The taxpayer insurance company had transferred sums from accounts designated as Capital Reserves. The Revenue said that these were properly part of the profit and loss accounts for the respective tax years, and chargeable receipts.
Held: The Revenue’s cross appeal succeeded. As a life assurance company, the amounts to be taken into account in computing its profits include its investment income from its long term business fund and any increase in the value of its assets during the accounting period. The amounts to be taken into account under section 83(2) were those listed on the Form 40, the revenue account submitted in respect of a Long Term Buisness Fund. It was necessary to concentrate not on the past history of the legislation, but the meaning of the sections at the relevant time.
The use of the word ‘as’ in ‘as brought into account’ showed that the calculation must be on the basis of what had actually been entered into the regulatory account, through the Form 40. The words of the statute were clear enough to dispel arguments as to alternative meanings put by the taxpayer.
Lord Hope, Deputy President, Lord Walker, Lady Hale, Lord Neuberger, Lord Clarke
[2011] UKSC 32, UKSC 2010/0178, 2011 SLT 749
Bailii, Bailii Summary, SC Summary, SC
Finance Act 1998 Sch 18, Insurance Companies (Accounts and Statements) Regulations 1996 (SI 1996/943), Insurance Companies Act 1982
Scotland
Citing:
At Special Commissioners – Scottish Widows Plc v Revenue and Customs SCIT 24-Jan-2008
SCIT INSURANCE – Life Assurance Business – Finance Act 1989 section 83(2)and(3) – enquiry into Company’s tax returns referral under paragraph 31A of Schedule 18 to the Finance Act 1989 – computation of Case 1 . .
Appeal from – Scottish Widows Plc v HM Revenue and Customs SCS 28-May-2010
The taxpayer insurance company had transferred sums from Capital reserves. The Revenue said that these receipts must be treated as income and chargeable to tax accordingly.
Held: The court (Lord Emslie dissenting) refused the appeal and . .
Cited – Scottish Union and National Insurance Co v Inland Revenue 1889
In computing a life insurance company’s profits for tax purposes, the company may take the actuarial surplus as a suitable starting point for dealing with transfers from reserves. . .
Cited – Revell v Edinburgh Life Insurance Co 1906
. .
Cited – Gresham Life Assurance Society v Styles 1892
Statutory provisions which bring profits and gains into charge to tax are to be construed as directed towards profits and gains in their natural and proper sense – in a sense which no commercial man would misunderstand – and that those words are . .
Cited – Revenue and Customs v William Grant and Sons Distillers Ltd HL 28-Mar-2007
The Revenue appealed findings as to the calculation of profits for corporation tax. The companies had sought to deduct sums from profits for depreciation of unsold stock in accordance with current accounting standards.
Held: ‘the profit and . .
Cited – London County Council v Attorney General 1901
Lord MacNaghten said: ‘Income tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else.’
Lord Macnaghten said of a relator action: ‘The initiation of the litigation, and the determination of the . .
Cited – Equitable Life Assurance Society v Hyman HL 20-Jul-2000
The directors of the Society had calculated the final bonuses to be allocated to policyholders in a manner which was found to be contrary to the terms of the policy. The language of the article conferring the power to declare such bonuses contained . .
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 . .
Cited – Pepper (Inspector of Taxes) v Hart HL 26-Nov-1992
Reference to Parliamentary Papers behind Statute
The inspector sought to tax the benefits in kind received by teachers at a private school in having their children educated at the school for free. Having agreed this was a taxable emolument, it was argued as to whether the taxable benefit was the . .
Cited – Allchin v Coulthard CA 1942
Lord Greene MR discussed the meaning of the word ‘fund’: ‘The word ‘fund’ may mean actual cash resources of a particular kind (e.g. money in a drawer or a bank), or it may be a mere accountancy expression used to describe a particular category which . .
Cited – W T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .
Cited – Farrell v Alexander HL 24-Jun-1976
The House considered the construction of a consolidation Act.
Held: It is ordinarily both unnecessary and undesirable to construe a consolidation Act by reference to statutory antecedents, but it is permissible to do so in a case where the . .
Cited – Vestey v Inland Revenue Commissioners HL 1979
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 . .
Cited – Inland Revenue Commissioners v Joiner HL 26-Nov-1975
HL Surtax – Tax advantage – Transaction in securities – Company recon- struction – Surplus assets o f old company distributed in voluntary liquidation – Agreement for liquidation providing for agreed methods o f . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 01 November 2021; Ref: scu.441503