In the tax year 1974/75 a taxpayer company voted to award bonuses to its two directors and controlling shareholders and credited the sums to accounts with the company from which the directors were free to draw. The directors did not draw on those sums. The Inland Revenue assessed the company to tax, arguing that the company should have deducted tax under the PAYE system on the full sums credited to those accounts.
Held: The assessment was upheld. The word ‘payment’ had no one settled meaning but took its colour from its context. There was no need for the directors to withdraw the money from their loan accounts for there to have been payment by the company, stating: ‘when money is placed unreservedly at the disposal of directors by a company, that is equivalent to payment’. Different considerations would have arisen if the company had required a further decision by the board of directors or by the shareholders in general meeting before the money could have been withdrawn.
Judges:
Walton J
Citations:
[1979] 2 All ER 927, [1979] 3 WLR 68, [1979] AC 731, (1980) RPC 31, [1978] TR 477, [1979] 2 All ER 73, [1979] 1 WLR 409, 52 TC 522, [1979] STC 129, [1978] UKHL TC – 52 – 522
Links:
Jurisdiction:
England and Wales
Cited by:
Approved – RFC 2012 Plc (Formerly The Rangers Football Club Plc) v Advocate General for Scotland SC 5-Jul-2017
The Court was asked whether an employee’s remuneration is taxable as his or her emoluments or earnings when it is paid to a third party in circumstances in which the employee had no prior entitlement to receive it himself or herself.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 18 August 2022; Ref: scu.642457