Ball v National and Grindlays Bank Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL |
| Judgment Date | 23 June 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0623-2 |
| Docket Number | 1970 No. 48 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 June 1971 |
[1971] EWCA Civ J0623-2
In The Supreme Court of Judicature
Court of Appeal
On Appeal From the High Court of Justice
Chancery Division (Revenue Paper)
(Mr. Justice Ungoed-Thomas)
Lord Justice Russell
Lord Justice Fenton Atkinson
and
Mr. G. B. Graham Q. C. and Mr. A. G. Guest (instructed by Messrs. Loxley, Sanderson & Morgan, Solicitors, London) appeared on behalf of the Respondent (Appellant).
Mr. H. H. Monroe Q. C. and Mr. P. W. Medd (instructed by The Solicitor of Inland Revenue, London) appeared on behalf of the Appellant (Respondent).
The judgment I am about to read is the judgment of the Court.
This is an appeal from a decision of Mr. Justice Ungoed-Thomas, reported in (1971) Volume 2 Weekly Law Reports, page 1129, where the facts are fully stated.
The question is whether payments made in the year 1966 by the Bank to the trustees pursuant to its covenant in the Deed dated 13th September 1962 are allowable under Section 52 of the Finance Act 1965 as deductions against the profits of the Bank in computing its liability to corporation tax, as being a charge on income. Charges on income include for this purpose annuities or other annual payments, but sub-section (4) excludes any such payment unless it is "made under a liability incurred for a valuable and sufficient consideration". The short question for solution is therefore whether the liability which was incurred by the Bank when it executed the covenant was incurred "for a valuable and sufficient consideration".
There is no doubt that the Bank, by bringing into existence this scheme for subsidizing the education in British schools of the children of its expatriate officers, has obtained very considerable benefit in its business, assisting as it has in the retention of previously discontented officers and in the recruitment of others for its overseas service. It has had good value for its money. It was commercially a very sound move: and indeed voluntary payments by the Bank to the trustees for the same purposes, additional to the liability under the covenant, are treated by the Revenue authorities as deductible in ascertaining the Bank's trading profits as having been made wholly and exclusively for the purposes of its trade.
Before the change to corporation tax the ordinary way of working matters out in a situation such as is involved in a covenant such as the present was not to deduct the gross amount of the annuity from the profits;...
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