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Taxes Management - From: 1970 To: 1979

This page lists 18 cases, and was prepared on 02 April 2018.

 
In re Vandervell's Trusts; Vandervell Trustees Limited v White and Others [1970] Ch 44
1970
CA
Lord Denning MR
Taxes Management
The deceased had sought to create a trust to benefit the Royal College of Surgeons. The parties disputed its tax effect. Held: Lord Denning MR said: 'We will in this court give the rule a wide interpretation so as to enable any party to be joined wherever it is just and convenient to do so. It would be a disgrace to the law that there should be two parallel proceedings in which the self same issue was raised, leading to difficult and inconsistent results. It would be a disgrace in this very case if the special commissioners should come to one result and a judge in the chancery division should come to another result as to who was entitled to these dividends.'
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In re Vandervell's Trusts (No 1); Vandervell Trustees Limited v White and Others [1971] AC 912; [1970] UKHL TC_46_341; [1970] 3 WLR 452; [1970] 3 All ER 16; [1970] TR 129,; 46 TC 341
15 Jul 1970
HL
Lord Wilberforce, Viscount Dilhorne, Lord Hope of Craighead (dissenting), Lord Diplock
Taxes Management
Practice - Parties - Joinder - Proceedings between subjects raising issues material to income tax - Joinder of Commissioners of Inland Revenue - Income Tax Act 1952 (15 & 16 Geo. 6 & 1 Eliz. 2, c.10), ss. 52 and 64 ; Income Tax Management Act 1964 (c.37), 5.5(6); R.S.C., Ord. 15, r.6(2).
The House clarified the exclusive nature of the jurisdiction of the special or general commisioners. This principle is not to be taken to exclude the jurisdiction of the courts to decide a question of fact or law which is a basis for an income tax assessment where the taxpayer and the revenue so agree, provided the assessment to which the question relates has not become final and provided also the question, 'in form suitable for decision by the court', is not 'so close to the question of the assessment itself' that the court should decline to entertain it. But either the taxpayer or the revenue have the right to insist the statutory procedure should be followed.
Viscount Dilhorne said: "The many reported cases in which this rule has been considered were comprehensively reviewed by Devlin J . . . in Amon -v- Raphael Tuck & Sons Limited . . . In this case the Court of Appeal held that there should be a wide interpretation of the rule. Whether this interpretation is wider than that stated by Devlin J . . . it is not necessary to consider. My difficulty about accepting Lord Denning's wide interpretation is that it appears to me wholly unrelated to the wording of the rule. I cannot construe the language of the rule as meaning that a party can be added whenever it is just or convenient to do so. That could have been simply stated if the rule was intended to mean that. However wide an interpretation is given, it must be an interpretation of the language used. The rule does not give power to add a party whenever it is just or convenient to do so. It gives power to do so only if he ought to be joined as a party or if his presence is necessary for the effectual and complete determination and adjudication upon all matters in dispute in the cause or matter. It is not suggested that the revenue ought to have been joined."
Lord Wilberforce said: "There may be questions, in form suitable for decision by the court, which are in fact so close to the question of the assessment itself that the court ought not to entertain them but leave them to the statutory procedure. And nothing that I have said must be taken to imply that either the Crown, or the taxpayer, may not be entitled to insist that a particular question, as between them, be so decided. But I find nothing in the income tax legislation to justify the comprehensive proposition for which the appellants contend, namely, that the High Court is absolutely excluded from a vast range of issues of a kind normally justiciable by it, just because those questions arose between the taxpayer and Crown and form a basis, even a necessary basis, for an income tax assessment."
Lord Diplock: "Section 5(6) of the Income Tax Management Act 1964 provides that after notice of assessment has been served 'the assessment shall not be altered except in accordance with the express provisions of the Income Tax Acts.' The only way in which an assessment can be altered under the provisions of the Income Tax Acts is by the special commissioners on an appeal to them by the party assessed."
Income Tax Management Act 1964 5(6) - Income Tax Act 1952
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Argosy Co v Inland Revenue Commissioners [1971] 1 WLR 514; [1971] UKPC 5; [1971] TR 29
8 Feb 1971
PC
Lord Donovan
Taxes Management
(Guyana) The word "best" when used to refer to the judgment of a tax officer making an assessment of tax due, rather than implying a higher than normal standard, is a recognition that the result may necessarily involve an element of guesswork. It means simply "to the best of (their) judgment on the information available"
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Crabtree v Hinchcliffe (Inspector of Taxes) [1971] 3 WLR 821; [1971] 3 All ER 967; (1971) 47 Tax Cases 419
27 Oct 1971
HL
Lord Reid, Lord Morris of Borth-y-Gest, Viscount Dilhorne, Lord Donovan, Lord Pearson
Capital Gains Tax, Taxes Management
The taxpayer's shareholding in his quoted company was to be sold. A sale was substantially agreed, but not completed for several months. Between times came the beginning of the tax year. The Act provided that, for quoted shares, save in special circumstances, the base value of the shares was to be the quoted price at the start of the tax year. The taxpayer argued that that price had been set in ignorance of the take-over, and therefore substantially undervalued the shares, and that that error was a special circumstance. Held: The taxpayer's appeal failed. The special circumstances had to apply at the time in issue, the start of the tax year. The Special Commissioners' findings of fact were not set out satisfactorily, and did not state whether an announcement should have been made before the start of the tax year. Nevertheless, the negotiations had not at that date reached a stage at which an announcement would have been correct, and the quoted price remained appropriate. Board members of companies will often have price sensitive information which they cannot yet disclose. That does not mean that the public market in the shares is a false market. The Revenue's interpretation of special circumstances was unnecesarily narrow, but this did not affect the outcome. Viscount Dilhorne: 'For circumstances to be special must be exceptional, abnormal, or unusual and the mere fact that directors have knowledge which would affect the prices quoted if made public cannot, in my view, be regarded as an unusual circumstance.'
Finance Act 1965 44(3)
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Inland Revenue Commissioners v Goldblatt [1972] Ch 498
1972


Taxes Management, Insolvency, Torts - Other
In a winding up case, the Commissioners can if necessary proceed against a receiver for misfeasance.
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 Greenberg v Inland Revenue Commissioners; HL 1972 - [1972] AC 109

 
 Ransom v Higgs; 1973 - [1974] 50 Tax Cas 1; [1973] I WLR 1187
 
Buswell v Inland Revenue Commissioners [1974] 1 WLR 1631
1974
CA
Orr LJ, Russell and Stamp LJJ
Taxes Management, Litigation Practice

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White and others v Vandervell Trustees Ltd. (No. 2), Re Vandervell's Trusts (No 2) [1974] EWCA Civ 7; [1974] Ch 269; [1974] 1 All ER 47; [1974] 3 WLR 256
3 Jul 1974
CA
Lord Denning MR, Stephenson LJ, Lawton LJ
Taxes Management, Equity, Trusts
Lord Denning MR described the modern practice concerning pleadings: "It is sufficient for the pleader to state the material facts. He need not state the legal result. If, for convenience, he does so, he is not bound by, or limited to, what he has stated."
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Inland Revenue Commissioners v Bullock [1976] STC 409; [1976] 1 WLR 1178
1976
CA
Buckley LJ
Taxes Management
The court was asked to decide whether the taxpayer's house was his principal home. Buckley LJ discussed the nature of 'residence': "A man may have homes in more than one country at one time. In such a case, for the purpose of determining his domicile, a further enquiry may have to be made to decide which, if any, should be regarded as his principal home."
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 Amministrazione Delle Finanze Dello Stato v Simmenthal SpA (No 2); ECJ 9-Mar-1978 - C-106/77; R-106/77; [1978] EUECJ R-106/77; [1978] ECR 629; [1978] 3 CMLR 263
 
Lothbury Investment Corporation Ltd v Inland Revenue Commissioners [1981] Ch 47; (1979) 53 TC 223
1979

Goulding J
Taxes Management
The taxpayer company was a non-trading company owing shareholders substantial sums. Rather than pay dividends it waived dividends it held in a public company, and the shareholder waived interest on the loans. The IR apportioned the income of the company between the shareholders pro rata according to their interest on a winding up. The commissioners on appeal said they could not substitute their own view for the Revenue where the Revenue had not exceeded its powers. Held: The Commissioners did have the jurisdiction to review the Revenue's decision. But in this case the Revenue could not be said to have incorrectly exercised their discretion.
Income and Corporation Taxes Act 1970 296`
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Vestey v Inland Revenue Commissioners [1979] Ch 177
1979
ChD
Walton J
Taxes Management, Constitutional
The case concerned section 478, which had monstrous and unintended results, if applied in accordance with its natural meaning. The Commissioners did not seek to apply the section in a manner which produced such results. The court held: "One should be taxed by law, and not be untaxed by concession"
Income and Corporation Taxes Act 1970 478
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Vestey v Inland Revenue Commissioners (No 2) [1979] Ch 198
1979
ChD
Walton J
Taxes Management, Constitutional
The Commissioners of Inland Revenue do not have, any more than does any other emanation of the Crown, any power to suspend or dispense with laws. "It is at this point that there arises what Mr Potter, for the taxpayers, has denominated as a serious constitutional question; namely what rights the Inland Revenue Commissioners have to pick and choose when recovering tax. The Solicitor-General said, and doubtless rightly said, that the commissioners are under no duty to recover every halfpenny of tax which may be due. One may say "Amen" to that very readily, because the costs of recovery of extremely small amounts of tax would far outweigh the tax recovered. One expects the tax authorities to behave sensibly. In this connection I was referred to section 1 of the Inland Revenue Regulation Act 1890 and to section 1 of the Taxes Management Act 1970, but I do not think that either of these provisions has any real bearing on the matter. What the revenue authorities, through the Solicitor-General, are here claiming is a general dispensing power, no more and no less. He submitted that the system of extra-statutory concessions was well known and well recognised, and that what was happening in the present case was no more than the grant of an additional extra-statutory concession. In the first place, I, in company with many judges before me, am totally unable to understand upon what basis the Inland Revenue Commissioners are entitled to make extra-statutory concessions. To take a very simple example (since example is clearly called for), upon what basis have the commissioners taken it upon themselves to provide that income tax is not to be charged upon a miner’s free coal and allowances in lieu thereof? That this should be the law is doubtless quite correct; I am not arguing the merits, or even suggesting that some other result, as a matter of equity, should be reached. But this, surely, ought to be a matter for Parliament, and not the commissioners. If this kind of concession can be made, where does it stop; and why are some groups favoured as against others?"
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Vestey v Inland Revenue Commissioners [1980] AC 1148; (1979) 54 Tax Cas 503; [1979] 3 WLR 915; [1979] UKHL TC_54_503
1979
HL
Lord Wilberforce, Lord Dilhorne, Lord Salmon, Lord Edmund-Davies, Lord Edmund-Davies
Taxes Management, Constitutional, Income Tax, Taxes Management
Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined. A proposition that whether a subject is to be taxed or not, or, if he is, the amount of his liability, is to be decided (even though within a limit) by an administrative body represents a radical departure from constitutional principle. It may be that the revenue could persuade Parliament to enact such a proposition in such terms that the courts would have to give effect to it: but, unless it has done so, the courts, acting on constitutional principles, not only should not, but cannot, validate it. When Parliament imposes a tax, it is the duty of the commissioners to assess and levy it upon and from those who are liable by law. Of course they may, indeed should, act with administrative commonsense. To expend a large amount of taxpayer’s money in collecting, or attempting to collect, small sums would be an exercise in futility: and no one is going to complain if they bring humanity to bear in hard cases. I accept also that they cannot, in the absence of clear power, tax any given income more than once. But all of this falls far short of saying that so long as they do not exceed a maximum they can decide that beneficiary A is to bear so much tax and no more, or that beneficiary B is to bear no tax. This would be taxation by self-asserted administrative discretion and not by law. The fact in the present case is that Parliament has laid down no basis on which tax can be apportioned where there are numerous discretionary beneficiaries. The Commissioners had no power to mitigate the gross injustice that would result from the strict application of the section, as interpreted by them. The devices resorted to by the Commissioners were unconstitutional.
HL Income tax - Avoidance of tax - Transfer of assets - Income payable to trustees of settlement resident abroad - Income accumulated and invested - Income from such investments also accumulated and invested in two funds - Investments including shares in wholly-owned overseas companies - Capital sums paid out of each fund to discretionary beneficiaries (other than the transferors) ordinarily resident in the U.K. - Capital sum paid to mother of infant beneficiary - Whether infant "received" or "entitled to receive" such capital sum - Whether each of such beneficiaries had "power to enjoy" income of (a) the trustees, (b) the overseas companies - Whether such income deemed to be income of each of such beneficiaries in years prior to, including, and subsequent to, year of receipt - Power of Board of Inland Revenue to apportion such income between selected beneficiaries - Income Tax Act 1952, s 412 (1), (2), (4), (5) & (6) - Finance Act 1969, s 33 - Inland Revenue Regulation Act 1890, s 1 - Taxes Management Act 1970, s 1.
Taxes Management Act 1970 1 - Inland Revenue Regulation Act 1890 1 - Finance Act 1969 33 - Income Tax Act 1952 412(1)
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Vestey v Inland Revenue Commissioners [1980] AC 1148; (1979) 54 Tax Cas 503; [1979] 3 WLR 915; [1979] UKHL TC_54_503
1979
HL
Lord Wilberforce, Lord Dilhorne, Lord Salmon, Lord Edmund-Davies, Lord Edmund-Davies
Taxes Management, Constitutional, Income Tax, Taxes Management
Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined. A proposition that whether a subject is to be taxed or not, or, if he is, the amount of his liability, is to be decided (even though within a limit) by an administrative body represents a radical departure from constitutional principle. It may be that the revenue could persuade Parliament to enact such a proposition in such terms that the courts would have to give effect to it: but, unless it has done so, the courts, acting on constitutional principles, not only should not, but cannot, validate it. When Parliament imposes a tax, it is the duty of the commissioners to assess and levy it upon and from those who are liable by law. Of course they may, indeed should, act with administrative commonsense. To expend a large amount of taxpayer’s money in collecting, or attempting to collect, small sums would be an exercise in futility: and no one is going to complain if they bring humanity to bear in hard cases. I accept also that they cannot, in the absence of clear power, tax any given income more than once. But all of this falls far short of saying that so long as they do not exceed a maximum they can decide that beneficiary A is to bear so much tax and no more, or that beneficiary B is to bear no tax. This would be taxation by self-asserted administrative discretion and not by law. The fact in the present case is that Parliament has laid down no basis on which tax can be apportioned where there are numerous discretionary beneficiaries. The Commissioners had no power to mitigate the gross injustice that would result from the strict application of the section, as interpreted by them. The devices resorted to by the Commissioners were unconstitutional.
HL Income tax - Avoidance of tax - Transfer of assets - Income payable to trustees of settlement resident abroad - Income accumulated and invested - Income from such investments also accumulated and invested in two funds - Investments including shares in wholly-owned overseas companies - Capital sums paid out of each fund to discretionary beneficiaries (other than the transferors) ordinarily resident in the U.K. - Capital sum paid to mother of infant beneficiary - Whether infant "received" or "entitled to receive" such capital sum - Whether each of such beneficiaries had "power to enjoy" income of (a) the trustees, (b) the overseas companies - Whether such income deemed to be income of each of such beneficiaries in years prior to, including, and subsequent to, year of receipt - Power of Board of Inland Revenue to apportion such income between selected beneficiaries - Income Tax Act 1952, s 412 (1), (2), (4), (5) & (6) - Finance Act 1969, s 33 - Inland Revenue Regulation Act 1890, s 1 - Taxes Management Act 1970, s 1.
Taxes Management Act 1970 1 - Inland Revenue Regulation Act 1890 1 - Finance Act 1969 33 - Income Tax Act 1952 412(1)
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Inland Revenue Commissioners v Plummer [1979] 3 All ER 775; [1980] AC 896; [1979] UKHL TC_54_1; [1979] STC 793; [1979] TR 339; [1979] 3 WLR 689; 54 TC 1
1 Nov 1979
HL
Lord Wilberforce, Lord Fraser of Tullybelton
Taxes Management, Income Tax
Although transactions were integrated as part of a preconceived scheme which was commercially marketed and that had no other conceivable purpose than that of saving surtax, the construction of the statute compelled the acceptance of a fiscal result which accorded very ill with the true "substance" of the transactions taken as a whole. There was nothing illegal about the scheme and it was entitled to a fair, if not necessarily benevolent, consideration by the court. Purchased annuities are in principle captured by schedule D of the Income Tax Acts. Lord Wilberforce considered it was not possible to read into the definition an exception in favour of commercial transactions but that it was necessary to consider the scope of the words of the definition: "If it appears, on the one hand, that a completely literal reading of the relevant words would so widely extend the reach of the section that no agreement of whatever character fell outside it, but that, on the other hand, a legislative purpose may be discerned, of a more limited character, which Parliament can reasonably be supposed to have intended, and that the words used fairly admit of such a meaning as to give effect to that purpose, it would be legitimate, indeed necessary, for the courts to adopt such meaning." and ". . . it can, I think, fairly be seen that all of these provisions...have a common character. They are designed to bring within the net of taxation dispositions of various kinds, in favour of a settlor's spouse, or children, or of charities, cases, in popular terminology, in which a taxpayer gives away a portion of his income, or of his assets, to such persons, or for such periods, or subject to such conditions, that Parliament considers it right to continue to treat such income, or income of the assets, as still the settlor's income. These sections, in other words, though drafted in wide, and increasingly wider language, are nevertheless dealing with a limited field – one far narrower than the field of the totality of dispositions, or arrangements, or agreements, which a man may make in the course of his life. Is there then any common description which can be applied to this." As to Bulmer v IRC: "My Lords, I think that in doing so the learned judge was well within the limits of permissible interpretation, and that with the "element of bounty" test we have a definition which is in agreement with the intention of Parliament as revealed through the whole miniature code . . ."
Lord Fraser of Tullybelton said that the definition of settlement applied only where there was an element of bounty because the word "settlement", even allowing for its extended definition was used throughout the relevant Part "with a flavour of donation or bounty".
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 Regina v Inland Revenue Commissioners ex parte Rossminster Ltd; HL 13-Dec-1979 - [1980] AC 952; [1979] UKHL 5; [1980] 1 All ER 80
 
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