Levene v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judgment Date | 09 March 1928 |
| Date | 09 March 1928 |
| Court | King's Bench Division |
NO. 661.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
COURT OF APPEAL.-
HOUSE OF LORDS.-
Income Tax-Residence-Ordinary residence-Income Tax Act, 1918 (8 - 9 Geo. V, c. 40), Rule 2 (d) of the General Rules applicable to Schedule C, and Section 46 (1)-Finance Act, 1924 (14 - 15 Geo. V, c. 21), Section 27.
Until March, 1918, the Appellant, a British subject, leased a house in London. At that date he surrendered the lease and sold his furniture, and until January, 1925, he had no fixed abode but stayed at hotels either in this country or abroad. Until December, 1919, he stayed in England and it was admitted that up to that date he was both resident and ordinarily resident in the United Kingdom. In that month he went abroad and did not return until July, 1920, and from that date until January, 1925, he spent between four and five months each year in the United Kingdom, the reasons for his visits being to obtain medical advice for himself and his wife, to visit relatives and the graves of his parents, to take part in certain Jewish religious observances and to deal with his Income Tax affairs. In January, 1925, he leased a flat abroad and expected to continue to make visits to the United Kingdom though not to such an extent as in the past.
The Appellant contended that for the year 1920-21 to 1924-25 he was neither resident nor ordinarily resident in the United Kingdom, and that as being not resident he was entitled to exemption from Income Tax under Rule 2 (d) of the General Rules applicable to Schedule C in respect of the interest or dividends on any securities of a foreign State or a British Possession owned by him, and that as being not ordinarily resident he was entitled to exemption under Section 46 (1), Income Tax Act, 1918, in respect of the income from certain 5 per cent. War Loan of which he was the owner.
The Special Commissioners, on application being made to them under Section 27 of the Finance Act, 1924, decided that his claims for exemption failed.
Held, that the Appellant was resident and ordinarily resident in the United Kingdom in the years in question.
Stated under the Finance Act, 1924, Section 27 (2), and the Income Tax Act, 1918, Section 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 8th June, 1925, for the purpose of hearing appeals, the said Commissioners heard and determined claims for relief from Income Tax made by Mr. Louis N. Levene (hereinafter called "the Appellant") for the years ending respectively 5th April, 1921, 5th April, 1922, 5th April, 1923, 5th April, 1924, and 5th April, 1925.
2. At all material times the Appellant was the owner of securities of British possessions and in respect of the income arising therefrom he claimed relief under paragraph (d) of Rule 2 of Schedule C of the Income Tax Act, 1918, on the ground that he was not resident in the United Kingdom for the years in question. He was also the owner of British War Loan and in respect of the income arising therefrom he claimed relief under Section 46 of the Income Tax Act, 1918, on the ground that he was not ordinarily resident in the United Kingdom for the years in question. These claims had been refused by the Commissioners of Inland Revenue.
3. The Appellant is a British subject, and was formerly interested in a financial business in London. He discontinued this business in 1911 and since that date has had no occupation. He lived in a house in Curzon Street, London, of which he held a lease, until early in 1918 when he decided to break up his establishment and (to use his own expression) to "live abroad". On the 20th and 21st March, 1918, his furniture, with the exception of a few articles which were included in his Marriage Settlement and have since been stored in London by order of the Trustees, was sold by auction, and on the 3rd April, 1918, he surrendered the lease of his house, making a payment of £400 to the freeholders on account of rent and dilapidations.
4. From March, 1918, until December, 1919, the Appellant continued to live in the United Kingdom, in hotels. In December, 1919, he went abroad and did not return until the 10th July, 1920, since when he has been in the United Kingdom for the following periods:-
1920-10th July to 24th November |
19 weeks |
1921-2nd July to 27th November |
21 weeks |
|
1922-9th April to 18th June 10th Sep. to 19th November |
20 weeks |
|
1923-12th April to 27th June 10th Sep. to 15th November |
20 weeks |
|
1924-10th April to 1st July 10th Sep. to 23rd November |
22 weeks |
During the remainder of these five years, he was staying at Monaco and at various places in France.
5. In 1917 and again in October, 1918, the Appellant applied for a passport for himself and his wife to leave England but such application was refused. Upon a third application being made in November, 1918, a passport for the Appellant and his wife was granted, but owing to the state of his wife's health the Appellant and his wife could not leave this country until December, 1919.
6. From March, 1918, until January, 1925, the Appellant had no fixed place of abode, but stayed in hotels, whether in this country or abroad. He did not retain rooms at any hotel when absent, nor was there any hotel in which he stayed so long or to which he returned so frequently that it could in any sense be described as his home. When in France he paid the Visitors' Tax. In the course of the years 1922, 1923 and 1924, he made endeavours to find a suitable flat in Monaco, and drafts of several tenancy agreements were produced to us but the negotiations came to nothing since none of the premises inspected were suitable, until in January, 1925, the Appellant took a lease of a flat in Park Palace, Monte Carlo, for nine years, for which he paid a premium of 130,000 francs and he lived there with his wife until he came to England for the purposes of the appeal. These premises were furnished by the Appellant. It was his intention to return to Monte Carlo and to live in his flat there with his wife. He expected to continue to make visits to England though not to such an extent as in the past. Since he gave up his house in 1918 he had had no intention of again taking a house or flat in the United Kingdom.
7. The Appellant is married but has no children. His wife has almost always accompanied him in his movements. Both he and his wife have indifferent health, and have been advised to live in the South of France and avoid the United Kingdom in the winter months. One of the reasons for their visits to England was to obtain medical advice. They also came to visit their relatives, his wife having five sisters and he himself six sisters and brothers residing in England. One of his brothers is mentally afflicted, and in April, May and June of 1924 the Appellant had to make fresh arrangements for his brother's care in a home at Brighton. Other reasons for his coming to England annually were to take part in certain Jewish religious observances, to visit the graves of his parents, who are buried at Southampton, and to deal with his Income Tax affairs.
8. The Appellant has always kept a bank account in London and since 1919 he has had accounts in Paris, in Nice, and since 1923 in Monte Carlo. Since giving up his residence here in 1918 the London bank account has only been operated on to a small extent such as for payment of charitable subscriptions and other expenses incurred in this country.
9. It was contended on behalf of the Appellant:-
(a) That since December, 1919, he had not been resident or ordinarily resident in the United Kingdom.
(b) That under Rule 2 (d) of the General Rules applicable to Schedule C, he was entitled to exemption from Income Tax in respect of the interest or dividends on any securities of a foreign state or a British Possession owned by him; and
(c) That under Section 46 of the Income Tax Act, 1918, he was entitled to exemption from Income Tax in respect of the interest on British Government securities issued with the condition that the interest thereon should not be liable to Income Tax so long as it was shown that the securities were in the beneficial ownership of persons not ordinarily resident in the United Kingdom.
10. It was contended on behalf of the Crown, inter alia:-
(2) That the Appellant had left the United Kingdom for the purpose only of occasional residence abroad within the meaning of Rule 3 of the General Rules applicable to Schedules A, B, C, D and E contained in the First Schedule to the Income Tax Act, 1918.
(3) That his regular coming to the United Kingdom for periods of from four to five months in each year showed that he was in the United Kingdom as part of the ordinary habits of his life.
(4) That during the years in question the Appellant was resident and ordinarily resident in the United Kingdom, and that he was not entitled to the relief claimed.
11. We, the Commissioners who heard the appeal, gave our decision in the following terms:-
The Appellant is a British subject and until March, 1918, "he was a householder in London. He then surrendered the "lease of his house and sold his furniture, and from March, 1918, "until January, 1925, he did not occupy any fixed place of "residence, but lived in hotels, whether in this country or "abroad.
"He was admittedly resident and ordinarily resident in "the United Kingdom until December, 1919. He then went "abroad and in each subsequent year he has spent between "7 and 8 months abroad and between 4 and 5 months in the "United Kingdom.
"We are satisfied upon the evidence that when he left the "United Kingdom in December, 1919, he had formed the "intention, which he has consistently carried out ever since, "of living abroad for the greater part of the year, but of "returning to this country...
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