swarb.co.uk - law index
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Corporation Tax - From: 1970 To: 1979
This page lists 13 cases, and was prepared on 27 May 2018.
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 Odeon Associated Theatres Ltd v Jones; 1970 - (1970) 48 TC 257
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Cooke v Beach Station Caravans Ltd [1974] 1 WLR 1398; (1974) 49 TC 514
1974
Corporation Tax
The excavation and construction of 2 swimming pools in a caravan park was held to be the provision of plant, not premises or setting.
1 Citers
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Rolls Royce Motors Ltd v Bamford (1976) 51 TC 319
1976
Walton J
Corporation Tax
The court was asked whether the new state owned company which took over some of the assets and undertaking of Rolls Royce Ltd following its insolvency was entitled to carry forward and set against its profits the losses of the old company up to the date of its liquidation. Rolls Royce Ltd had been made up of six divisions each making different types of engines. Four of the divisions which dealt with the manufacture of aero engines were transferred to the new state owned company while the two remaining divisions which manufactured cars were transferred to a new and separate company. Held: The state owned company did not carry on the same trade as Rolls Royce Ltd had done because it no longer manufactured cars.
1 Citers
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Aberdeen Construction Group Ltd v Inland Revenue Commissioners [1978] AC 885; [1978] UKHL TC_52_281; [1978] 1 All ER 962; (1978) 52 Tax Cas 281
1978
HL
Lord Wilberforce
Capital Gains Tax, Corporation Tax
The House gave guidance on the interpretation of Tax statutes. Held: The consideration at issue had been paid both for shares and for something else, the waiver of a loan the seller had made to the company. Lord Wilberforce emphasised the need to consider each asset disposed of separately in the light of the rules which apply to that particular asset.
TC Corporation tax - Chargeable gains - Disposal by holding company of its shares in subsidiary company on condition that holding company waived repayment of its loans to the subsidiary - Whether consideration given for shares alone or shares and loans - Whether the loans were debts on a security and an allowable loss accrued - Whether the amount o f the loans was an allowable deduction in computing the gain or loss on the disposal - Finance Act 1965 (c 25), Sch 7, para 11; Sch 6, paras 4(1) (b), 8.
Capital gains tax is a tax on gains, or gains less losses. It is not a tax on arithmetical differences. To say that a loss (or gain) which appears to arise at one stage in an indivisible process, and which is intended to be and is cancelled out by a later stage, so that at the end of what was bought as, and planned as, a single continuous operation, is not such a loss (or gain) as the legislation is dealing with is well, and indeed essentially, within the judicial function.
Finance Act 1965
1 Citers
[ Bailii ]
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 Pearce (HM Inspector of Taxes) v Woodall-Duckham Ltd; CA 28-Feb-1978 - [1978] EWCA Civ 7; [1978] 1 WLR 832; [1978] 2 All ER 793; (1978) 51 TC 271
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Ben-Odeco v Powlson [1978] UKHL TC_52_459; [1978] 2 All ER 1111; [1978] STC 460; [1978] TR 359; [1978] 1 WLR 1093; 52 TC 459
27 Jul 1978
HL
Corporation Tax
Corporation tax - Capital allowances - Machinery and plant - First year allowances - Oil rig - Whether commitment fees and interest on loans form part of expenditure on the provision of machinery or plant - Finance Act 1971 (c 68), s 41(1).
[ Bailii ]
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Floor v Davis (Inspector of Taxes) [1978] Ch. 295
1979
CA
Eveleigh LJ
Corporation Tax
The court considered the taxation of a sale of shares in one company called IDM to a company (FNW) and a further sale by that company to a yat another company (KDI). Held(Majority) It was right to look at each of the sales separately. The court rejected an argument by the Crown that they could be considered as an integrated transaction.
Eveleigh LJ, dissenting, upheld the argument, saying that the fact that each sale was genuine did not prevent him from regarding each as part of a whole, or oblige him to consider each step in isolation. Nor was he so prevented by the Westminster case. Looking at the scheme as a whole, and finding that the taxpayer and his sons-in-law had complete control of the IDM shares until they reached KDI, he was entitled to find that there was a disposal to KDI.
1 Citers
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 Floor v Davis (Inspector of Taxes); HL 1979 - [1980] AC 695; [1979] 2 WLR 830; [1979] 2 All ER 677
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Crusabridge Investments Ltd v Casings International Limited (1979) 54 TC 246
1979
HH Judge Finlay QC
Landlord and Tenant, Corporation Tax
The landlord of light industrial premises sought damages from his tenant for breach of the user covenant in the lease. This permitted the premises to be used, inter alia, as an "industrial building or structure" as defined by the Capital Allowances Act 1968. The tenant was in business of purchasing used tyres, storing and inspecting them in the premises to see whether they were suitable for making re-moulds. Those thought to be suitable were then consigned to a re-moulder which would then select and purchase the tyres it wanted. The tenant also sold re-moulded tyres on commission and provided a re-moulding service for some of its customers. Due to the nature of its business, at any one time there would be a large number of tyres stored in the premises awaiting despatch to a re-moulder. Held: The storage of used tyre casings and re-moulds fell within s.7(1)(f)(ii) and (iii) of the 1968 Act. As to Dale -v-Johnson, the true ratio of that decision was that the storage in that case was no more than ancillary to the company's trade and that Shiel J did not decide that s.7(1)(f) was only applicable if "there is a trade which consists in storage and nothing else". The words "which consists in" in s.7(1)(f) means he said "involves" .
Capital Allowances Act 1968
1 Cites
1 Citers
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American Leaf Blending Co SDN BHD v Director-General of Inland Revenue [1979] AC 676
1979
PC
Lord Diplock
Corporation Tax
(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 its factory and warehouse, and let the premises to various licensees. The Board considered whether that income was from a "source consisting of a business" to allow it to adjust losses from the business for previous years of assessment. Held: Not every isolated act of a kind which was authorised by the Memorandum if done by a company necessarily constituted the carrying on of a business. The Board rejected the idea that because letting was one of the objects of the memorandum, the action was necessarily carrying on a business.
Lord Diplock: "So it is clear that 'rents' …. may nevertheless constitute income from a source consisting of a business if they are receivable in the course of carrying on a business of putting the taxpayer's property to profitable use by letting it out for rent.
[W]hether the company … was carrying on a business of letting out its premises for rents … is one of fact
In the case of a private individual it may well be that the mere receipt of rents from property that he owns raises no presumption that he is carrying on a business. In contrast, in their Lordships' view, in the case of a company incorporated for the purpose of making profits for its shareholders any gainful use to which it puts any of its assets prima facie amounts to the carrying on of a business. Where the gainful use to which a company's property is put is letting it out for rent, their Lordships do not find it easy to envisage circumstances that are likely to arise in practice which would displace the prima facie inference that in doing so it was carrying on a business.
The carrying on of 'business', no doubt, usually calls for some activity on the part of whoever carries it on, though, depending on the nature of the business, the activity may be intermittent with long intervals of quiescence in between. In the instant case, however, there was evidence before the special commissioners of activity in and about the letting of its premises by the company during each of the five years that had elapsed since it closed down its former tobacco business. There were three successive lettings of the warehouse negotiated with different tenants; there was the removal of the machinery from the factory area which made it available for use for storage and a separate letting of that area to a fresh tenant; and as recently as October 1968 there was the negotiation of a letting to a single tenant of both the factory area and the warehouse.
As has been mentioned, the question whether the company was carrying on a business of letting out its premises for rent was one of fact for the special commissioners; …"
1 Citers
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Benson v Yard Arm Club Ltd (1979) 53 TC 67
1979
Corporation Tax
The purchase and conversion of a vessel and barge to be used as permanently moored floating restaurant was held not to be the provision of plant to attract allowances.
1 Citers
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 In re Mesco Properties Ltd; ChD 1979 - [1979] 1 WLR 558
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O'Brien (Inspector of Taxes) v Benson's Hosiery (Holdings) Ltd [1979] UKHL TC_53_241; [1980] AC 562; [1979] 3 All ER 652; [1979] 3 WLR 572; 53 TC 241; [1979] STC 735; [1979] TR 335
25 Oct 1979
HL
Corporation Tax
HL Corporation tax - Chargeable gains - Meaning of "property" and "assets" under Part III of Finance Act 1965 (c 25) - Whether £50,000 received from director to secure release from service agreement a chargeable gain - Finance Act 1965, s 22(1), (3) and (4)(b).
Finance Act 1965
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