Gilbert (HM Inspector of Taxes) v Hemsley
| Jurisdiction | Scotland |
| Judgment Date | 09 July 1981 |
| Date | 09 July 1981 |
| Court | Court of Session (Inner House - First Division) |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
Income tax, Schedule E- Higher paid employee-Whether legally enforceable ban on private use of car- Whether Commissioners' findings of fact supportable-Finance Act 1976, s 64(1), s 72(6)(a), s 75(f).
H was an employee of a plant hire company. He was in higher-paid employment for the purpose of Chapter II of Part III of the Finance Act 1976. He normally worked on week days but was on call seven days a week. His duties were to maintain and repair the company's civil engineering plant at its premises and at sites. A car, equipped with radio telephone which he was required by the the company to take home at night, was made available to him. He used the car to travel to the company's yard, to sites and to transport workmen to and from work, taking the car home at night. He owned another car which he used for domestic purposes. H was assessed to tax under Schedule E on the footing that for the purposes of s 72(6)(a) of the 1976 Act the terms on which the car was made available to him did not prohibit "private use" (as defined in s 72(5)(f): "use otherwise than for his business travel") and that the journeys he made in the car between his home and the company's premises was such private use. The General Commissioners allowed H's appeal accepting his submission that under the terms of his agreement with the company he was prohibited from using the car for private purposes and in fact made no such use of it. The Crown appealed. In the High Court the Crown contended that the Commissioners could not have reached their conclusion if they had understood and applied the law. It accepted for the Crown that the fact that H did not use the car for domestic purposes was a finding of fact which could not be challenged, but that when he used the car to travel to and from his home, whether to the company's premises or sites or otherwise, that travel was not something that he was "necessarily obliged to do in the performance of the duties of his employment" within s 72(5)(c) and therefore was private use within s 72(5)(f). Secondly that the words "prohibits" in s 72(5)(f) required there to be an express and legally enforceable ban on private use: the arrangement between H and the company fell short of this.
Held, in the Chancery Division, dismissing the Crown's appeal that the Commissioners had applied the proper tests and having heard the evidence must have been satisfied that on the special facts of the case H's home was his working base, that he was travelling in the performance of his duties whether he went from home to the premises or to a site or to collect workmen and take them to and from work. The Commissioners had not misconstrued s 72(6)(a) or failed to appreciate that what was required was a contractual prohibition of private use of the car. Though this may have been an inference from the facts and not a primary finding it was a conclusion to which the Commissioners were entitled to come.
Stated under the Taxes Management Act 1970, s 56, by the Commissioners for the General Purposes of the Income tax for the Division of Scunthorpe in the County of Humberside for the opinion of the High Court of Justice.
1. At a meeting of the said General Commissioners held at the Civic Centre, Scunthorpe, on 19 March 1980, Mr. Philip Hemsley (hereinafter called "the Respondent") appealed against an assessment to income tax under Schedule E made upon him for the year 1977-78, in the sum of £350 in respect of a car made available to him by his employer.
2. The question for our determination was whether a car made available to the Respondent by his employer was to be deemed to have been made available to him in the year 1977-78 for his private use under the provisions of s 72(6)(a), Finance Act 1976, because: (a) the terms on which it was made available did not prohibit private use; and/or (b) such use was made of the car in that year. It was not disputed before us that if the car was properly to be deemed to have been made available for his private use, the Respondent was assessable to tax under Schedule E by virtue of the provisions of s 64(1), Finance Act 1976.
3. Evidence was given by the Respondent and the only document produced was a copy contract of employment which is appended hereto and marked "exhibit" and which forms part of this Case(1).
4. The following facts were admitted or proved:-
(i) The Respondent was a director of M. Gould (Plant Hire) Ltd. (hereinafter called "the Company") of Colin Road, Scunthorpe, and in 1977-78 his earnings were £5,633, excluding the benefit of £350 as assessed by the Inland Revenue. During the year he had use of an Opel Rekord car, first registered in 1972, which had been previously used by the managing director of the Company. The Respondent had no shares in the Company.
(ii) The Respondent's duties were to maintain and repair the Company's civil engineering plant at its yard in Colin Road, Scunthorpe, and also at various building sites in Yorkshire, Humberside and Lincolnshire. He had three maintenance men under his charge. The Respondent lived at Burton-on-Stather, a village some six miles from the Company's yard. The Respondent was married with a family. He owned a car of his own, and the drive of his house at Burton-on-Stather was wide enough to accomodate both his own car and that which belonged to the Company. The Respondent did not provide a garage at his home at Burton-on-Stather as this was used for his own vehicle. The drive being sufficiently wide for the two cars to stand side by side there was no necessity for the Respondent to move the Company's car to gain access to his own. The Respondent's duties included driving from the Company's yard to building sites and between his home at Burton-on-Stather and sites. He was required by the Company to take the car home at night because of risk of vandalism if it was left in the Company's yard and as there was often no room for it there.
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(iii) The car was five years old and had registered more than 100,000 miles when made available to the Respondent. As a result of its use on building sites it was usually dirty with mud and grease and unfit to be used as anything but a working car. The Respondent did not in fact use it for domestic purposes,
understanding that he was forbidden from so doing and preferring to use his own personal vehicle. The car was equipped with a radio telephone by which communication was maintained with the Company's headquarters at its yard and with other Company vehicles, most of which were similarly equipped. (iv) The Respondent normally worked from Monday to Friday and also on Saturday morning but he was on call seven days per week. He was on the telephone at home and the Company paid for this. There were no set times for commencement and cessation of work; these varied from day to day. The Respondent could be and was sometimes called out from his home in the evening in the event of a van intended to take men home from a site failing to start. He was on call at all times when he left home in the car. Sometimes he would travel between Burton-on-Stather and a site two or three times a week but then some weeks might elapse before such a journey again became necessary. He frequently travelled from a site to Burton-on-Stather. Despite the wording of the contract of employment the Respondent never claimed any overtime payments but he had time off in lieu of overtime.
(v) When he joined the Company the Respondent...
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