CURTIS BROWN, Ltd (as AGENTS for STELLA BENSON, D. H. LAWRENCE and PETER B. KYNE) v JARVIS (HM INSPECTOR of TAXES)
| Jurisdiction | England & Wales |
| Judgment Date | 18 November 1929 |
| Date | 18 November 1929 |
| Court | King's Bench Division |
NO. 740.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
Income Tax, Schedule D - Literary agents assessed (1925-26) as agents - Copyright royalties paid to persons not resident in the United Kingdom.
The Appellant Company carried on business in the United Kingdom as literary agents, acting on behalf of authors in making arrangements with publishers and others for the publication or disposal of authors' literary productions. The Company remitted to the authors the royalties less the Company's commission and expenses.
The Company was assessed to Income Tax, Schedule D, for the year 1925-26 in respect of sums paid under such arrangements to certain authors who were not resident in the United Kingdom. The books concerned were written out of the United Kingdom. The Company appealed to the Special Commissioners.
The Commissioners, in an interim decision, determined that the copyright royalties in question were not profits or gains arising from any trade, profession or vocation exercised in the United Kingdom; that they were profits or gains arising from property in the United Kingdom; and that the non-resident authors were assessable in the name of the Company under Rule 5 of the General Rules, Income Tax Act, 1918. At a further hearing the Commissioners held that the assessments should be under Case VI of Schedule D and that they should be in the amount of the royalties less the agents' commission and incidental expenses, so far as they related to the royalties brought into charge, and not, as contended on behalf of the Revenue, without any such deduction. Both parties appealed.
Held, that the royalties were annual profits or gains arising from property in the United Kingdom and so were assessable to Income Tax under Schedule D; and that allowance should be made in the assessments for the expenses indicated.
Stated under the Income Tax Act, 1918, Section 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 3rd February, 1928, for the purpose of hearing appeals, Curtis Brown, Limited, (hereinafter called the "Appellant Company") appealed against assessments to Income Tax made upon it as agent for Miss Stella Benson, Mr. D. H. Lawrence and Mr. Peter B. Kyne, in the sums of £106, £631 10s. and £1,449 5s.respectively for the year ending 5th April, 1926, by the Additional Commissioners of Income Tax for the Division of St. Paul, Covent Garden, under the provisions of Schedule D of the Income Tax Acts.
2. The Appellant Company carries on the business of literary agents in Henrietta Street, Covent Garden, London.
3. Miss Benson, Mr. Lawrence and Mr. Kyne are authors. Miss Benson resides in New York, Mr. Lawrence in Italy and Mr. Kyne in California. None of these is a person residing in Great Britain.
4. The Appellant Company in the course of its business as literary agent acts on behalf of authors in making arrangements with publishers and others for the publication or disposal of an author's literary productions. The procedure usually adopted is that the author sends the manuscript of the literary production to the Appellant Company who submits it to publishers who are likely to accept it. If the publisher is desirous of publishing the production or of purchasing the author's rights in the work or otherwise dealing with it, the publisher's terms for the acquisition of the work are incorporated in a form of contract between the author and the publisher which is prepared in duplicate. One part is executed by the publisher and sent with the counterpart to the Appellant Company who in turn forwards the documents to the author. If the author approves of the contract the counterpart is signed by him and returned to the Appellant Company who delivers it to the publisher. The contract usually provides that the publishers will account to the Appellant Company for any royalties payable under the contract, and the Appellant Company remits to the author the amount of such royalties after deducting therefrom its commission and any incidental expenses incurred by it.
5. In May, 1919, Miss Benson (in the manner above described) entered into a contract with Macmillan & Co., Ltd. for the publication in the British Empire, except Canada, of a novel written by her and entitled "Living Alone" on the terms that the publishers should pay her, through the Appellant Company a royalty of 15 per cent. on every copy sold up to 2000 copies and 20 per cent. on all copies sold above 2000 and a royalty of 4d. a copy on every copy sold in the Colonial Edition. A copy of this contract is attached hereto and forms part of this Case.(1) The whole of the work was written abroad and the contract was signed by Miss Benson in America.
6. In April, 1920, Mr. Lawrence (in the manner above described) entered into a contract with Martin Secker whereby it was agreed that the author should assign to the publisher the exclusive right of printing and publishing in book form in the United Kingdom, its Colonies and Dependencies, a new work written by the author entitled "Women in Love" in consideration of the payment by the publisher to the author of a royalty of 1s. per copy on the first 2000 copies, 1s.6...
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