Commissioners of Inland Revenue v City of London (The Epping Forest Case)
| Jurisdiction | England & Wales |
| Date | 1945 |
| Court | House of Lords |
HIGH COURT OF JUSTICE-
COURT OF APPEAL-
HOUSE OF LORDS-
Income Tax - Annual payment - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule D, Case III, Rule 1 (a), and General Rules, Rule 19.
Under the Epping Forest Act, 1878, Epping Forest is regulated and managed by the Corporation of London as the Conservators of Epping Forest; and the Corporation is required to contribute, in such amounts as shall be necessary, to the income of a fund applied to the expenses of the Conservators.
The Corporation makes a contribution each year to make good the deficiency on the income account of the Conservators. On paying that contribution in the Income Tax year 1948-49 the Corporation made a deduction therefrom based on the prevailing rate of Income Tax, which it justified by the contention that the contribution was an "annual payment" for Income Tax. In its capacity of Conservators the Corporation was regarded as a separate entity, the purposes of which were exclusively charitable. It was therefore claimed that the deduction made should be repaid by the Inland Revenue under the provisions relieving charities from Income Tax.
The Special Commissioners admitted the claim.
Held, that the Special Commissioners' decision was correct.
Stated under Section 19 (3) of the Finance Act, 1925, and Section 149 of the Income Tax Act, 1918, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 4th April, 1950, the said Commissioners heard, under Section 19 (3) of the Finance Act, 1925, a claim for exemption from Income Tax for the year 1948-49 under Section 37 (1) (b)of the Income Tax Act, 1918, by the Corporation of the City of London in its capacity of the Conservators of Epping Forest (hereinafter called "the Respondents"). The said claim had been duly made to the Commissioners of Inland Revenue (hereinafter called "the Appellants") who had disallowed the same.
2. The way in which the said claim arises is as follows.
By virtue of the Epping Forest Act, 1878, Epping Forest is regulated and managed by the Corporation as Conservators of the Forest.
The Corporation is required by the said Act (inter alia) to contribute to the income of a fund called the Epping Forest Fund, and has for many years so contributed, the amount contributed in the year ended 31st March, 1949 (the relevant year) being £16,006 3s.4d., from which the Corporation deducted £7,202 15s.6d. for Income Tax, leaving a net payment of £8,803 7s. 10d.
3. It was common ground between the parties that in its capacity of Conservators the Corporation fell to be regarded as a separate entity capable of receiving payments from itself in its capacity of the Corporation of the City of London, that the said contributions made by the Corporation to the said fund fell to be regarded as payments (made in account) to the Conservators, and that the purposes of the Conservators were exclusively charitable.
The claim of the Respondents was that: (1) the above contributions were "annual payments" within Rule 1 (a) of Case III of Schedule D and Rule 19 (1) of the General Rules of the Income Tax Act, 1918; (2) in making the contribution for the said year ended 31st March, 1949, the gross amount of the contribution was £16,006 3s. 4d.,from which the Corporation had deducted tax amounting to £7,202 15s. 6d.; and (3) the Respondents (being admittedly a charity, and so exempt from tax) were entitled to repayment of the said sum of £7,202 15s. 6d. from the Appellants.
4. There were put in evidence before us the following documents, marked respectively, as under, which accompany this Case in a separate bundle and form part of the Case, namely(1):
(A) Statement headed "Epping Forest" being a detailed statement of the relevant history of the Forest, deposed to as hereinafter mentioned.
(B) Balance of revenue account made up from City's Cash since 1920-21.
(C) Bundle containing copy claim for repayment of Income Tax for the year 1948-49 submitted to the Appellants by the Respondents, with copy certificate of deduction of Income Tax for the year ended 31st March, 1949, submitted by the Respondents to the Appellants, and copy correspondence in relation thereto.
(D) Bundle containing copies of (a) warrant for £200 of 11th June, 1945, drawn on behalf of the Epping Forest Committee on the Chamberlain of London, (b) list of payments ordered by that committee to be made by warrant on 11th June, 1945, (c) warrant for £8 10s. 0d. of 9th July, 1945, drawn on behalf of that committee on the said Chamberlain and (d) list of payments ordered by that committee to be made by warrant on 9th July, 1945. Although these documents relate to years earlier than the year of claim, they were taken as representative examples in order to avoid using similar documents for the year of claim, which might be required for the current records of the Corporation.
(E) Printed accounts of the Corporation for the year ended 31st March, 1949.
The following statutes were also referred to, namely, the Metage on Grain (Port of London) Act, 1872, the Epping Forest Act, 1878, and the Epping Forest Act, 1880.
5. The principal statute, for present purposes, is the Epping Forest Act, 1878.
Section 3 of this Act provides that Epping Forest shall be regulated and managed under and in accordance with that Act by the Corporation of the City of London, acting by the Mayor, Aldermen and Commons of the said city in Common Council assembled, as the Conservators of Epping Forest (in the Act referred to as the Conservators).
Section 30 (1) provides that there shall be four verderers of Epping Forest. Sub-section (2) sets out the names of the first verderers. Sub-section (3) provides that they shall hold office until 25th March, 1880, and Sub-section (4) provides that succeeding verderers shall be elected by the persons for the time being on the register of commoners provided for in the Fourth Schedule to the Act, and in manner prescribed in that Schedule. Sub-section (5) provides that a person shall not be qualified to be elected a verderer unless he is resident within one of the Forest parishes, or if he is a member of the Court of Common Council of the City of London. By Sub-section (6) the elected verderers shall hold office for seven years, but shall be re-eligible.
Section 31 provides:
(2) There shall be a committee for the purposes of this Act styled the Epping Forest Committee (in this Act referred to as the committee), which committee shall, subject to the provisions of this Act, have authority to exercise the powers and discretion and do the acts which the Conservators are by this Act empowered to exercise and do.
(3) The Court of Common Council of the City of London shall from time to time select members thereof, not exceeding twelve in number, to be members of the committee.
(4) The verderers shall be members of the Committee, and shall have the same powers, authorities, rights and privileges as the members thereof selected from the Court of Common Council, and no other or different powers, authorities, rights, or privileges.
(5) The acts and proceedings of the committee shall be done and conducted subject and according to the like directions, rules, and practice as if the committee were a committee of the Court of Common Council.
Section 33 sets out the general powers and duties of the Conservators under 26 heads, which include the management of the timber, the making of inclosures, the maintenance and making of roads, footpaths and ways, the acquisition or erection of buildings for recreation or for the use of offices of the Conservators, the provision and maintenance of pounds for the impounding of cattle, provision for games, bathing and other amusements, and numerous other matters.
Section 39 provides as follows:
(2) The Corporation of London shall from time to time contribute to the capital and income of a fund, to be called the Epping Forest Fund, such moneys as shall be necessary out of the City of London grain duty or from other sources.
(3) The Fund shall consist of-
(4) As regards capital:…
-
(5) As regards income:…
(iv) The annual income arising from the investments of any money, part of the capital of the fund:
(v) The half-yearly or other periodical payments in respect of rentcharges:
(vi) All fines, penalties, proceeds of timber-cuttings and loppings, and other moneys received by the Conservators, other than capital as aforesaid:
(vii) The fees and income received for marking the cattle of the commoners, and in respect of cattle and animals impounded.
(viii) All moneys contributed by the Corporation of London, or by any person, to the income of the fund.
Section 41 (2) provides:
The Conservators shall apply the income of the Fund in payment of rents, salaries, taxes, insurances, and other current expenses attending the execution of their powers and duties, and the making of the register of commoners and the elections of verderers, and in payment of or provision for any annual sums of money, allowances for compensation, annuities, pensions, or retiring allowances, and such other charges as they are not empowered to discharge out of capital.
6. Evidence (which we accepted) was given by Mr. Irving Blanchard Gane, who is the Chamberlain of London. He testified to the history of Epping Forest, the rights of parties in the Forest, the acquisition of Forest land by the Corporation, the events leading up to the Epping Forest Act, 1878, and subsequent thereto, payments by the Corporation for Forest land, the management of the Forest, and the Epping Forest Fund, as set out in Exhibit "A", and also gave further evidence as under.
7. Regarding the "grain duty" or "other sources", out of which the Corporation was required to pay the contribution in...
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