Commissioners of Inland Revenue v City of Glasgow Police Athletic Association
| Jurisdiction | Scotland |
| Judgment Date | 19 December 1961 |
| Date | 19 December 1961 |
| Docket Number | No. 13. |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
Revenue—Income tax—Exemption—Charity—Charitable purpose—Profits of annual sports meeting held by police athletic association—Whether association established "for charitable purposes only"—Finance Act, 1921 (11 and 21 Geo. V, cap. 32), sec. 30—Finance Act, 1927 (17 and 18 Geo. V, cap. 10), sec. 24.
Administration of Justice—Authority of English judgments—Charity—Exemption of charities from income tax—Statute—Construction—Taxing statute applicable to United Kingdom.
The Finance Act, 1921, sec. 30, as amended by the Finance Act, 1927, sec. 24, enacts:—"(1) Exemption shall be granted—…(c) from income tax under Schedule D in respect of the profits of a trade carried on by any charity, if the profits are applied solely to the purposes of the charity and either—(i) the trade is exercised in the course of the actual carrying out of a primary purpose of the charity; or (ii) the work in connexion with the trade is mainly carried on by beneficiaries of the charity.…(3) In this section the expression “charity” means any body of persons or trust established for charitable purposes only."
A police athletic association, established for the encouragement of all athletic sports and general pastimes, was assessed to income tax in respect of the profits of an annual amateur athletic meeting held by it. It claimed exemption as being a charity within the meaning of sec. 30 of the Finance Act, 1921, as amended, and, on the authority of certain English decisions, the Special Commissioners allowed its claim, being of opinion that by promoting the efficiency of the police force it conferred a direct benefit on the public. In an appeal by the Commissioners of Inland Revenue the question of law was whether the association was a charity within the meaning of the section, and both parties contended that the legal meaning of "charity" in a United Kingdom taxing statute fell to be determined by the interpretation placed on the word in the decisions of the Chancery Division of the High Court of Justice in England.
Held that the Court could not apply English law where that law was not found as a fact in the case, and that, as the Special Commissioners had material before them to warrant their decision, the appeal must be refused.
Authorities reviewed.
Commissioners for Special Purposes of Income Tax v. PemselELR, [1891] A. C. 531, discussed.
At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts the Commissioners heard and determined a claim by the City of Glasgow Police Athletic Association for exemption from income tax under Schedule D in respect of the profits of a trade, namely, the holding of annual sports, carried on by the Association. The grounds of the claim were that (a) the Association was a "charity," as defined by section 30 (3) of the Finance Act, 1921, namely, "a body of persons or trust established for charitable purposes only," (b) the profits of the said trade were applied solely to the purposes of the Association, and (c) both of the conditions of paragraph (c) of subsection (1) of section 30 of the Finance Act, 1921, as amended by section 24 of the Finance Act, 1927, were satisfied, namely, (i) the trade was exercised in the course of the actual carrying out of a primary purpose of the Association and (ii) the work in connexion with the trade was mainly carried on by beneficiaries of the Association.
At the hearing of the claim it was conceded on behalf of the Commissioners of Inland Revenue (a) that the profits of the said trade were applied solely to the purposes of the Association, and (b) that, if the Association was a "charity," as above defined (which was denied), the above condition (ii) was satisfied, namely, the work in connexion with the trade was mainly carried on by beneficiaries of the charity, with the result that the Association would be entitled to the exemption claimed; and the issue before the Special Commissioners was accordingly confined to the question whether the Association was a body of persons or trust established for charitable purposes only.
The Special Commissioners allowed the claim, and, at the request of the Commissioners of Inland Revenue, stated a case for appeal to the Court of Session.
The following is a brief summary of the facts which the Special Commissioners held proved:—The Association was formed in February 1938 with the purpose of co-ordinating the various athletic and sporting activities of the members of the City of Glasgow Police Force. Under its rules its objects were (rule 2) "to encourage all forms of athletic sports and general pastimes"; membership was restricted to officers and ex-officers of the Force; the Chief Constable was president, the Assistant Chief Constables and Superintendents were vice-presidents; management was vested in an executive committee, and there were eight divisional committees (one for each police division) and a number of sectional committees (each concerned with a separate athletic or sporting activity); sections were devoted, inter alia, to angling, athletics, badminton, billiards, bowls, boxing and wrestling, cricket, football, golf, rugby, shooting, and swimming; social activities, such as dances, were arranged by the divisional committees; all resolutions passed at all meetings were subject to the approval of the Chief Constable; membership (originally a condition of service for new entrants to the Force) was entirely voluntary; the subscription was 3d. per week for serving officers and 5s. per annum for ex-officers. During the year ending 30th September 1950 the revenue of the Association was £2778, of which £1225 was derived from subscriptions of members (representing 85 per cent of the Force) and £1214 from the profit on the annual sports which constituted the "trade" in question in the case. The expenditure was £2123, which, to the extent of £1850, represented the "net expenses" incurred in conducting the various sectional activities. The annual sports were an amateur sports meeting, open to competitors from all over the world and attended by some 50,000 spectators who paid for admission. A few events were confined to members of the Association, and a few to members of other police forces, but the great majority were open to all amateurs. The sports were held at Hampden Park, which was made available free of charge by the Queen's Park Football Club; and judges, starters and timekeepers were supplied by the Scottish Amateur Athletic Association in order to secure recognition of the meeting as an amateur meeting. But the preliminary work of organisation, the whole work of controlling the meeting by the provision of stewards, &c., and the associated work of controlling traffic in connexion with the meeting, was all done by members of the Association. The purpose of the meeting was to provide funds for the Association, and the profits were applied solely to the purposes of the Association. The Association was affiliated to the Police Athletic Association, a central body, founded in 1928, whose constitution and rules were approved by the Secretary of State for the Home Department and the Secretary of State for Scotland The relations between the Association and the Glasgow Police Force were very close, the Association being regarded as an essential part of the police organisation in respect that it played an important part in the maintenance of health, morale and esprit de corps within the Force, attracted recruits, contented existing officers, and promoted good relations with the public through competition in athletic events.
The contentions on behalf of the Association were stated as follows:—"That the Association was a body of persons established for charitable purposes only and (it being conceded on behalf of the [Commissioners of Inland Revenue] that the profits of the said trade of holding annual sports were applied solely to the purposes of the Association, and that the work in connexion with the said trade was mainly carried on by beneficiaries of the Association), the Association was accordingly entitled to exemption, under section 30 (1) (c) of the Finance Act, 1921 (as amended by section 24 of the Finance Act, 1927) from income tax under Schedule D in respect of the profits of the said trade."
The contentions for the Commissioners of Inland Revenue were:—"That, having regard to the wide nature and extent of the objects for which the Association was formed, it was not a body of persons or trust established for charitable purposes only, and was therefore not entitled to the exemption claimed."
The Special Commissioners gave their decision in the following terms:—"We, the Commissioners who heard the said claim, entirely accepted that the object specified in rule 2, namely, “to encourage and promote all forms of athletic sports and pastimes,” was not, per se, a charitable object, “apart from special concomitants” (see Commissioners of Inland Revenue v. National Anti-Vivisection SocietyTAX, 28 T. C. 311, per Lord Wright at p. 353). On the facts of this case, however, we found the following “special concomitants,” viz.: (a) The object specified in rule 2 was the object of an Association consisting exclusively of officers and ex-officers of the City of Glasgow Police Force (rule 8). (b) The Chief Constable was the President and the Assistant Chief Constables and Superintendents were the Vice-Presidents of the Inland Association (rule 3). (c) All resolutions and decisions passed at all meetings of the Association were subject to the approval of the Chief Constable (rule 23), who therefore retained the ultimate control of the Association. (d) The Association was regarded by Association the senior officers of the City of Glasgow Police Force as an essential part of the police organisation. (e) The Secretary of State for the Home Department and the Secretary of State for Scotland had approved the constitution and rules...
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