Mapp v Oram
| Jurisdiction | England & Wales |
| Judge | Lord Hodson,Viscount Dilhorne,Lord Upjohn,Lord Pearson,Lord Diplock |
| Judgment Date | 23 July 1969 |
| Judgment citation (vLex) | [1969] UKHL J0723-2 |
| Date | 23 July 1969 |
| Court | House of Lords |
[1969] UKHL J0723-2
House of Lords
Lord Hodson
Viscount Dilhorne
Lord Upjohn
Lord Pearson
Lord Diplock
Upon Report from the Appellate Committee, to whom was referred the Cause Mapp (Inspector of Taxes) against Oram, et è contra, that the Committee had heard Counsel, as well on Monday the 9th as on Tuesday the 10th, days of June last, upon the Petition and Appeal of Merlyn Roger Mapp, of Atherstone House, Ward's End, Loughborough, Leicestershire (one of Her Majesty's Inspectors of Taxes), praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 15th of May 1968, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, and that the Petitioner might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Petition and Cross Appeal of Leonard Murray Oram, of 66 Holt Drive, Loughborough, Leicestershire (Company Director), praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 15th of May 1968, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Leonard Murray Oram; and also upon the Case of Merlyn Roger Mapp (Her Majesty's Inspector of Taxes), lodged in the said Original and Cross Appeals; and due consideration had this day of what was offered on either side in these Appeals:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Original Appeal, be, and the same is hereby, dismissed this House: And it is further Ordered, That the said Appellant in the Original Appeal do pay, or cause to be paid, to the said Respondent in the Original Appeal the Costs incurred by him in respect of the said Original Appeal to this House, the amount of such Costs to be certified by the Clerk of the Parliaments: And it is further Ordered, That the said Order of Her Majesty's Court of Appeal, of the 15th day of May 1968, complained of in the said Cross Appeal, be, and the same is hereby, Reversed except as to Costs, and that the Judgment of the Honourable Mr. Justice Ungoed-Thomas, of the 24th day of July 1967, thereby Reversed, be, and the same is hereby Restored: And it is further Ordered, That the Respondent in the Cross Appeal do pay, or cause to be paid, to the said Appellant in the Cross Appeal the Costs incurred by him in respect of the said Cross Appeal to this House, the amount of such Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
This appeal raises the question whether the child allowance for 1965-66 which the taxpayer has claimed in respect of his son, a boy over 16, a full-time undergraduate at St. Andrews University, should be restricted by reference to the amount of the boy's earnings for two and a half months in a French school.
The question turns on the Income Tax Act, 1952, section 212. The following extracts are material:—
"(1) If the claimant proves that he has living at any time within the year of assessment any child who is either under the age of sixteen years or who, if over the age of sixteen years at the commencement of that year, is receiving full-time instruction at any university, college, school or other educational establishment, he shall, subject to the provisions of this and the next following section, be entitled in respect of each such child to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on the appropriate amount for the child.
. . . . .
(1A) The appropriate amount for the child shall vary according to the age of the child at the commencement of the year of assessment, and [subject to subsection (4) of this section]—
( a) for a child shown by the claimant to have been then over the age of sixteen, shall be one hundred and sixty-five pounds;
. . . . .
(4) In the case of a child who is entitled in his own right to an income exceeding £115 a year the appropriate amount for the child …
Provided that in calculating the income of the child for the purpose of this subsection no account shall be taken of any income to which the child is entitled as the holder of a scholarship, bursary, or other similar educational endowment."
The taxpayer's son, when over sixteen, obtained a post as a temporary teacher at a Lycée in France. In 1965/66 he received the equivalent of £150 in the two and a half months that fell in the year of assessment. The whole of the £150 was spent in France so that nothing remained to be brought into this country on his return here to resume his degree course at St. Andrews University.
As the provision of the statute shows, it is for the taxpayer to set out the facts which substantiate his claim and on those stated by him the Inspector refused to allow the claim to child allowance on the ground that the boy was entitled in his own right to an income exceeding £115 a year for the year in question. This refusal was not surprising for, although the Commissioners of Inland Revenue admitted that they could not tax the boy's receipts as foreign income, since it was not remitted to this country, they relied on a practice which, it was said, had been followed for the last forty years. This practice was to treat income in the wide sense of the word receivable abroad, although not taxable, reduced only by certain limited expenses, to which I shall later refer, as operating to cut down or defeat children's allowances for the purpose of section 212.
The Commissioners allowed the taxpayer's appeal from the Inspector's refusal on the ground that "'income in his own right' within the terms of section 212 (4) meant income computed in accordance with the Income Tax Acts: that is to say income for Income Tax purposes." The emoluments which the boy received were not chargeable to income tax under Cases I, II or III of Schedule E. Not being chargeable they did not operate to defeat the claim of the taxpayer.
On appeal to the Court, Ungoed-Thomas J., upheld the decision of the Commissioners but the decision was reversed by the Court of Appeal which by a majority (Salmon L.J. and Fenton Atkinson L.J., Danckwerts L.J. dissenting) held that the word "income" in section 212 meant income in the widest sense of the word whether or not chargeable to tax. Accordingly the fact that the earnings were not remitted and so were not chargeable was irrelevant. They were still income and, subject to such deductions as might be properly allowed in accordance with the ordinary principles of accountancy, must be set against the taxpayer's claim.
The appeal to your Lordships' House was set in train by the Crown which obtained leave to appeal upon the contention that the Court of Appeal was wrong in that part of its decision which concerned the method of allowing deductions from earnings whether earned abroad or at home. It was submitted that the deductions to be made from the gross amount received by the boy were those authorised by paragraph 7 of the Ninth Schedule of the Income Tax Act, 1952. Paragraph 7 reads:
"If the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
This paragraph of course has no application to the emoluments of the boy since these were not taxable and this no doubt led the majority of the Court of Appeal to seek their own solution to the problem of how the proper deduction should be ascertained in dealing with claims for child allowance where non-taxable income of the child was concerned.
The taxpayer was, on the same day as the Crown, given leave to appeal in order to submit that the whole approach of the majority of the Court of Appeal was wrong, so that no question of calculating the deductions arose. He maintained the submission he had successfully made to the Commissioners and to Ungoed-Thomas J. that the words "income in his own right" in section 212 must mean income computed in accordance with the Income Tax Acts.
In order to construe the section it is legitimate and, indeed, necessary to see what the origin of section 212 was and in what context it first appeared. This is to be found in the Finance Act, 1920. Section 21 subsection (1) is in the same terms as section 212 (1) of the 1952 Act save that the deduction is, in the earlier Act, fixed at thirty-six pounds. Section 21, subsection (3) reads:—
"No deduction shall be allowed under this section in respect of any child who is entitled in his own right to an income exceeding forty pounds a year."
The proviso which follows is in the same terms as that to be found following section 212 (4) of the 1952 Act. Section 22 (1) of the 1920 Act is important. It is a section providing for deduction in respect of dependent relatives and, so...
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