Commissioners of Inland Revenue v Miller
| Jurisdiction | Scotland |
| Judgment Date | 07 July 1928 |
| Date | 07 July 1928 |
| Docket Number | No. 93. |
| Court | Court of Session |
Lord President (Cylde), Lord Sands, Lord Blackburn, Lord Morison.
RevenueIncome taxSuper-taxItems to be included in return of total incomeAnnual value of mansion-house and policy parksRight under trustRight to occupy and possessWhether a proper liferent or analogous to a proper liferentEffect of payment of income tax under Sched. A by occupier without right of reliefIncome Tax Act, 1918 (8 and 9 Geo. V. cap. 40), secs. 4 and 5 (1), Sched. A, No. VII., Rules 1 and 2, and Sched. B.
Fee and LiferentLiferent or right of occupancyWidow's right to occupy and possess mansion-house.
A testator conveyed his estate to trustees, and directed them, in the event, which happened, of his death without issue survived by his wife, to hold and retain his lands and estate of M., and out of the income of his estate generally to make various payments including (1) all feu, blench, and teind duties, and all public, parochial, and local burdens of every kind exigible furth of his heritable estates, (2) all sums necessary to keep in repair M., its gardens, policies, and furniture, and to keep up the game, and (3) all sums necessary to keep up the buildings, fences, woods, drains, plantations, &c., on the estates. He further directed them to allow his wife to occupy and possess during her lifetime, free of rent or taxes (both landlord's and tenant's) the mansion-house of M. with the offices, furniture, and certain other subjects including the game. He also directed that the wages of the foresters should be paid by the trustees, but that the wages of the gamekeepers and gardeners should be paid by his wife.
The testator having died, the trustees, in terms of his settlement, allowed his wife to occupy and possess the mansion-house and other subjects, and she occupied and possessed them during the year ended 5th April 1920.
An additional assessment to super-tax for the year ended 5th April 1921 was made upon her on a sum representing the amounts of the assessments to income tax for the year ended 5th April 1920 (1) on the annual value of the mansion-house and policy parks, (2) on the assessable value of the policy parks and the other subjects, and (3) on the amount of the rates on the mansion-house and policy parks and of the wages paid by the trustees. Against this assessment she appealed.
Held (diss. Lord Morison) (1) that the appellant was neither a proper liferenter, nor in a position analogous to that of a proper liferenter, of the lands, but had a mere right of personal occupation, and, accordingly, that the annual value of the lands did not form part of her income for super-tax purposes; (2) that the facts that she actually occupied the lands, that tax under Schedule A was charged upon occupiers, and that there was no statutory method whereby she could pass the burden of the tax on to the proprietor, were not sufficient to cause the annual value to be deemed to be part of her total income for super-tax purposes, in respect that that tax could not be charged on an income which did not exist; (3) that, in any event, the trustees and not the appellant were the occupiers within the meaning of the Act; (4) that, as her right of occupation of the policy parks was not one which could be converted into money, their assessable value under Schedule B was not part of her total income for super-tax purposes; and (5) that the right to have rates and foresters' wages paid by the trustees was a mere pertinent of the right to occupy and possess M., and, accordingly, that the appellant was not liable in super-tax in respect of these payments.
Johnstone v. Mackenzie's TrusteesELR, 1912 S. C. (H. L.) 106, [1912] A. C. 743, distinguished.
Inland Revenue v. Wemyss, 1924 S. C. 284, commented on.
The Honourable Dame Eveline Miller, widow of Sir James Miller of Manderston, Baronet, appealed to the Commissioners for the Special Purposes of the Income Tax Acts against an additional assessment to super-tax on the sum of 1500 made upon her for the year ended 5th April 1921.* She had previously been assessed
to super-tax for that year, but the assessment had not included the amounts of the assessments to income tax for the year ended 5th April 1920 in respect of the annual value of the mansion-house and policy parks of Manderston under Schedule A, and in respect of the assessable value of the policy parks and part of a farm under Schedule B, these subjects having been occupied and possessed by the appellant during the year in question under the terms of her husband's will. Nor had it included the sums paid by her husband's trustees in rates on the mansion-house and policy parks, and in wages. The Commissioners refused the appeal, and, at the request of Lady Miller, stated a case for the opinion of the Court of Session as the Court of Exchequer in Scotland.
The case set forth that the following facts, inter alia, were admitted or proved:(1) The appellant is the widow of Sir James Miller of Manderston, Bart., who died without issue on 22nd January 1906. (2) Sir James Miller, by a trust-disposition and settlement, dated 4th December 1901, which, together with a codicil, dated 26th December 1901, was recorded in the Books of Council and Session on 26th January 1906, gave, inter alia, the following directions:Certain passages were quoted from the trust-disposition and settlement, which was annexed to, and formed part of, the case. The following is a summary of the settlement so far as relevant:Sir James Miller of Manderston nominated trustees, and conveyed to them all and sundry his lands, heritages, and whole estate and effects, heritable and moveable, real and personal, belonging to him at the time of his death, in trust for the uses, ends, and purposes after mentioned. After giving directions for the payment of his debts and other expenses, and of certain annuities and legacies, he made provision for the events, which did not happen, of his being survived by a son and of his being survived by a daughter. In the sixth place he dealt with the event, which happened, of his death without issue, and directed his trustees: (Sixth) To hold and retain my said lands and estate of Manderston and others, and out of the income of my estate generally (including the said lands and estate of Manderston and others) to make the various payments before provided for in the event of my death leaving a son. These payments were: (first) all feu, blench and teind duties, and all public parochial and local burdens of every kind exigible furth of my heritable estate; (second) all sums that shall appear to them to be proper and necessary to be expended from time to time for putting or keeping in repair the mansion-house of Manderston, and offices, gardens, policies and pleasure grounds thereof, and for adding to the furniture and other effects in said mansion-house, and for keeping up the game on my said lands and estate, all which it is my desire that my trustees shall keep up and maintain at their discretion during the subsistence of this Trust; (third) in the absolute and uncontrolled discretion of my Trustees, all sums which shall appear to them to be necessary or proper to be expended in keeping up
and maintaining the buildings, fences, drains, roads, and plantations on the said lands of Manderston and others, and my other heritable estate in good condition and repair, and for erecting any additional buildings, or making any additional fences, drains, roads or plantations, or executing any other works of any kind on the said lands and others which they may consider necessary for the improvement, management, cultivation or letting of the same, or for the working or letting of the stone quarries or minerals therein. The directions in the event of his dying without issue continued as follows: (Seventh) To allow my said wife to occupy and possess during her lifetime, free of rent or taxes (both landlord's and tenant's), the said mansion-house of Manderston and offices and furniture and other effects therein, and the game on my said lands of Manderston and others, and the other subjects of which I have directed my said wife to have the liferent in the event of my death survived by a daughter: And I direct my Trustees during the liferent of my said wife to pay the wages of the foresters employed in connexion with the said establishment, the wages of the gamekeepers and gardeners to be paid by my said wife. The other subjects referred to were: the said mansion-house of Manderston and furniture and other effects therein, and stables, coach-houses and other offices, policies (including grass parks within the same), gardens and pleasure grounds pertaining thereto; as also the dairy and other buildings at Buxley and the pertinents thereof, and whole fittings therein, whether fixed or moveable, with the free use and enjoyment of the game on my said lands and estate of Manderston and others.
The case further stated:(3) The appellant did in fact, as contemplated in the said trust-disposition and settlement, occupy and possess the mansion-house and lands at Manderston during the year ended 5th April 1920, and for the said year the assessments under Schedules A and B of the Income Tax Act on the house and lands so occupied by her were:
| Policy parks, Schedule A | 165 | 10 | 0 |
| Policy parks, Schedule B | 452 | 0 | 0 |
| Part farm, Briery Hill, Schedule B | 89 | 5 | 0 |
| Mansion-house, Schedule A | 319 | 10 | 0 |
No question arises as to the appellant's liability in respect of the Briery Hill subjects, which were rented by the appellant from the trustees. (4) The trustees under the authority, above set out, of the trust-disposition and settlement paid the following sums during the said year out of income received by them under deduction of income tax:
| Forester's wages | 60 | 0 | 0 |
| Rates on mansion-house | 65 | 0 | 0 |
| Rates on Policy parks | 32 | 0 | 0 |
(5) The appellant had been assessed to super-tax for the year ended 5th April 1921 without the inclusion of any amount to...
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