Cited – David Robson v Eric Mitchell (HM Inspector of Taxes) ChD 8-Jul-2004
The taxpayer sought capital gains tax relief of a loan to a business.
Held: To succeed in his claim the taxpayer had to establish that the indebtedness created was to be used entirely to serve the borrower’s business. . .
Cited – Mallalieu v Drummond HL 27-Jul-1983
The taxpayer was a barrister. To comply with Bar guidance on court dress, she wore, in court and in and to and from chambers black dresses, suits and shoes and white blouses. The clothing were perfectly ordinary articles suitable for everyday wear. . .
Cited – McKnight (Inspector of Taxes) v Sheppard HL 18-Jun-1999
The taxpayer sought to set off against tax some pounds 200,000 spent defending professional disciplinary proceedings. The House was asked whether this was ‘money wholly and exclusively laid out or expended for the purposes of the trade.’
Held: . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.199763

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.

Citations:

(1942) 24 TC 412

Cited by:

Cited – Atkinson (HM Inspector of Taxes) v Camas Plc CA 6-May-2004
An investment company made an abortive attempt to take over another. It sought to set off against its Corporation Tax, the costs of the professional advice incurred.
Held: The expenses were deductible. . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 30 April 2022; Ref: scu.198424

The court considered the nature of allowable expenses for an investment company: ‘the notion behind this Section may be thought to be that the expenditure is something which if you were looking at the profits and gains under Schedule D would be deductible as a sum of money wholly and exclusive expended for the purpose of making profits and gains, within Rule 3 of Cases I and II of Schedule D, and accordingly that any expenditure partaking of a capital nature is not aimed at by the Section.’

Judges:

Croom-Johnson J

Citations:

[1944] 26 TC 293

Jurisdiction:

England and Wales

Cited by:

Cited – Newsom v Robertson ChD 30-Apr-1952
Mr Newsom, a practising barrister sought to set off against his income, the expenses of travelling between his home and his chambers in London. The Inspector appealed the decision of the commissioners that he could do so. The rule required that the . .
Applied – Sun Life Assurance Society v Davidson CA 1956
The phrase ‘general management’ extended further than ‘management’ and included what was done at the lower levels of a company’s executive structure.
Romer LJ said: ‘The ratio decidendi of Golder’s Case (Capital and National Trust Ltd. v. . .
Cited – Atkinson (HM Inspector of Taxes) v Camas Plc CA 6-May-2004
An investment company made an abortive attempt to take over another. It sought to set off against its Corporation Tax, the costs of the professional advice incurred.
Held: The expenses were deductible. . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 29 April 2022; Ref: scu.197028

A bricklayer sought to set against his income tax, the expenses of travelling to and from his home to work.
Held: The taxpayer travelled from home to sites within a 55 mile radius. The home was his base of operations, and the expenses were allowed. There was ‘the greatest difficulty drawing a line or indicating theoretical distinctions between expenses of travelling from home in cases such as those of itinerant traders’.

Judges:

Stamp LJ

Citations:

[1972] Ch 157

Jurisdiction:

England and Wales

Citing:

Followed – Newsom v Robertson ChD 30-Apr-1952
Mr Newsom, a practising barrister sought to set off against his income, the expenses of travelling between his home and his chambers in London. The Inspector appealed the decision of the commissioners that he could do so. The rule required that the . .

Cited by:

Cited – Powell v Jackman (Inspector of Taxes) ChD 10-Mar-2004
The taxpayer was a milkman. He sought to set off against his liability to income tax, the expenses of his daily journey between his home and the depot from which he collected the milk for distribution.
Held: The only test was whether the . .
Cited – Sargent v Barnes ChD 1978
The dental surgeon taxpayer travelled to his dental surgery from home by car every day, a distance of about 11 miles. He also maintained a laboratory where a dental technician worked, about 1 mile from his home and almost directly on the route . .
Cited – Samadian v Revenue and Customs FTTTx 28-Jan-2013
FTTTx INCOME TAX – self-employed consultant geriatrician with office at home where he performed significant business functions – travel between home, places of employment and private hospitals where he saw . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 29 April 2022; Ref: scu.195745

An American citizen, with his ordinary residence and indeed practising the law in New York, took a three-year lease of a furnished shooting lodge in Scotland. He resided at the shooting lodge for a period of two months in each year during the shooting season, but the lodge was available to him for the rest of the year if he had wished to come. He kept his home in New York open throughout the year and returned there when he was not shooting in Scotland. The shooting box was kept in readiness for him when he was not there, and his occupation was described by the Lord President as not being of a casual or temporary nature but as ‘substantial’ and, as regards some of its incidents, ‘continuous’. It was asked whether he was in Scotland for a temporary purpose only on those facts.
Held: Lord M’Laren said ‘I do not think that Mr. Cadwalader is in a position to affirm, when he comes year after year during the currency of his lease to spend the shooting season in Scotland, that he is here for a temporary purpose only. I do not mean that you might not frame a definition which would bring this within the scope of temporary purposes, but, taking the ordinary meaning of the word, I should say that temporary purposes means casual purposes as distinguished from the case of a person who is here in the pursuance of his regular habits of life.’

Judges:

Lord M’Laren

Citations:

[1904] 5 TC 101, (1904) 7 F (Sess Cas) 146

Jurisdiction:

Scotland

Cited by:

Approved – British Road Services v Wurzal 1971
A trailer used to transport goods between this country and continental Europe as found to be without a plate as required by regulation 3. The defence claimed the trailer was exempted by Schedule 2 of the regulations as it fell within the class of . .
Cited – High Tech International Ag and others v Deripaska QBD 20-Dec-2006
The clamants brought actions for damages for torts said to have been committed by the defendants in Russia. They said that the defendant was domiciled within the jurisdiction under the EU Regulation.
Held: Domicile for the issue of . .
Cited – Cornwall Council, Regina (on The Application of) v Secretary of State for Health and Somerset County Council SC 8-Jul-2015
PH had severe physical and learning disabilities and was without speech, lacking capacity to decide for himself where to live. Since the age of four he received accommodation and support at public expense. Until his majority in December 2004, he was . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 29 April 2022; Ref: scu.195483

Abortive expenditure on the proposed acquisition of a capital asset is usually capital in nature.

Citations:

[1973] 1 WLR 236

Cited by:

Cited – Camas Plc v HM Inspector of Taxes ChD 7-Jul-2003
An investment company sought to set against its liability to corporation tax, the various costs of taking over another company. They argued that as an investment company these were not costs of the purchase and could be set against tax.
Held: . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 29 April 2022; Ref: scu.184472

A person domiciled in the United States but resident in England paid allowances to her daughter resident in England out of the income of her investments in the United States, by means of a banker’s draft drawn on a London bank payable to the daughter and posted to her in California. The banker’s draft was bought by the mother’s bank in California and debited to her account. The mother was assessed to tax under Case V of Schedule D on the amount of the allowances. The assessment was discharged by the Special Commissioners.
Held: The Special Commissioners held that the gift to the daughter was completed in California, at the latest, when the banker’s draft was posted to her on her mother’s instructions. The judge concluded that the sections only caught income from foreign possessions which is either received by the taxpayer in the United Kingdom or to which he is entitled at the time it comes to the United Kingdom. He specifically rejected the argument for the Crown that if the subject matter of the gift comes to the United Kingdom by direction of the taxpayer it is received by the taxpayer. If there is a gift of foreign income completed outside the United Kingdom the donee may remit the subject matter or any other property representing it to the United Kingdom without a liability to United Kingdom tax being imposed on either the donor or the donee.

Judges:

Lawrence J

Citations:

(1936) 20 TC 229

Cited by:

Cited – Grimm v Newman Chantry Vellacott DFK CA 7-Nov-2002
Accountants appealed a finding of professional negligence. They had advised an american resident in Britain that he could transfer assets to his wife here without adverse tax consequences. At the trial the judge had considered an alternative scheme . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 29 April 2022; Ref: scu.183429

(Judgment) Free movement of workers – Tax convention – Netherlands rules on the avoidance of double taxation

Citations:

[2002] EUECJ C-385/00

Links:

Bailii

Jurisdiction:

European

Income Tax

Updated: 28 April 2022; Ref: scu.178722

Profits made by receipt of a lump sum from the sale of notes and documents, created in a professional writing career but without the copyright, were taxable under Schedule D in the year of the sale.

Citations:

Ind Summary 30-May-1995, Gazette 24-May-1995, Times 02-May-1995

Jurisdiction:

England and Wales

Income Tax

Updated: 28 April 2022; Ref: scu.90229

Investment was not part of the trading activity of an electricity supplier – no set off.

Citations:

Times 27-Oct-1995

Jurisdiction:

England and Wales

Income Tax

Updated: 28 April 2022; Ref: scu.84385

Income Tax, Schedule D-Excess Profits Duty-Profits of trade-Isolated transaction.

Citations:

[1926] UKHL TC – 11 – 297

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 27 April 2022; Ref: scu.633835

Citations:

[1926] UKHL TC – 10 – 285

Links:

Bailii

Jurisdiction:

Northern Ireland

Income Tax

Updated: 27 April 2022; Ref: scu.633831

Income Tax/Corporation Tax : Assessment/Self-Assessment – HMRC enquiry – closure notice and amendment to self-assessment return – penalty – appeal allowed in part and penalty reduced

Citations:

[2018] UKFTT 729 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 27 April 2022; Ref: scu.632435

Income Tax, Schedule D, Case IV

Citations:

[1902] UKHL TC – 4 – 464

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 27 April 2022; Ref: scu.630795

For income tax purposes, interest is only derived, or arises, when it is actually or constructively received or credited. Rowlatt J said: ‘Before a good debt is paid there is no such thing as income tax upon it. The meaning of the section must be ‘receivability’ speaking of a debt, which has been received, and means the date on which it is paid as distinct from the date on which it was accruing.’

Judges:

Rowlatt J

Citations:

[1928] 1 KB 73

Jurisdiction:

England and Wales

Cited by:

Cited – Revenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 15 April 2022; Ref: scu.428301

Case withdrawal

Citations:

[2016] UKUT 257 (TCC)

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 12 April 2022; Ref: scu.570401

The taxpayer defendant (C) had been both resident and ordinarily resident in the UK. He moved to Los Angeles in 1978 making his home and business there until May 1979, when, not having set foot in the UK in the interim, he returned to reside in the UK. The Commissioners ruled that he had not been resident nor ordinarily resident in the UK in 1978-79. The Revenue appealed.
Held: The appeal failed. Nicholls J rejected arguments that (a) on the primary facts found by the commissioners Mr Clark had been so resident and ordinarily resident and (b) for the purposes of the provision (which was then in section 49 of the Income and Corporation Taxes Act 1970) he had left the UK for the purpose only of occasional residence abroad.
The court accepted the Revenue’s submission that the provision brought into the tax net those who were not resident in the UK at all in the year of assessment, holding that ‘occasional residence’ was the converse of ‘ordinary residence’.

Judges:

Nicholls J

Citations:

[1986] Ch 1

Jurisdiction:

England and Wales

Cited by:

Applied – Davies and Another, Regina (on The Application of) v Revenue and Customs SC 19-Oct-2011
The Revenue had published a booklet, IR20, setting out their approach to the interpretation of the phrases ‘residence’ and ‘ordinary residence’. The taxpayer said that this was a more generous definition than the statutory one, and that having acted . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 12 April 2022; Ref: scu.450184

INCOME TAX – adjustments to self assessment – discovery assessment – suppression of takings – fairness of estimates by HMRC – appeal dismissed

Citations:

[2009] UKFTT 282 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 12 April 2022; Ref: scu.409085

SCIT National Insurance Contributions – Whether contribution record accurate – Whether actions of HMRC in breach of European Convention on Human Rights – Whether contributor entitled to pay additional Class 3 contributions – No.

Citations:

[2008] UKSPC SPC00677

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 12 April 2022; Ref: scu.267765

The taxpayer operated through a one man limited company employed by a recruitment agency to provide IT services to a customer. He appealed a finding that he was liable to pay tax as an employee.
Held: The appeal was dismissed. The legislative scheme anticipated only two contracts and here there were three, but it also anticipated the rolling up of more than one contract into just one contract. The decision of the commissioner was one properly open to him and was not to be disturbed.

Judges:

Park J

Citations:

Times 22-Oct-2004

Statutes:

Finance Act 2000 60, Social Security Contributions (Intermediaries) Regulations2000 (2000 No 727) 6

Jurisdiction:

England and Wales

Citing:

Appeal from – Usetech Ltd v HM Inspector of Taxes SCIT 12-Mar-2004
NATIONAL INSURANCE CONTRIBUTIONS – intermediary rules (‘IR35′) – whether worker to be regarded as in ’employed earner’s employment by the client’ – Social Security Contributions (Intermediaries) Regs 2000, reg 6 – yes – appeal dismissed
INCOME . .
Cited – Professional Contractors’ Group and Others v Commissioners of Inland Revenue CA 21-Dec-2001
Legislation had been enacted to tax under Schedule E, people employed through one man service companies and similar. Representatives of such taxpayers sought review of the legislation as incompatible with European law being a hindrance to the . .
Cited – Synaptek Ltd v Young (Inspector of Taxes) ChD 28-Mar-2003
The taxpayer was a computer consultant working through the medium of a limited liability company. The respondent sought to make him liable for social security contributions as an employee of the business which used his services.
Held: The . .

Cited by:

Appealed to – Usetech Ltd v HM Inspector of Taxes SCIT 12-Mar-2004
NATIONAL INSURANCE CONTRIBUTIONS – intermediary rules (‘IR35′) – whether worker to be regarded as in ’employed earner’s employment by the client’ – Social Security Contributions (Intermediaries) Regs 2000, reg 6 – yes – appeal dismissed
INCOME . .
Lists of cited by and citing cases may be incomplete.

Income Tax

Updated: 12 April 2022; Ref: scu.220021

Case remitted by High Court to commissioner for unprecedented second time.

Citations:

Ind Summary 08-Nov-1993

Jurisdiction:

England and Wales

Income Tax

Updated: 10 April 2022; Ref: scu.90477

A partnership facing sure future losses because of obligations under leases where rents would not be met by sub-lettings because of falls in letting values, could set off losses in future years also against current profits since it was proper accounting practice.

Citations:

Times 04-Mar-1999, Gazette 17-Mar-1999

Jurisdiction:

England and Wales

Income Tax

Updated: 08 April 2022; Ref: scu.81336

A bonus earned in one year but payable later is taxable in year earned.

Citations:

Times 25-Apr-1995

Jurisdiction:

England and Wales

Income Tax

Updated: 08 April 2022; Ref: scu.81035

An auctioneer was not required to report to the Inland Revenue on the gross receipts of other traders on sales where he had acted as agent.

Citations:

Gazette 01-Mar-1995, Times 31-Dec-1994, Ind Summary 13-Feb-1995

Statutes:

Taxes Management Act 1970 13

Jurisdiction:

England and Wales

Income Tax

Updated: 08 April 2022; Ref: scu.80485

NIC and tax and NICs appeal by the taxpayer, Usetech, against a decision determining a question of principle concerning the liability to tax and NICs of Usetech and its principal shareholder and director. Usetech was a ‘one man company’ whose business consisted of making the services of Mr Hood available to third party users.’

Judges:

Park J

Citations:

[2004] EWHC 2248 (Ch), 76 TC 811, [2004] STI 2220, [2005] BTC 48, [2004] STC 1671

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 07 April 2022; Ref: scu.655554

Citations:

[2020] UKFTT 389 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Income Tax

Updated: 07 April 2022; Ref: scu.655321