The company had ceased trading, but rental income was still generated from its former premises. The Revenue sought to include the receipt in calculations of whether the company was entitled to a small company corporation tax rate. The Revenue appealed the special commissioner’s decision that it was not a business income.
Held: The appeal failed. It could not be said, on the facts found by the Special Commissioner that ‘the only true and reasonable conclusion contradicts’ his determination. Rent might constitute income from a source consisting of a business and would do if received in the course of carrying on a business of putting property to profitable use by letting it out for rent, but the commissioners conculsion in this case the rent did not come from a source which amounted to a business.
Judges:
Lawrence Collins J
Citations:
Times 20-Apr-2006, [2006] EWHC 763 (Ch)
Links:
Statutes:
Income and Corporation Taxes Act 13(4)
Jurisdiction:
England and Wales
Citing:
Cited – Jowett (Inspector of Taxes) v O’Neill and Brennan Construction Ltd ChD 25-Mar-1998
Wynchgate Construction Ltd, an associated company of the taxpayer company, (‘WCL’), commenced a trade in 1994 of providing the services of British construction workers to a contractor operating in Germany. The trade only lasted for about 5 months. . .
Cited – American Leaf Blending Co SDN BHD v Director-General of Inland Revenue PC 1979
(Malaysia) The taxpayer company had a cigarette making factory and a bonded warehouse for storing tobacco and cigarettes. Its business proved to be unprofitable, and it came to abandon both its manufacturing and trading businesses. It still owned . .
Cited – John M Harris (Design Partnership) Ltd v Lee SCIT 1997
Mr Harris, an architect, owned more than 75% of the taxpayer company. He also owned all the shares in John M Harris (Properties) Ltd. He wanted to buy a holiday home in France and was advised that the property should, for French legal reasons and . .
Cited – Land Management Ltd v Fox SCIT 2002
The Commisioner was asked whether receipts of an associated company, The Share and Debenture Trust Ltd, were part of a business. The company did not trade, but owned shares in the taxpayer company and a freehold property. The Special Commissioner . .
Cited – Barclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .
Cited – Town Investments Ltd v Department of the Environment HL 2-Mar-1977
The House considered the application of Orders made under the Counter-Inflation Acts 1972 and 1973 to premises let initially to the Minister of Works and then to the Secretary of State for the Environment for occupation by civil servants. Each of . .
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.
Corporation Tax
Updated: 01 July 2022; Ref: scu.240130
