Fitzpatrick v Commissioners of Inland Revenue (No.2)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Keith of Kinkel,Lord Templeman,Lord Jauncey of Tullichettle,Lord Browne-Wilkinson,Lord Mustill |
| Judgment Date | 17 February 1994 |
| Judgment citation (vLex) | [1994] UKHL J0217-2 |
| Court | House of Lords |
| Docket Number | No. 1 |
| Date | 17 February 1994 |
[1994] UKHL J0217-2
Lord Keith of Kinkel
Lord Templeman
Lord Jauncey of Tullichettle
Lord Browne-Wilkinson
Lord Mustill
House of Lords
For the reasons given in the speech to be delivered by my noble and learned friend Lord Templeman, which I have had the opportunity of reading in draft and with which I agree, I would dismiss the Scottish appeals and allow the appeals by the Revenue in the English cases.
My Lords,
These Scottish and English appeals are concerned with the expenses of ten journalists. Each journalist worked for a newspaper and purchased and studied copies of other newspapers and periodicals. The question is whether the sums expended by the journalist in the purchase of newspapers and periodicals are deductible from the income of the journalist liable to income tax pursuant to section 189 of the Income and Corporation Taxes Act 1970 which, so far as material, provides:
"(1) If the holder of an office or employment is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment … or otherwise to expend money wholly, exclusively, and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
The relevant provisions of section 189 of the Act of 1970 were first enacted in section 51 of the Income Tax Act 1853 and are now reproduced in section 198(1) of the Income and Corporation Taxes Act 1988.
Three of the Scottish journalists worked for "The Glasgow Herald" which is a newspaper circulating throughout Scotland and two worked for "The Glasgow Evening Times" which circulates in the area of Glasgow. The proprietors of both the Scottish newspapers were George Outram and Co. Ltd. Four of the English journalists worked for the "Daily Mail" and the fifth for "The Mail on Sunday". The proprietors of these newspapers were Associated Newspapers Ltd.
Each of the ten journalists was a member of the National Union of Journalists employed on the terms of an agreement negotiated between the union and the proprietor of the newspaper. The agreement between the Scottish proprietors and the union for the period 1 July 1983 to 30 June 1984 included the following terms:
"5. Hours of Work
(a) All members will have the right to work a four day week, (b) All members of the Chapels employed full time shall not exceed an average of 34 hours per week if exclusively engaged in night work, 36½ hours if exclusively engaged in day work …"
12. "Expenses
(a) Expenses will be paid to Chapel Members who incur expenditure in the course of their duties, in accordance with Appendix B of this agreement."
Appendix B dealt with meal expenses, car expenses, clothing, telephones, removal expenses and:
"3. Newspaper and TV licence expenses
In compliance with Inland Revenue regulations all expenses associated with the purchase of newspapers and television licence were grossed up and consolidated into salaries with effect from 1st October 1982. Journalists employed by the company at that time have the option of having these expenses paid on a monthly or six-monthly basis."
For the purpose of the present proceedings it was agreed between the parties that each journalist in the Scottish appeals received from his employer in 1985/6 a newspaper allowance of £1063, that this allowance formed part of his emoluments for the year for the purposes of section 183 of the Act of 1970 and that the journalist spent at least £1063 in purchasing newspapers and periodicals. The question in the Scottish appeals was whether the sum of £1063 was deductible from the income of each journalist as expenses under section 189 of the Act of 1970.
In the case of the English newspapers it was agreed between the parties that each journalist in the English appeals received from his employer in 1985/6 a newspaper allowance, that the allowance formed part of his emoluments for the purposes of section 183 of the Act of 1970 and that the journalist spent an amount at least equal to the allowance in the purchase of newspapers and periodicals. The question in the English appeal was whether the amount of the allowance thus spent was deductible from the income of each journalist as expenses under section 189 of the Act of 1970.
In the Scottish cases the special commissioners refused the claims of each journalist to deduct the expenses of purchasing newspapers and periodicals on the grounds that the journalist read in order to prepare himself for his duty and that the reading was not undertaken "in the performance" of his duties. The First Division of the Inner House of the Court of Session (the Lord President (Hope) and Lord Cullen, Lord McCluskey dissenting) upheld the commissioners and the journalists now appeal.
In the English cases the general commissioners upheld the claims of each journalist to deduct the expense of purchasing newspapers and periodicals on the grounds that the journalist was reading "in the performance" of his duties. That decision was upheld (save in one instance) by Warner J. and all the claims were upheld by the Court of Appeal (Ralph Gibson, Mann and Nolan L.J J.). The revenue now appeal.
The five journalists involved in the Scottish appeals were employed respectively as:
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(1) An assistant picture editor. He purchased nine daily newspapers, three Sunday newspapers and the following periodicals: "Radio Times", "TV Times", "Woman", "Woman's Own", "Cosmopolitan", "Private Eye", "Ideal Home" and "Practical Gardener".
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(2) A feature writer and weekly columnist. She purchased five newspapers every day and other daily papers from time to time. On Sundays she took five or six newspapers. She took some magazines regularly as useful background reading including "The Economist", "History Today", "Illustrated London News", "Listener", "Spectator", "Private Eye", "Life", "Radio Times", "TV Times" and "Time Out" and others such as "Woman", "Woman's Own", "Cosmopolitan" and "She" when it seemed from the cover they might have something useful for her work.
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(3) A staff reporter. He bought four daily and two Sunday papers. He also bought "The Spectator", "New Scientist", "Newsweek", "Time", "The Economist", "New Society", "Listener", "Punch" and "Private Eye" regularly and on occasion, "Vogue" and "Good Housekeeping". He sometimes bought "The Times Educational Supplement".
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(4) A sub-editor. He nearly always bought five daily newspapers and one of the quality English papers. On Sundays he bought five newspapers. He also bought a variety of magazines as they appeared such as "The Listener", "Radio Times", "TV Times", "Exchange and Mart", "Scottish Field", "Homes and Gardens", "UK Press Gazette", "Woman" and "Woman's Own".
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(5) A sports sub-editor. He bought eight daily papers, five Sunday papers and also the "Radio Times", "TV Times", "Punch", "Tennis World", "Cosmopolitan", "Soccer Journal" and a number of other magazines.
The five journalists involved in the English appeals were employed respectively as:
(6) A picture editor. He purchased all the daily and Sunday newspapers and on each day two or three editions of the evening newspapers. He also purchased each publication of the "British Journal of Photography", "SLR", "Amateur Photographer", "Paris Match", "Stern", "Creative Camera", "Epoca", "Punch", "Time", "Sussex Courier", "Life", "Express" and "Star", "Illustrated London News", "Tatler", "Country Life", "Bunte", "Cosmopolitan" and "Melbourne Newsweek".
(7) A news sub-editor. He purchased eight daily papers, seven Sunday papers. "Radio Times" and "TV Times", "Time", "Smash Hits", "Spectator", "Economist", "New Statesman", "Private Eye", "Newsweek" and "UK Press Gazette" when he considered it necessary.
(8) A sports reporter. He purchased all the dailies and eight Sunday newspapers. He regularly bought the "Cricketer", "Wisden Cricket Monthly", "Shoot", "World Soccer", "Match Weekly", "Spectator", "New Statesman", "Private Eye", "Newsweek", "Time", "UK Press Gazette" together with other periodicals and foreign newspapers which he considered relevant.
(9) A staff photographer. He purchased nine daily papers, and two or more Sunday papers and in addition he bought "The Catholic Pictorial", "The Herald" and "Universe".
(10) A news layout journalist. He purchased all the daily and Sunday newspapers and in addition the "New Statesman", "Newsweek", "Time", "Campaign", "UK Press Gazette", "Kent Messenger", "TV Times" and "Radio Times".
Each journalist read the newspapers and periodicals which he purchased in his spare time mostly at home but sometimes while travelling to and from work and sometimes in his spare time at work. Some of the journalists kept cuttings for future reference. The evidence given by or on behalf of each journalist giving reasons for such reading was similar to and almost identical with the other cases. The journalist said that he read newspapers because he must know what has happened and what is likely to happen. He can find out what is happening by reading newspapers and periodicals. He needs to have an up to date knowledge of all aspects of the news. He has to know what other newspapers are doing about a particular news item, what stage various issues in a story have reached, judge every story in relation to everything else going on, avoid repeating stories appearing in other newspapers the previous day and take the story forward where it is a continuing event. In addition, newspapers and periodicals provide the journalist with...
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