Dr Barnardo’s Homes National Incorporated Association v Commissioners for Special Purposes of the Income Tax Acts: HL 14 Mar 1921

A testator had left his residuary estate to a charity. His estate included some investments. During the course of the administration of the estate, the executors received income from the investments on which tax had been deducted at source. The income received was eventually handed over to the charity as part of the residue, and the charity argued that it should be entitled to a repayment of the tax deducted at source.
Held: The charity was not entitled to repayment of the tax.
Viscount Cave stated: ‘When the personal estate of a testator has been fully administered by his executors and the net residue ascertained, the residuary legatee is entitled to have the residue as so ascertained, with any accrued income, transferred and paid to him: but until that time he had no property in any specific investment forming part of the estate or in the income from any such investment, and both corpus and income are the property of the executors and are applicable by them as a mixed fund for the purposes of administration.’
Viscount Finlay said: ‘It appears to me that the present case is really decided by the decision of this House in Lord Sudeley’s Case. It was pointed out in that case that the legatee of a share in a residue has no interest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is complete. The income from which this income tax was deducted was not the income of the charity. It was the income of the executors.’
Lord Atkinson said: ‘The case of Lord Sudeley v. Attorney-General . . conclusively established that until the claims against the testator’s estate for debts, legacies, testamentary expenses, etc., have been satisfied, the residue does not come into actual existence. It is a non-existent thing until that event has occurred. The probability that there will be a residue is not enough. It must be actually ascertained.’
Income Tax – Residuary bequest to Charity.- Will disputed – Income of testator’s estate prior to distribution received under deduction of Income Tax. – Claim by Charity for repayment of Income Tax deducted from accrued income of residue. – Rule Nisi for Mandamus

Viscount Cave, Viscount Finlay
[1921] 2 AC 1, [1921] UKHL TC – 7 – 646
Income Tax Act 1842 88
England and Wales
CitedSudeley v Attorney-General HL 1897
The husband had died leaving part of his residuary estate to his widow. She then died before the estate was fully administered. Both died domiciled in England. The husband’s estate included mortgages of land in New Zealand and the House was asked . .

Cited by:
CitedRaymond Saul and Co (A Firm) v Holden and Another; In re Hemming (deceased) ChD 12-Nov-2008
The claimant was sole residuary legatee of his mother’s estate. He became bankrupt, but was released by automatic discharge from the bankruptcy before the administration of the estate was completed. He challenged the solicitors who wished to pay the . .

Lists of cited by and citing cases may be incomplete.

Wills and Probate, Income Tax

Leading Case

Updated: 11 November 2021; Ref: scu.524660