Horton v Young
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE SALMON,LORD JUSTICE STAMP |
| Judgment Date | 06 May 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0506-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 May 1971 |
[1971] EWCA Civ J0506-1
In The Supreme Court of Judicature
The Court of Appeal
Appeals by Inspector of Taxes from orders of Mr. Justice Brightman.
The Master of the Rolls (Lord Denning),
Lord Justice Salmon and
Lord Justice Stamp
Mr. F. HEYWORTH TALBOT, Q. C., and Mr. PATRICK MEDD (instructed by The Solicitor of Inland Revenue) appeared on behalf of the Appellant, H. M. Inspector of Taxes.
Mr. LEONARD BROMLEY, Q. C. (instructed by Messrs. Ford & Co. of Eastbourne) appeared on behalf of both Appellants.
Mr. Horton is a bricklayer. He lives at Eastbourne. He works for a builder, Mr. Page, who carries on business at Willingdon, near Eastbourne. Mr. Page is a main contractor. He builds houses for owners on sites in Sussex, and beyond.
I expect that in former times Mr. Page employed Mr. Horton as a servant at a weekly wage. But, in order to avoid Selective Employment Tax, and so forth, they do things differently. Mr. Page engages Mr. Horton as a "labour only sub-contractor. We have seen such often. It means that Mr. Page supplies the materials, such as bricks and cement; and Mr. Horton provides the labour, not as a servant, but as a sub-contractor. It is just a different legal framework for the selfsame operation. It is lawful enough, but it is criticised in some quarters because of the abuses to which it gives rise.
The question here is as to the tax payable by Mr. Horton. He has to bring into account his profits from the "labour only sub-contract", but can he deduct his travelling expenses? He was the leader of a bricklaying team which generally consisted of three men. He collected the other men in his car and took them to the site. In the year in question he went to Reigate (45 miles); Lingfield (45 miles); Crystal Palace (55 miles); EastGrinstead (35 miles); Polegate (5 miles); Lewes (17 miles); and Hastings (17 miles).
Before each contract, Mr. Page used to go round to Mr. Horton's house and agree with him the site where he was to work and the rate which he was to be paid. Then Mr. Horton would go by car with the other men each day to the site. The work used to take up to three weeks at each site. The men went to and fro each day from Eastbourne. Sometimes Mr. Page would have work on two or more sites at the same time: and the bricklayers might go from one site to another in the same day.
Mr. Horton said that for the year in question his motor and travelling expenses came to £291. He claimed to deduct the whole from his profits. The Commissioners allowed him £100 only. They said that he could deduct the expenses of going from one site to another: but that he could not deduct the expenses of going from his home at Eastbourne to a site. Mr. Horton appealed to Mr. Justice Brightman. He allowed him to deduct the whole £291. The Inspector of Taxes appeals to this Court.
The relevant section is section 137 of the Income Tax Act, 1952, which says that no sum shall be deducted in respect of - "(a) any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation."
The question, therefore, is: Were these really expenses "wholly and exclusively laid out or expended" by Mr. Horton "for the purposes of his trade" as a labour only sub-contractor. Those few words have given rise to much difficulty. There are some cases which seek to elucidate them. In Strong &Co. of Romsey Ltd. v. Woodlfield (Surveyor of Taxes) (1906) A. C. 448 at page 453, Lord Davey said: 'It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade, or is made out of the profits of the trade. It must be made for the purpose of earning the profits." Lord Loreburn said (at page 452) that "….only such losses can be deducted as are connected with, in the sense that they are really incidental to the trade itself." But even those statements do not help much. I prefer to go by the decisions in actual cases. Take Newsom v. Robertson (Inspector of Taxes) (1953) 1 Ch. 7. Mr Newsom was a barrister who lived at Whipsnade. He travelled each day to his work in his chambers in Lincoln's Inn. It was held that Mr. Newsom could not deduct the expenses of travelling from Whipsnade to his chambers in London. The reason was because Mr. Newsom's base of operations was his chambers at Old Square in London.
The present case is very different. Mr. Horton's base of operations was Eastbourne. He claims his travelling expenses to and from that base. I think he is entitled to deduct them.
Mr. Heyworth Talbot in his reply put the position very neatly. He said: "If the locus in quo of the trade was Eastbourne and his trade really radiated from Eastbourne as a centre, I admit that the travelling expenses would be deductible." But Mr. Heyworth Talbot went on to urge that the locus in quo of Mr. Horton's trade was not Eastbourne or a house in Eastbourne, but it was a shifting base from one building site to another: and on that account the only expenses that could be deducted were thetravelling between sites. I do not think that is the right view. On the finding of the Commissioners, there is only one reasonable inference to draw from the primary facts. It is that Mr. Horton's house at Eastbourne was the locos in quo of the trade, from which it radiated as a centre. He went from it to the surrounding sites according as his work demanded.
During the argument we discussed the case of a circuiteer, that is, the barrister who has his home near London, but spends most of his time on the circuit. He hardly ever appears at his chambers in London. He probably telephones every day, but rarely puts in an appearance. The locus in quo of his trade or profession - from which it radiates - is his home. I am glad to know that his travelling expenses to and from his home to the circuit are allowed by the Revenue. It is said to be done as a matter of concession. But I think it is more. He is entitled under the statute to deduct the expenses; because they are wholly and exclusively incurred for the purposes of his profession.
If the Commissioners were right, it would lead to some absurd results. Suppose that Mr. Horton had a job at a site 200 yards away from his home, and another one at Reigate, 45 miles away. All he would have to do would be to go for five minutes to the site near home and then he would get his travelling expenses to and from Reigate. I can well see that he could...
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...the expenses were incurred in travelling from one to the other in the performance of his duties. I should refer also to Horton v. Young(1) 47 T.C. 60 (C.A.). That was a Schedule D case in which it was established that an independent bricklayer had his home as his base of operations, with th......
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