Gallic Leasing Ltd v Coburn (Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 02 March 1989 |
| Date | 02 March 1989 |
| Court | Chancery Division |
Chancery Division.
Vinelott J.
Mr. David Goldberg Q.C. (instructed by Hewitt Woollacott & Chown) for the taxpayer company.
Mr. Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.
The following cases were referred to in the judgment:
I.R. Commrs. v. Hood Barrs TAX(1959) 39 T.C. 683
Proctor & Gamble Ltd. v. Taylerson (H.M.I.T.) TAX[1988] BTC 462
Thompson v. Goold & Co. ELR[1910] A.C. 409
Corporation tax - Group relief - Claim - No prescribed form of claim - Time-limit - Claim to be made within two years of end of accounting year - Whether informal claim valid - Whether claim must identify companies surrendering losses and amount of losses to be surrendered -Taxes Management Act 1970 section 42 subsec-or-para (5) section 114Taxes Management Act 1970, sec. 42(5), 114; Income and Corporation Taxes Act 1970 section 258 subsec-or-para (1) section 264 subsec-or-para (1)Income and Corporation Taxes Act 1970, sec. 258(1), 264(1) (now Income and Corporation Taxes Act 1988 section 402 subsec-or-para (1) section 412 subsec-or-para (1)Income and Corporation Taxes Act 1988, sec. 402(1), 412(1)).
This was an appeal by the taxpayer company against a decision of the General Commissioners that an informal claim indicating an intention to claim group relief did not constitute a claim as required by theTaxes Management Act 1970 section 42 subsec-or-para (5)Taxes Management Act 1970, sec. 42(5).
The taxpayer was assessed to corporation tax for the year to 31 March 1982. It lodged a notice of appeal on 31 October 1982 and applied for a postponement of the tax. The notice included a note that profits would be covered by group relief within the Income and Corporation Taxes Act 1970 section 258Income and Corporation Taxes Act 1970, sec. 258. On 30 June 1983 a copy of the company's accounts and computations were submitted in support of the appeal and Note 6 set out the amount claimed to be subject to group relief.
The tax inspector asked for further details after which there was no communication until January 1985 when the inspector again requested further particulars. By that time, the two-year period within which a claim for group relief could be made had elapsed. On 4 December 1986, the inspector refused relief on the grounds that no claim had been made within the two-year time limit prescribed. He said that a claim had to specify the accounting periods of the taxpayer and the surrendering companies to which the claim related and the amount claimed and had to be signed by or on behalf of the taxpayer.
The taxpayer appealed against that refusal on the grounds that a valid application had been made. The Board of Inland Revenue had not prescribed the form in which a claim for group relief should be made under the Taxes Management Act 1970 section 42 subsec-or-para (5)Taxes Management Act 1970, sec. 42(5) and, therefore, the informal claim should be regarded as a "proceeding" which should not be "deemed to be void or voidable for want of form" by virtue ofTaxes Management Act 1970 section 114sec. 114 of the 1970 Act.
The General Commissioners held that a "proceeding" in Taxes Management Act 1970 section 114sec. 114 referred only to actions taken by the Revenue and not to a claim by a taxpayer; and thatTaxes Management Act 1970 section 42sec. 42 required a claim to be in an identifiable form signed by or on behalf of the taxpayer and to contain such particulars as were required to make it intelligible. Accordingly, no claim had been made within the time limit prescribed by the Income and Corporation Taxes Act 1970 section 264 subsec-or-para (1)Income and Corporation Taxes Act 1970, sec. 264(1)(c).
The taxpayer appealed to the High Court.
Held, allowing the taxpayer's appeal:
1. Since the Board of Inland Revenue had not prescribed the form in which a claim for group relief had to be made, a claim could be made in any form. All that was required was that a company should make it clear to the tax inspector that it wished to use any reliefs available to other members of the group to which it belonged against its profits.
In the present case, the claim was made in a document (the notice of appeal) and signed by the accountants on behalf of the taxpayer. It was clear from that notice and Note 6 to the accounts and the computations sent to the inspector that the claim extended to the whole of the taxpayer's profits for the accounting period to 31 March 1982. The effect of those documents was the same as if the accounts had been accompanied by a letter claiming group relief under Income and Corporation Taxes Act 1970 section 258sec. 258 on the full amount of the profits shown on the profit and loss account for the period to 31 March 1982.
2. A taxpayer company in a claim under Income and Corporation Taxes Act 1970 section 258 subsec-or-para (1)sec. 258(1) need not identify the surrendering company and the amount of the losses to be surrendered. The scheme of the legislation worked perfectly well if all that the claimant was required to do was to claim group relief, whether in respect of the whole or a proportion of its profits, leaving the claim to be allowed or disallowed when its profits and the losses of the other companies in the group were finally determined and any necessary consents were obtained. Any other conclusion would produce an anomalous result.
Per Curiam: It was not necessary to decide whether a claim had to be in writing and signed by or on behalf of a claimant or whether the amount of profit in respect of which relief was claimed must be specified. Nor was it necessary to decide whether a claim for group relief was a proceeding to which Taxes Management Act 1970 section 114 subsec-or-para (1)sec. 114(1) applied. However, there was no obvious reason why a provision designed to ensure that a proceeding was not invalidated by want of form or mistake, defect or omission, if the proceeding in substance and effect conformed with the intent and meaning of the Taxes Acts, should apply only to a proceeding by the Crown.
1. At a meeting of the General Commissioners for the City of London on 10 June 1987 Gallic Leasing Ltd. ("the company") appealed against an assessment to corporation tax made on the company for the accounting period 12 months ended 31 March 1982 ("the accounting period") and against the decision of the inspector to refuse group relief for that period claimed under Income and Corporation Taxes Act 1970 section 258sec. 258 of the Income and Corporation Taxes Act 1970.
2. The point at issue in these appeals was whether a valid claim to group relief was made by the company within the time limit of two years from the end of the accounting period of each surrendering company to which the claim relates as required by Income and Corporation Taxes Act 1970 section 264 subsec-or-para (1)sec. 264(1)(c) of the Act, i.e. within two years from 31 March 1982, the latest date being 31 March 1984.
3. The facts found by the Commissioners, their decision and the reasons for that decision are set out in para. 9 of the case.
4. [Paragraph 4 listed the documentary evidence before the Commissioners.]
5. [Paragraph 5 listed the witnesses who gave evidence before the Commissioners.]
6. No authorities were referred to in the course of the hearing.
7. The contentions advanced on behalf of the company were as follows:
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(2) The Commissioners of Inland Revenue had not determined underTaxes Management Act 1970 section 42 subsec-or-para (5)sec. 42(5) of the Taxes Management Act 1970 the form in which the claim to group relief should be made. Accordingly, there is no legal requirement as to the precise form of a group relief claim.
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(3) Under Taxes Management Act 1970 section 114sec. 114 of the Taxes Management Act 1970 the references to group relief in the application for postponement of tax and the corporation tax computation should be regarded as a proceeding which should not be "deemed to be void or voidable for want of form" if they were "in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts".
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(4) It follows that the notice of appeal stating "profits covered by group relief" and the entries in the final accounts and the corporation tax computation referring to group relief either individually or together constitute a claim to group relief, there being no necessity for the amount of the relief claimed to be specified.
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(5) The inspector's letters of 18 July 1983 and 18 January 1985 constituted his acceptance that a group relief claim had been made. Further evidence of such an acceptance is afforded by the inspector's failure to seek a determination of the assessment under Taxes Management Act 1970 section 54sec. 54 of the Taxes Management Act 1970.
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(6) Accordingly it should be decided that the company had made a valid claim within the appropriate time limit, that the full group relief claimed of £321,291 should be allowed and that the corporation tax assessment should be reduced to nil.
8. The contentions advanced by the inspector of taxes were as follows:
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(2) Although the Commissioners of Inland Revenue had not determined under Taxes Management Act 1970 section 42 subsec-or-para (5)sec. 42(5) of the Taxes Management Act 1970 the form in which the claim to group relief should be made, it was necessary for a claim to specify the accounting period, the surrendering company, its accounting period and the amount claimed as well as being signed by or on behalf of the company.
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(3) The references to group relief in the application for postponement and the corporation tax computation did not constitute such a formal claim.
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(4) The term "other proceedings" in Taxes Management Act 1970 section 114sec. 114 of the Taxes Management Act 1970 must be construed as relating to actions taken by the Revenue and cannot therefore refer to a claim for relief.
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(5) The...
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