Brighton College v Marriott
| Jurisdiction | England & Wales |
| Judge | Lord Chancellor,Lord Atkinson,Lord Buckmaster,Lord Carson,Lord Blanesburgh |
| Judgment Date | 18 December 1925 |
| Judgment citation (vLex) | [1925] UKHL J1218-1 |
| Date | 18 December 1925 |
| Court | House of Lords |
[1925] UKHL J1218-1
House of Lords
Lord Chancellor.
Lord Atkinson.
Lord Buckmaster.
Lord Carson.
Lord Blanesburgh.
After hearing Counsel, as well on Tuesday the 3d, as on Thursday the 5th and Friday the 6th, days of November last, upon the Petition and Appeal of Brighton College, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 24th of November 1924, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of S. J. Marriott, His Majesty's Inspector of Taxes, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 24th day of November 1924, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
In this case the Court of Appeal, reversing the decision of Mr. Justice Rowlatt, has held that the appellants, a corporation bearing the name of Brighton College, were properly assessed to income tax for the year ending on the 5th April 1923 and the question for your Lordships' decision is whether the tax was rightly so assessed.
The school known as Brighton College was founded in or about the year 1840 for the purpose of providing for the sons of noblemen and gentlemen a liberal and practical education in conformity with the principles of the Established Church, and was for some years conducted under the terms of a Deed of Establishment dated the 11th September 1848. In the year 1873 the school was taken over by the appellant company, which was then incorporated under the Companies Acts as a company limited by guarantee, its principal objects being defined by the Memorandum of Association as follows:—
( a) To continue with an improved constitution the Brighton College, which has been carried on since the year 1846 in Brighton.
( b) To provide thereby a sound religious, classical, mathematical, and general education, in conformity with the doctrines of the Church of England.
The Memorandum of Association contained a provision to the effect that the income and property of the College, whencesoever derived, should be applied solely towards the promotion of the objects of the College as set forth in the Memorandum of Association, and no portion thereof should be paid or transferred directly or indirectly by way of dividend, bonus or otherwise by way of profit to the members of the College; and the Board of Trade, pursuant to section 22 of the Companies Act, 1867, granted a licence for the registration of the company without the addition of the word "limited" to its name. The Articles of Association provided (among other things) that every member should have the privilege of nominating to the College one pupil in respect of each share held by him, and that pupils not so nominated should pay an additional charge; but this privilege, although still in existence, is not now used by the members. The Articles also provided that the Council should have the general care and management of the College and should regulate the tuition and other fees to be paid by the pupils.
The school has been carried on by the appellant company in accordance with the Memorandum and Articles of Association. The company has taken over or acquired the land required for the school and has improved the school premises, borrowing considerable sums for that purpose on mortgage or debentures. It employs a large staff and charges fees for the education given. The school is not assisted by any subscriptions, and there is nothing to show that the fees are fixed on other than commercial principles. For many years past the receipts of the College have considerably exceeded the working expenses, and the surplus has been applied to the payment of interest on the debt secured by the mortgages and debentures and of instalments of the principal debt. In the years 1912 to 1921 these surpluses were as follows :—
| Surplus. | Intrest. | Principal paid off. | ||||
| 1912 | - | - | - | 1,633 | 1,013 | 500 |
| 1913 | - | - | - | 1,515 | 994 | 500 |
| 1914 | - | - | - | 1,538 | 1,108 | 500 |
| 1915 | - | - | - | 1,371 | 1,171 | 500 |
| 1916 | - | - | - | 1,403 | 1,151 | 500 |
| 1917 | - | - | - | 1,781 | 1,124 | 500 |
| 1918 | - | - | - | 1,901 | 1,095 | 500 |
| 1919 | - | - | - | 2,142 | 1,064 | 1,000 |
| 1920 | - | - | - | 1,729 | 1,031 | - |
| 1921 | - | - | - | 6,408 | 1,310 | 500 |
In these circumstances the additional Commissioners of Income Tax for the division of Brighton made an assessment upon the appellants under Schedule D of the Income Tax Act for the tax year 1922–3; and, on an appeal to the Special Commissioners, those Commissioners decided that a trade was being carried on, and after giving effect to certain agreed alterations they amended the assessment to 2,414 l. and determined the appeal accordingly. It was agreed by both sides that in arriving at the liability of the appellant College under Schedule D, the annual value of the buildings and offices upon which no tax had been levied under Schedule A should be deducted. A case having been stated for the opinion of the High Court, Rowlatt J. held that the appellants were not assessable to the tax, but on appeal to the Court of Appeal that Court reversed the decision of the High Court and affirmed the decision of the Special Commissioners. Hence the present Appeal.
It should be added that, for the purposes of the argument before the Court of Appeal and this House, it was admitted by the Crown that the object for which the College was established was a charitable object within the meaning of the statute of Elizabeth.
My Lords, by the Income Tax Act, 1918, income tax is chargeable under Schedule D in respect of the annual profits or gains arising or accruing to any person (including a corporation) residing in the United Kingdom from any trade, profession, employment or vocation. Exemption is granted (under section 37) from ( a) tax under Schedule A in respect of the rents and profits of any lands or hereditaments belonging to any public school, and ( b) tax under Schedule D in respect of any yearly interest or other annual payment forming part of the income of any charity. A further allowance is made (under Schedule A, Rule 6) in respect of the tax charged on any public school in respect of the public buildings, offices and premises belonging thereto; and by the Finance Act, 1921, (section 30) exemption is granted from income tax under Schedule D in respect of the profits of a trade carried on by any charity, if the work in connection with the trade is mainly carried on by...
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