Gallic Leasing Ltd v Coburn (Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 13 February 1991 |
| Date | 13 February 1991 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Fox, Balcombe and Stocker L JJ.
Mr Alan Moses QC and Mr Launcelot Henderson (instructed by the Solicitor of Inland Revenue) for the Crown.
Mr David Goldberg QC (instructed by Hewitt Woolacott & Chown) for the taxpayer.
The following cases were referred to in the judgment of the court:
IR Commrs v Hood Barrs TAX(1959) 39 TC 683
Thompson v Goold & Co ELR[1910] AC 409
Corporation tax - Group relief - Claim - No prescribed form of claim - Time-limit - Claim to be made within two years of end of accounting period - Whether informal claim valid - Whether claim must identify companies surrendering losses and amount of losses to be surrendered -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) (replaced by theIncome 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 Inland Revenue against a decision of Vinelott J ([1989] BTC 143) that mere notification by a company to the inspector that profits would be covered by group relief, without specifying a proposed surrendering company or the amount to be surrendered, was a valid claim for group relief.
The taxpayer company and five other members of the same group all made up their accounts to 31 March. During the accounting period to 31 March 1982 each of the five companies sustained trading losses which were capable of being surrendered for group relief.
On 1 October 1982 the inspector sent a notice of assessment to the taxpayer for the period to 31 March 1982 against which the taxpayer's accountants lodged an appeal stating that all profits would be covered by group relief. On 30 June 1983 a copy of the taxpayer's accounts was submitted in support of the appeal. A note to the accounts set out the corporation tax payable on the profits for the period and an equivalent amount of group relief.
No further details of the claim were submitted within two years of 31 March 1982 when the two-year period for making claims, provided byIncome and Corporation Taxes Act 1970 section 264 subsec-or-para (1)sec. 264(1)(c) of the 1970 Act, expired.
On 4 December 1986 the inspector refused relief on the grounds that no valid claim had been made within the two-year time limit because a claim had to specify the accounting periods of the taxpayer and the surrendering companies to which the claims related and also the amount of the losses to be surrendered.
The taxpayer contended that, since no determination as to the form of claim for group relief had been made by the Board of Inland Revenue under the Taxes Management Act 1970 section 42 subsec-or-para (5)Taxes Management Act 1970, sec. 42(5), the notice of appeal and the note to the accounts together amounted to a valid claim within the two-year time limit, and all further information to explain and justify the claim could be supplied outside the two-year period.
Held, allowing the Revenue's appeal:
1. A claim had to be a claim to losses or reliefs surrendered by a particular company and each claim to losses of a surrendering company was a separate claim. That was emphasised by the provisions ofIncome and Corporation Taxes Act 1970 section 264 subsec-or-para (1)sec. 264(1)(c) which related each claim to a particular surrendering company. Since the two-year time limit was tied to the surrendering company's accounting period, a valid claim must identify the relevant accounting period and the surrendering company. A valid claim must also relate to specific losses or reliefs although the amount need not be immediately quantifiable if figures and calculations were not yet available.
2. In the present case the documents relied on as constituting the claim did not constitute a valid claim. They gave no indication of the identity of a surrendering company or companies or of the amount to be surrendered by any company.
By a notice of appeal dated 31 March 1989 the Revenue appealed against a decision of Vinelott J. The grounds of the appeal were that the judge erred in law in holding that an appeal against assessment to estimated corporation tax for the period to 31 March 1982, taken together with the accounts and computation for that period subsequently submitted, constituted a valid claim for group relief under theIncome and Corporation Taxes Act 1970 section 258 subsec-or-para (1)Income and Corporation Taxes Act 1970, sec. 258(1) made within the two-year time limit specified byIncome and Corporation Taxes Act 1970 section 264 subsec-or-para (1)sec. 264(1)(c) of the Act.
This is an appeal by the Revenue from a decision of Vinelott J, that a valid claim had been made for group relief under Income and Corporation Taxes Act 1970 section 258sec. 258 of the Income and Corporation Taxes Act 1970. The claim was made by Gallic Leasing Ltd ("the taxpayer company") in respect of its profits for the accounting period ending on 31 March 1982.
Income and Corporation Taxes Act 1970 section 258 subsec-or-para (1)Section 258(1) of the 1970 Act provides that relief for trading losses may be surrendered by one company within a group of companies and on the making of a claim by another company in the same group may be allowed to that company by way of relief from corporation tax.
The subsection is in the following terms:
Relief for trading losses and other amounts eligible for relief from...
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Gallic Leasing Ltd v Coburn (Inspector of Taxes)
...either the surrendering companies or the amount of the relief to be surrendered by each. On 13 February 1991 the Court of Appeal [1991] S.T.C. 151 reversed Vinelott J.'s decision, holding that it was essential to a valid claim for group relief that the surrendering companies be identified ......
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R v Commissioners of Inland Revenue ex parte Unilever Plc
...to claim, and in quantum subsumed the value of their claims, they did not in fact alert the Revenue to these matters. Gallic Leasing Ltd v Coburn (Inspector of Taxes) [1991] 1 WLR 1399 construes the equivalent statutory time provision in respect of group relief claims as favourably as conce......