(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 payments had not been made, as required by the statute, ‘for the purpose of producing such profits; ‘
Held: The test was indistinguishable form that applicable under UK law. ‘The severance payments were properly accepted by the Board of Review, by Findlay J (dissenting) and by the majority of the Court of Appeal as representing expenditure both for the purpose of producing profits and in the production of profits. The obligation to make them was contingent, like many of the employer’s other contractual or statutory obligations, but was nonetheless incurred as a necessary condition of retaining the services of the employees concerned.’
Judges:
Lord Browne-Wilkinson, Lord Lloyd of Berwick, Lord Nolan, Lord Hoffmann, Lord Clyde
Citations:
[1997] UKPC 42
Links:
Statutes:
Income and Corporation Taxes Act 1988 74
Citing:
Cited – 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 – Godden v A Wilson’s Stores (Holdings) Ltd 1962
The company traded as rubber planters. A manager’s contract allowed for six months’ notice. The company agreed to sell its estates, and the sale was completed and the trade of the company discontinued. The manager was given notice to terminate his . .
Cited – Commissioners of Inland Revenue v The Anglo Brewing Co. Ltd 1925
The company sought to set off against income tax, ex gratia payments it had made to employees as the business closed.
Held: Rowlatt J said: ‘Now I cannot conceive how, under those circumstances, there can be any evidence at all that the . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Income Tax
Updated: 01 June 2022; Ref: scu.159251