The taxpayer, a comic actor, bought silver bullion hoping it would act as a hedge against a possible deflation of the pound. The revenue sought to tax his profits on sale under Schedule D. He argued that the money, being from one transaction, did not arise in the course of trade. The judge had reversed the Commissioners decision and found it not to be taxable.
Held: The revenue appeal succeeded: ‘supposing it was a hedge against devaluation, it was nevertheless a transaction entered into on a short-term basis for the purpose of making a profit out of the purchase and sale of a commodity, and if that is not an adventure in the nature of trade I do not really know what is. The whole object of the transaction was to make a profit.’ ‘because it was a hedge against devaluation it was not a trading adventure’ In this case: ‘it would have been possible for the commissioners to come to the view at which they did arrive in favour of the Crown or they might have taken a view of the facts in favour of the taxpayer. On the whole (not that it matters) I think that in the circumstances of this case I should have been inclined to agree with the view taken by the commissioners. With great respect to the learned judge, it is in my opinion impossible to say that the view expressed by the commissioners was not a view at which any reasonable tribunal could arrive.’ and ‘I for my part cannot see that it is any the less a trading adventure because one describes it as something to offset the loss incurred by a fall in the value of sterling, or as a ‘hedge’, or insurance, against devaluation.’
Harman and Salmon LJJ, and Cairns J
[1969] 1 All ER 332, [1969] 1 WLR 275, [1969] 45 Tax Cas 92, [1969] 47 ATC 358, [1968] TR 345
Income Tax Act 1952 Sch D Case 1
England and Wales
Citing:
Appeal From – Wisdom v Chamberlain (Inspector of Taxes) ChD 1968
Mr Wisdom, a famous comic actor, bought silver bullion, fearing the devaluation of the pound. He sold it at considerable profit. The commissioners found that that this was trading for profit.
Held: The Inspector’s appeal succeeded. The bullion . .
Cited – Jenkinson (Inspector of Taxes) v Freedland 1961
The court considered whether the purchase and sale of an item making a profit must count as acting in the course of trade so as to cause liability to income tax. Donovan LJ: ‘It cannot be right, therefore, to assert, as the Crown did before us, that . .
Cited – Edwards (Inspector of Taxes) v Bairstow HL 25-Jul-1955
The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only . .
Mentioned – Leeming v Jones (Inspector of Taxes) HL 1930
The case established the principle that the profit from a single transaction of a purchase and sale of property was taxable only if it amounts to a trade and if not does not fall within Case VI. The making of a profit on an isolated transaction of . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 01 January 2022; Ref: scu.235903