Lush (HM Inspector of Taxes) v Coles
| Jurisdiction | England & Wales |
| Judgment Date | 08 March 1967 |
| Date | 08 March 1967 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)
Income tax, Schedule E - Exemption - Civil Defence Corps training bounty - Not exempt - Income Tax Act 1952 (15 & 16 Geo. 6 & 1 Eliz. 2, c. 10). s. 457(4); Civil Defence Corps Warrant 1949; Civil Defence Corps (Organisation and Bounty) Warrant 1962.
The Respondent, as a senior officer of Class A of the Civil Defence Corps. received a training bounty from local authority funds. The local authority received a grant from central government funds which reimbursed a proportion of the cost of such bounties.
On appeal against an assessment to income tax under Schedule E for the year 1963-64 in respect of the bounty, the Respondent contended that it was exempt from tax under s. 457(4), Income Tax Act 1952, as a bounty payable out of the public revenue to members of the reserve and auxiliary forces of the Crown in consideration of their undertaking training and attaining a prescribed standard. For the Crown it was contended that the expression "the reserve and auxiliary forces of the Crown" in its context in s. 457(4) referred only to the armed forces. The General Commissioners allowed the appeal.
In the High Court the additional contention was advanced for the Crown that a sum payable out of local authority funds was not payable "out of the public revenue"
Held, that the bounty was not payable out of the public revenue and accordingly was not within s. 457(4).
Stated under s. 64 of the Income Tax Act 1952 by the Commissioners for the General Purposes of the Income Tax for the Kettering Division of the County of Northampton for the opinion of the High Court of Justice.
1. At a meeting of the Commissioners for the General Purposes of the Income Tax for the Kettering Division of the County of Northampton held at 11 Market Street, Kettering, on Wednesday 9th February 1966 John William Coles (hereinafter called "the Respondent") appealed against the following assessment:
1963-64 Schedule E further assessment: Civil Defence bounty £15
2. The sole question for determination by the Commissioners was whether a Civil Defence Corps bounty of £15, which the Respondent as a senior officer of Class A of the Civil Defence Corps had qualified to receive for training during a year, was exempt from the charge under Schedule E, by the terms of s. 457 (4) of the Income Tax Act 1952.
3. The Commissioners were referred to the following documents: (i) Civil Defence Act 1948; (ii) Civil Defence Corps Warrant 1949; (iii) Civil Defence Corps (Organisation and Bounty) Warrant 1962; (iv) Civil Defence Instructors Notes, General Notes (H.M. Stationery Office Code no. 34-398); (v) Civil Defence Training Memorandum No. 8. Deployment for Operations (H.M. Stationery Office Code no. 34-9999); (vi) Auxiliary Forces Act 1953; (vii) Army
Reserve Act 1950; (viii) Army Reserve Act 1962; (ix) Reserve and Auxiliary Forces Training Act 1951; (x) Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951; (xi) Regulations for the Territorial Army 1952; (xii) Regulations for the Army Emergency Reserve 1956. Copies of items (ii) and (iii) and copies of the relevant extracts from items (iv), (v), (xi) and (xii) above are attached hereto(1).4. The following facts were admitted or proved:
(i) The sums known as "training expenses allowances" referred to in s. 457 (4), Income Tax Act 1952, are not paid to members of the Civil Defence Corps.
(ii) The Civil Defence Corps is a Crown service.
(iii) The Civil Defence bounties are paid primarily out of local authority funds and are the subject in whole or in part of a grant from central government funds.
(iv) The bounties paid to members of the Civil Defence Corps are payable "in consideration of their undertaking prescribed training and attaining a prescribed standard of efficiency", as specified in s. 457 (4), Income Tax Act 1952.
5. The Respondent contended that:
(a) the Civil Defence Corps was by its very nature a reserve force. Its members were unpaid part-time volunteers who were training in times of peace for a specific defence function in time of war;
(b) such being the case, and bearing in mind points (ii), (iii) and (iv) of the facts set out above, the bounty which he had received satisfied all the conditions of s. 457 (4), Income Tax Act 1952, and the assessment appealed against should...
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