Glenrothes Development Corporation v Commissioners of Inland Revenue
| Jurisdiction | Scotland |
| Judgment Date | 26 November 1993 |
| Docket Number | No. 19. |
| Date | 26 November 1993 |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION
Revenue—Heritable property and conveyancing—Stamp duty exigible on conveyance on sale—Value added tax included in price—Whether consideration for sale included value added tax—Meaning of "consideration for the sale"—Finance Act 1963 (cap. 25), sec. 55(1)1
Words and phrases—Statutory interpretation—"Consideration for the sale"—Finance Act 1963 (cap. 25), sec. 55(1)1
Section 55(1) of the Finance Act 1963 enacts that the stamp duty on a "conveyance on sale" under sec. 54 of the Stamp Act 1891 shall be charged "by reference to the amount or value of the consideration for the sale". The appellants purchased some ground from a company for £1,750,000 plus £262,500 value added tax, the company having elected to waive the exemption of land from value added tax in terms of para. 2 of Sched. 6A to the Value Added Tax Act 1983 (as amended). Having paid the price and value added tax, a question arose as to whether the value added tax element was exigible to stamp duty. The respondents held that it was. The appellants then appealed by stated case to the Court of Session. The question posed related to the construction of the words "the amount or value of the consideration for the sale" and whether that was apt to include value added tax on the price of heritage.
Held (1) that the sellers, having exercised their right to waive the exemption to value added tax, had to charge that tax and account for it on the supply they were making to the appellants which meant both that the sellers were not obliged to deliver a disposition and that the appellants could not enforce the contract of sale until that price and value added tax had been paid; and, accordingly, (2) that, there being no ambiguity in the meaning of "consideration", the value added tax formed part of the consideration for sale as that expression was ordinarily understood; and question answered accordingly.
Dicta in Cape Brandy Syndicate v. Inland Revenue CommissionersTAX (1921) 12 T.C. 358 at p. 366 perRowlatt J.; Partington v. Att.-Gen.ELR (1869) L.R. 4 H.L. 100 at p. 122 per Lord Cairns; and Ross & Coulter v. Inland RevenueSC1948 S.C. (H.L.) 1 at p. 10 perLord Thankerton applied.
Observed that where there was no ambiguity in taxing statutes the court had no jurisdiction to alter the meaning of the words used, even if a harsh result followed.
Glenrothes Development Corporation purchased a plot or area of ground at Glenrothes from Ewart plc for £1,750,000 plus £262,500 value added tax. A question arose as to whether, for stamp duty purposes, the consideration for which the disposition was granted included the value added tax element. The Commissioners of Inland Revenue decided that it did and assessed stamp duty accordingly. The corporation thereafter requested that the commissioners state a case for the opinion of the Court of Session. The first question is the stated case was directed to whether or not stamp duty was exigible on the price plus value added tax.
The cause called before the First Division, comprising the Lord President (Hope), Lord Mayfield and Lord Morison, for a hearing.
At advising, on 26th November 1993—
LORD PRESIDENT (Hope)—This is a case which has been stated by the Commissioners of Inland Revenue for the opinion of the Court of Session under sec. 13 of the Stamp Act 1891. Our opinion is sought as to the stamp duty chargeable on a disposition which was presented by the appellant under sec. 12 of the Act for their opinion as to the stamp duty with which it was chargeable.
The disposition, which was dated 27th March 1990, related to a plot or area of ground at Glenrothes which the appellant has purchased from Ewart plc. In terms of the disposition the consideration for which it was granted was £1,750,000 together with £262,500 of value added tax payable thereon. The question on which the commissioners were required to express their opinion was whether, for stamp duty purposes, the consideration for which the disposition was granted included the sum of £262,500. They were of the opinion that it did include that sum, and on 8th January 1992 they assessed stamp duty on the disposition under the heading of "Conveyance or Transfer on sale" in the First Schedule to the 1891 Act at £20,125. The appellant was dissatisfied with that determination and, having paid the assessed stamp duty, required the commissioners to state and sign a case for our opinion on the questions whether the disposition is chargeable to stamp duty as assessed by the commissioners and, if not, whether it is chargeable to stamp duty in the sum of £17,500.
There is no doubt that the disposition was a "conveyance on sale" within the meaning of sec. 54 of the 1891 Act. Accordingly the charge to stamp duty in this case arises under the heading "Conveyance or Transfer on sale" in Sched. 1 to the Act. Section 55(1) of the Finance Act 1963 provides that the stamp duty chargeable under the heading "Conveyance or Transfer on sale" in Sched. 1 shall be charged "by reference to the amount or value of the consideration for the sale" at rates set out in that subsection, as amended by sec. 109(1) of the Finance Act 1984. The rate which is relevant to the present case is the rate of £1 for every £100 or part of £100 of the consideration. So the question is whether the consideration for the sale of the land included the amount of value added tax which was payable on that transaction.
According to the legislation relating to value added tax a sale of land is normally an exempt supply within the meaning of sec. 17 of the Value Added Tax Act 1983: see Group 1—Land in Sched. 6 to that Act, as substituted by sec. 18 of and para. 4(1) of Sched. 3 to the Finance Act 1989 with effect from 1st April 1989. The opening words of that group provide an exemption for "the
grant of any interest in or right over land or of any licence to occupy land", subject to various exceptions which do not apply to this case. But para. 2 of Sched. 6A to the 1983 Act, inserted by sec. 18 of and para. 6(2) of Sched. 3 to the 1989 Act, provides that a person may elect to waive the exemption in relation to any land, to the effect that any grant made by that person in relation to the land at a time when the election has effect shall not be treated as an exempt supply. That paragraph came into force on 1st August 1989, and Ewart plc elected to waive the exemption under cl. 1 of Sched. 6 with effect from 1st March 1990. They then entered into the transaction for the sale of the land to the appellant with entry as at 30th March 1990, and they delivered to the appellant a disposition of the land in exchange for the total sum mentioned therein as the consideration inclusive of the amount of value added tax.
The phrase which we have to construe, by reference to which the stamp duty is chargeable, is "the amount or value of the consideration for the sale". The stamp duty is chargeable on the disposition, which was the instrument whereby the seller's interest in the land was transferred to and vested in the purchaser. It contained within it, in the narrative of what is known as the induction clause, a statement of what, according to the ordinary use of language, was the consideration paid to the granter by the grantee. According to this statement the land was disponed: "In...
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