Furniss v Ford
| Jurisdiction | England & Wales |
| Judgment Date | 24 June 1981 |
| Date | 24 June 1981 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
Procedure-Jurisdiction-Whether appeal "decided in principle" or "determined"-Whether demand for Case to be stated was made in time-Taxes Management Act 1970, s 56(2).
In February 1973 a County Council gave the taxpayer notice of its application for planning clearance for the development of 26 acres of his agricultural land as a site for a school. In March 1976 a price was agreed for this land by private treaty, and the Council, without ever invoking its powers of compulsory purchase, duly acquired it. The effect of para 5 of Sch 4 to the Finance Act 1974 was that "if notice to treat in respect of [the taxpayer's] interest was (or is by virtue of any enactment deemed to have been) served before 18 December 1973 on [him]", the disposal should be treated as having been made before that date; in which event no development gains tax would have been payable. Assessments on the taxpayer to development gains tax and capital gains tax in the sums of £129,450 and £150,000 respectively having been raised, he appealed, relying on the said paragraph and contending that the said notice of February 1973 was tantamount to a notice to treat.
On 15 February 1978 the Commissioners decided in principle that the matter fell within the said paragraph, and adjourned the case for the figures to be agreed; whereupon the Inspector, as a protective measure, formally expressed dissatisfaction. Figures based on the Commissioners' said decision having been agreed, on 15 March 1978 a different body of Commissioners determined the amounts assessed to development gains tax and capital gains tax at nil and £147,200 respectively. The Inspector again declared his dissatisfaction, and on 31 March 1978 requested the Commissioners to state a Case; which they signed after each party had submitted amendments thereto, including one by the taxpayer (which the Commissioners adopted) to the effect that the development gain had on 15 February been "determined as nil". The taxpayer, as a preliminary issue, applied to the High Court by way of Notice of Motion for an order that the Court had no jurisdiction to entertain the Inspector's appeal and for it to be struck out. In the High Court evidence was given both by affidavit and orally.
Held, in the Chancery Division, (i) that the Judge had an inherent jurisdiction to decide whether the Commissioners had power to state a Case, (Burston v. Commissioners of Inland Revenue 28 TC 123 followed), which jurisdiction was concurrent with that of the Divisional Court of the Queen's Bench Division, (Reg. v. Commissioners of Inland Revenue ex parte Gordon Haig Emery 53 TC 555 followed); dismissing the Notice of Motion with costs, that both appeals had been expressly adjourned on 15 February 1978 and determined on 15 March 1978 with the result that the Inspector's demand for a Case had been in time; (ii) allowing the Inspector's appeal with costs, that
as the sale by the taxpayer to the Council was a sale by private treaty and no notice to treat was served or was deemed to have been served by virtue of any enactment on the taxpayer, Sch 4, para 5 of the Finance Act 1974 could not apply to relieve the taxpayer of liability to development gains tax.Per Curiam: If a taxpayer or an Inspector wishes to contend that the other party did not declare his dissatisfaction immediately after the determination of an appeal, or did not give notice requiring the Commissioners to state a Case within the requisite period, the right course is to apply by Motion for a declaration that the Commissioners have no power to state a Case and, if necessary, an order restraining them from doing so; and to support that Motion by affidavit evidence setting out the relevant facts. It is quite wrong to seek to make amendments to the draft Case Stated setting out facts, which, if true, would show that the Commissioners had no power to state a Case.
Stated under s 56 of the Taxes Management Act 1970 by the Commissioners for the General Purposes of the Income Tax for the Northwich Division in the County of Cheshire for the opinion of the High Court of Justice.
1. At a meeting of the said Commissioners held at Northwich on Wednesday 15 February 1978 Mr. Roy Ford ("the taxpayer") appealed against an assessment to capital gains tax for 1975-76 in the sum of £150,000 and an assessment to tax on development gains from land for 1975-76 in the sum of £129,450 both assessments relating to the disposal by the taxpayer of his freehold interest in approximately 26 acres of land at Brook Farm, Holmes Chapel, Cheshire.
2. The question for our decision was whether (as contended by the taxpayer) by virtue of the letters from Messrs. Frank R. Marshall to the Cheshire County Council (County Land Agent) dated 11 January 1973 and 2 February 1973 and by virtue of a letter from Cheshire County Council (County Land Agent) to Messrs. Frank R. Marshall of 20 February 1973 the disposal fell to be treated for the purposes of Chapter I of Part III of the Finance Act 1974 as having been made before 18 December 1973 by virtue of the transitional provisions contained in para 5 of Sch 4 to the Act. (If the taxpayer's contention is right, it was common ground that the disposal was not subject to the tax on development gains on land imposed by Chapter I of Part III of the Act.)
3. The taxpayer was represented by Mr. B. G. Healey of Hall Healey Brown & Co., chartered accountants.
4. A bundle of correspondence between the taxpayer and the Cheshire County Council ("the Council") was placed before us (exhibit A), and the following facts were proved or admitted:
(2) The taxpayer owned agricultural land at Brook Farm, Chester Road, Holmes Chapel, Cheshire.
(3) In or about 1969 the taxpayer became aware that the land included about 26 acres upon which the Cheshire County Council proposed to build a school.
(4) On 20 February 1973 the Council gave notice to the taxpayer (this was the said letter of 20 February 1973 referred to in para 3) of its intention to apply to the County Planning Committee for planning clearance for the proposed development.
(5) The taxpayer offered the land for sale to the Council, and following negotiations a sale price of £160,000 was agreed between the taxpayer and the Council on 1 March 1976.
(6) The taxpayer's freehold interest in the land was conveyed to the Council on 23 March 1976.
(7) The Council did not at any time invoke its compulsory powers of purchase under the Town and Country Planning Act 1971 to acquire the land.
5. The taxpayer's agent relied on para 5 of Sch 4 to the Finance Act 1974. This provided that where a disposal was to a local authority exercising compulsory powers and a notice to treat had been given prior to December 1973 the disposal should be treated as arising before December 1973 and accordingly not chargeable to development gains. The accountant agreed that the land had not been purchased compulsorily by the Cheshire County Council and that no notice to treat had in fact been given. However, para 5(1) contained a rider regarding the notice to treat invoking deeming provisions where there was prior to December 1973 service of a notice by virtue of any enactment. The accountant maintained that the notification of February 1973 and subsequent negotiations with Cheshire County Council was tantamount to a notice to treat. He produced a letter from the firm of valuers who had negotiated the sale in support of his contention. The letter set out the course of the negotiations and indicated that there would have been little purpose in requiring Cheshire County Council to initiate compulsory purchase powers if it was claimed that the authority would be able to secure the land ultimately. Negotiations for the sale had therefore been commenced as a more appropriate alternative. The accountant made the point that the land would have attracted a far higher price as land for residential development and that the planning application of January 1973 automatically nullified any possibility of obtaining such higher price. His interpretation of "exercising" in para 5(1), Sch 4, Finance Act 1974 was "able to exercise" and he did not consider therefore that the local authority actually had to exercise compulsory purchase powers for the sub-paragraph to apply. The accountant's claim was that the notifications of January and February 1973 constituted enactments for the purpose of para 5, Sch 4, Finance Act 1974.
6. The Inspector contended that:
(2) none of the transitional provisions relating to development gains set out in Sch 4 to the Finance Act 1974 applied to the disposal;
(3) in particular, contrary to the taxpayer's contention, para 5 of Sch 4 to the Finance Act 1974 did not apply to the disposal since a notice to treat in respect of the taxpayer's interest was not served on the taxpayer by the Council before 18 December 1973, or at any time thereafter nor was such a notice deemed to have been served on him before or after that date by any enactment;
(4) the correspondence which took place between the taxpayer and the Council in February 1973 in which the Council gave notice of its intention to ask the County Planning Committee to grant planning clearance for the building of a school did not amount to a notice to treat in respect of the taxpayer's interest nor did it amount to an enactment by virtue of which a notice to treat in respect of that interest was deemed to have been served;
(5) the word "exercising" in para 5 of Sch 4, Finance Act 1974, meant "in the course of exercising";
(6) the disposal of the taxpayer's interest in the land took place after 17 December 1973 and tax on the development gain computed in accordance with s 38, Finance Act 1974, fell to be charged;
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(7) the assessment under appeal should be confirmed in the following figures:
£
Capital gains
17,750
Development gains from land
32,362.
(8) (Assessments to...
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