In estimating the average of profits of an insurance company assessable to income tax it is a question of fact #
which is the fairest method. General Accident Fire and Life Assurance Company v. Inland Revenue ( M’Gowan), [1908] AC 207, 1908 S.C. (H.L.) 24, 45 SLR 681, lays down no fixed rule of law for such ascertainment.
The appellants contended that in estimating yearly profits they were entitled to carry forward 40 per cent. as a reserve against unexpired risks. During the three years of which the profits were averaged for ascertainment of income tax this reserve had increased by pounds 56,334, making a difference of pounds 18,778 in the return for the year. Their contention was upheld by the Commissioners and Bray (J.), but the Court of Appeal held that in the case of the General Accident Fire and Life Assurance Company v. M’Gowan ( sup.) a rule was laid down for the assessment of such profits.
Held that no such rule was laid down in M’Gowan’s case, and that the method of assessment pursued by the company was in the circumstances the fairest.
Citations:
[1912] UKHL 1038
Links:
Jurisdiction:
England and Wales
Income Tax
Updated: 25 April 2022; Ref: scu.619238