Bramford's Road Transport, Ltd v Evans (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 16 October 1953 |
| Date | 16 October 1953 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
Income Tax, Schedule D - Road Haulage Undertakings - Vesting of lorries in British Transport Commission - Transport Act, 1947 - Compensation received - Balancing charge - Succession - Income Tax Act, 1945 (8 & 9 Geo. VI, c. 32), Sections 17 and 60.
(1) The Appellant Company, B.R.T., Ltd., carried on a road haulage undertaking. Following notice of acquisition by the British Transport Commission under Section 40, Transport Act, 1947, the whole property of the undertaking vested on 9th May, 1949, in the Commission, and from that date the Company ceased to trade. For a few months thereafter the undertaking was carried on as a unit by the Road Haulage Executive, using the same lorries and serving the same customers, but as from 1st September, 1949, it was merged with another unit and operated from a different depot.
Compensation was subsequently paid by the Commission for the lorries under Section 47, Transport Act, 1947, and a balancing charge was raised under Section 17, Income Tax Act, 1945, in respect of the excess of the compensation over their written down value.
On appeal before the Special Commissioners it was contended on behalf of the Company-
(i) that, whether or not the Commission succeeded to the Company's trade, that trade was, within the meaning of Section 17 (1), Income Tax Act, 1945, permanently discontinued at the date of vesting, so that following the decision of the Court of Session in the "Girl Eileen" case, 31 T.C. 402, no balancing charge could be raised,
(ii) alternatively, that the Commission did not succeed to the Company's trade,
(iii) alternatively, that the compulsory acquisition and vesting in the Commission of the Company's lorries did not constitute a sale within the meaning of Section 17 (1) (a).
The Commissioners dismissed the appeal, holding that the B.T.C. succeeded to the Company's trade so that, by virtue of the last paragraph of Section 17 (1), Income Tax Act, 1945, the cessation of the Company's trade did not amount to permanent discontinuance; and, therefore, whether or not there was a sale within the meaning of Section 17 (1) (a), the lorries fell, by virtue of Section 60 (1), to be treated as if they had been sold to the Commission.
(2) and (3). The facts in these cases and the arguments before the Commissioners were in all material respects similar to those in the first case. In both cases the Special Commissioners found that the B.T.C. succeeded to the trade previously carried on by the Appellants and dismissed the appeals.
Only the first case was argued and Counsel for the Appellants did not take any point of distinction between that and the other two cases.
Held, following the decision in John Hudson & Co., Ltd. v. Kirkness(1), that there was no sale of lorries to the B.T.C., but that the Special Commissioners were correct in holding that there was a succession within the meaning of Section 60 (1), Income Tax Act, 1945.
Bramford's Road Transport, Ltd. v. Evans (H.M. Inspector of Taxes)
CASE
Stated under the Income Tax Act, 1952, Section 64, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the Chancery Division of the High Court of Justice.
At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 26th and 27th March, 1952, Bramford's Road Transport, Ltd. (hereinafter called "Bramford") appealed against an assessment under Case I, Schedule D, for the year 1949-50 in the sum of £6,330 less £197 capital allowances in respect of a balancing charge, the said assessment having been raised upon Bramford under the provisions of Section 17, Income Tax Act, 1945.
2. At the hearing of this appeal evidence was given before us by Mr. Charles William Bramford, formerly managing director of Bramford, and by Mr. James Berry Garrett, Chief Officer (Organization) to the Road Haulage Executive and chairman of the Executive's Asquisitions Co-ordinating Committee.
The following documents were put in evidence before us and are attached to and form part of this Case(2):
Provisional ascertainment dated 14th April, 1949, of compensation payable under Section 47 of the Road Transport Act, 1947, made by the Transport Commission under Section 48 (1), Transport Act, 1947 |
Exhibit A. |
Final ascertainment and detailed list of vehicles, taken over by the Transport Commission as at 9th May, 1949 |
Exhibit B. |
Gazetteer and alphabetical list of undertakings acquired to 30th September, 1949, by the Transport Commission |
Exhibit C. |
The following document, referred to in evidence at the hearing of this appeal, is available in a separate bundle for the assistance of the High Court:
British Transport Commission report and accounts for 1950 Exhibit D.
The facts found by us on the above-mentioned evidence, or agreed by the parties in this appeal, are as stated in the following paragraphs numbered 3 to 9 inclusive.
3. Prior to 9th May, 1949, Bramford carried on, from headquarters in Leicester, a trade or business of regular service carries between Leicestershire, Northamptonshire, Staffordshire and intermediate counties. Bramford carried goods, known in the trade as "smalls", i.e. consignments up to three hundredweights, and "large smalls", i.e. consignments from three hundredweights up to one ton between four main services, viz. Leicester to Stafford; Leicester to Stoke-on-Trent; Leicester to Wolverhampton; and Leicester to Northampton. Bramford was a small private company, using only one type of transport vehicle, and contracted for the maintenance of those vehicles with one service motor engineering firm. It offered its services to all customers within the area of its operation, provided the consignment of goods for carriage was of the particular type above-mentioned, but its business was, in practice, mainly confined to specialised customers. It operated a "door to door", 24-hour service and was equipped to accept exceptional traffic. Its largest single customer was the Goodyear Tyre Co., for which firm about 30 per cent. of its total annual carriage was done. The remainder of its business was spread over about 120 principal customers. Bramford's main depot at 36, Nanson Road, Leicester, was owned by its managing director, Mr. C.W. Bramford, and leased to that Company. Bramford also used two other small properties at Leicester and Stoke-on-Trent, which were owned by Mr. C.W. Bramford.
4. On 9th May, 1949, the whole undertaking of Bramford was compulsorily taken over by the Transport Commission (hereinafter called "the Commission") under the provisions of the Transport Act, 1947, and on the same date Bramford ceased to carry on any trade of road haulage, or any other trade. The provisions of the Transport Act under which this transaction was effected are Sections 39, 40, 44 and 45. The requisite notice of acquisition was given by the Commission and, under Section 45, ownership of the trade vehicles, previously the property of Bramford, vested in the Commission on 9th May 1949. The general duty of the Commission as defined by Section 3 of the Transport Act was
to secure or promote the provision of an efficient, adequate, economical and properly integrated system of public inland transport.
5. From the commencement in the year 1948 of the operation of the Transport Act, the intention of the Commission was to acquire by agreement undertakings to make a network of transport undertakings on which to build subsequent compulsory acquisitions. At the time, however, the primary transport companies were not ready for the formation of a group structure, and the Commission was therefore obliged to begin with compulsory acquisitions, and to build them up gradually into a group structure. In the summer of 1949 a start was made with the formation of a group structure, but when a new undertaking was compulsorily acquired it necessarily formed a unit by itself, before it could be merged with others into a group.
6. Accordingly, on and after 9th May, 1949, the undertaking previously carried on by Bramford continued for a time very much as before. The Road Haulage Executive, in addition to acquiring Bramford's vehicles, took over its stores and all its other assets, except cash, debts, a private car and some investments. The Commission also used Bramford's Leicester depot from 9th May to 1st September, by arrangement with Mr. C.W. Bramford who was appointed a District Traffic Assistant under the Commission. The two small properties mentioned above in paragraph 3 were not taken over by the Commission. Bramford's 10 lorries continued on similar services, except that two which had been engaged in work for the Goodyear Tyre Co. were, shortly after 9th May, 1949, taken off that work and transferred to the Stafford district. The undertaking previously carried on by Bramford continued as a unit for a few months until 1st September, 1949, and the following entry appeared in the Road Haulage Executive Gazetteer, viz.
Unit E. 93. Bramfords "Smalls" Leicester/Staffordshire, Northamptonshire.
Exhibit C, pages 87 and 178.)
The address in the Gazetteer, 36, Nanson Road, and the telephone number were those of the original Bramford's property, but from the vesting date, 9th May, 1949, vehicles other than Bramford's former lorries were supplied with fuel oil at that address, which was not the case when the business was privately operated. To officials of the Transport Commission Executive, the undertaking was known as "Unit E.93" after the vesting date, but the Commission purchased for £1 the name "Bramford's" from the Company, though it never used the full name "Bramford's Road Transport". The name "Bramford's" was retained for purposes of identification, for domestic purposes and for external use and to prevent the name being used...
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