Jellinek v Myall
| Jurisdiction | England & Wales |
| Judgment Date | 24 November 1966 |
| Date | 24 November 1966 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
Income tax, Schedule A - Annual value - Flat - Newly assessed as separate property - How annual value to be determined - Income Tax Act 1952 (15 & 16 Geo. 6 & 1 Eliz. 2, c. 10), s. 82, Schedule A, para. 2(b) and ss. 84(3) and 109; Finance Act 1957 (5 & 6 Eliz. 2, c. 49), s. 18.
For 1959-60 and previous years assessments to income tax under Schedule A in respect of a block of flats, treated as a single property, were made on the landlord. In the year 1960-61 several flats in the block were let to tenants, including the Appellant, on leases for periods exceeding 50 years at rents exceeding a rackrent. For 1960-61 onwards assessments were made under s. 18, Finance Act 1957, on the tenants of the flats so let on the footing that each flat was a separate property, the annual values for 1960-61 being arrived at by reference to the rackrent at which the flat was then worth to be let by the year.
On appeal against assessments to income tax under Schedule A for the years 1960-61 to 1963-64, the Appellant contended that s. 18 applied only for the purpose of determining the person chargeable, and that the annual value of his flat for 1960-61 should be arrived at by apportioning the annual value adopted for 1959-60 for the whole block. For the Crown it was contended that s. 18 required the flat in question to be treated as a distinct building, and the annual value fell to be ascertained by reference to the rackrent value. The General Commissioners accepted the Crown's contention.
Held, that s. 18, Finance Act 1957, had nothing to do with valuation and the annual value for 1960-61 must be arrived at by apportioning the annual value adopted for the previous year for the whole block of flats.
Stated by the Commissioners for the General Purposes of the Income Tax for the Division of Holborn in the London Borough of Camden under the Income Tax Act 1952, s. 64, for the opinion of the High Court of Justice.
1. At a meeting of the said Commissioners held on Thursday, 1st July 1965, at Central House, Upper Woburn Place, London W.C.1., Leopold Erhard Jellinek (hereinafter called "the Appellant"), the tenant of a flat known as 82, Eton Hall, N.W.3, appealed against assessments made on him under Schedule A for the years of assessment 1960-61 to 1963-64 inclusive in respect of the said flat in the gross amount of £532 (net £440) for each of the said years.
2. The appeals relating to the said flat were heard together with other similar appeals by tenants relating to certain other flats in two blocks of flats, one known as, and hereinafter called, "Eton Hall", and the other known as Eton Place.
3. The questions in issue before us were:
(i) whether, on being treated as a distinct building in accordance with the provisions of s. 18 of the Finance Act 1957, the said flat became a new unit of assessment the annual value of which was to be determined in accordance with the provisions of para. 2(b) of Schedule A in s. 82 of the Income Tax Act 1952, or the annual value of the flat should be an appropriate fraction of the annual value of Eton Hall previously adopted for the purpose of assessment on the landlord as mentioned in para. 4(b) below;
(ii) the quantum of the assessments if they fell to be ascertained under the said para. 2(b).
4. The following facts were admitted or proved:
(a) The said flat no. 82 was during the years of assessment in question a distinct part of a building (namely "Eton Hall"), and separately occupied by a tenant of the landlord of the entire building.
(b) Prior to 1960-61 there was a single assessment upon Peachey Property Corporation Ltd. (hereinafter called "Peachey"), the immediate lessor of the said flat, in respect of Eton Hall in accordance with the provisions of s. 109(1)(c) of the Income Tax Act 1952, and there was no separate Schedule A assessment in respect of the said flat or any of the other flats in Eton Hall.
(c) No structural alterations had been carried out on the said flat.
(d) In 1960 certain tenants of flats in Eton Hall took leases from Peachey for a period exceeding 50 years at rents which it was conceded by the Inspector of Taxes were not rackrents.
(e) Following the grant of the said long leases the Inspector of Taxes in 1960-61 exercised the option granted to the Crown under the provisions of s. 18, Finance Act 1957, to treat each of the flats so let as a distinct building, and raised assessments on the respective tenants thereof on the basis that the annual value of each of such flats fell to be ascertained under s. 82, Schedule A, para. 2(b), aforesaid.
(f) Only those flats in Eton Hall let on long leases were so treated under the provisions of the said s. 18 and the subjects of assessments raised on that basis.
(g) On 14th February 1961 Peachey granted to the Appellant (who had not previously been a tenant of Peachey) a lease of the said flat for a term of 51 years from 25th December 1960 at a rent which it was conceded by the Inspector of Taxes was not a rackrent. A copy of the said lease was produced and admitted or proved at the hearing of the appeal. It is not attached hereto and does not form part of this Case, but is available to the Court if desired.
(h) Subsequently the said flat was...
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