McDougall v Smith

JurisdictionScotland
Date1913
CourtCourt of Session

NO. 388.-COURT OF SESSION (SCOTLAND), FIRST DIVISION.-

(1) RONALD M'DOUGALL (Curator Bonis for ALASTAIR A. M'DOUGALL)
and
S. C. H. SMITH (Surveyor of Taxes)

Income Tax (Schedule D). - Relief in respect of earned income. - Business carried on by Curator Bonis for benefit of lunatic ward. - Finance Act, 1907 (7 Edw. VII. c. 13), Section 19.

A business is carried on, on behalf of a lunatic ward, by a Curator Bonis, who in this capacity is assessed to Income Tax under Schedule D in respect of the profits.

Held, that in these circumstances the profits of the business are not "earned income" of the ward within the meaning of Section 19 (7) of the Finance Act, 1907, and that relief on account of earned income cannot, therefore, be allowed in respect of such profits.

CASE.

At a meeting of the Commissioners for the general purposes of the Income Tax Acts and for executing the Acts relating to the inhabited house duties for the District of Cuninghame in the County of Ayr, held at Irvine on the 2nd day of February 1918, for the purpose of hearing and determining appeals.

Ronald M'Dougall, as curator bonis for Alastair A. M'Dougall, innkeeper, Kilbirnie, through his agent, Mr. James Douglass Gordon, Solicitor, Dalry, Ayrshire, appealed against an assessment to Income Tax made upon him under Schedule D for the year ending 5th April 1918 on the sum of £550, in respect of the profits of the business carried on by the appellant at Kilbirnie, the said assessment being made at 3s.6d. per £, which is the unearned rate applicable to incomes exceeding £500 and not exceeding £1,000.

The Appellant claimed a reduction of the assessment to the earned rate of 2s. 6d. per £ applicable to the amount.

The following facts were admitted or proved:-

  1. (2) The said business originally belonged to Mr. Alastair A. M'Dougall, who on or about April 1916 became incapable of managing his own affairs and was sent to an asylum, Mr. Ronald M'Dougall being appointedcurator bonis to him on 15th December 1916.

  2. (3) The profits assessed were earned in the business which was carried on by the Appellant as curator aforesaid. No objection was taken to the amount of the profits assessed, the only dispute being in regard to the rate.

  3. (4) The Finance Act of 1907, section 19 (7), enacts:-

For the purposes of this section, the expression "income" "means income as estimated according to the several rules "and directions of the Income Tax Acts; and the expression ""earned income" means:-

  1. (a) "…

  2. (b)...

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8 cases
  • Koenigsberger v Mellor (Inspector of Taxes)
    • United Kingdom
    • Chancery Division
    • 11 May 1993
    ...were referred to in the judgment: Fry (Surveyor of Taxes) v Shiels' Trustees TAX(1914) 6 TC 583 M'Dougall v Smith (Surveyor of Taxes) TAX(1918) 7 TC 134 Northend (HMIT) v White & Leonard & Corbin Greener and OrsTAX(1975) 50 TC 121 Peay (HMIT) v Newton TAX(1970) 46 TC 653 Income tax - Retire......
  • Lawrance v Ridsdale's Executrix
    • United Kingdom
    • Chancery Division
    • 27 February 1976
    ...firm and secondly to earn the right to receive payments from future profits after retirement. (5) Counsel referred to M'Dougall v.Smith(2) 7 T.C. 134 where business was carried on by trustees for the benefit of a lunatic ward and the Court held that the lunatic was not entitled to earned in......
  • Koenigsberger v Mellor (Inspector of Taxes)
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 17 March 1995
    ...of Self-Employed and Small Businesses Ltd ELR[1982] AC 617 M'Dougall (Curator Bonis for M'Dougall) v Smith (Surveyor of Taxes)TAX(1918) 7 TC 134 Northend (HMIT) v White & Leonard & Corbin Greener & OrsTAX(1975) 50 TC 121 Werle & Co v Colquhoun (Surveyor of Taxes) TAX(1888) 2 TC 402 Income t......
  • Lawrance (HM Inspector of Taxes) v Ridsdale's Executrix
    • United Kingdom
    • Chancery Division
    • 27 February 1976
    ...firm and secondly to earn the right to receive payments from future profits after retirement. (5) Counsel referred to M'Dougall v.Smith(2) 7 T.C. 134 where business was carried on by trustees for the benefit of a lunatic ward and the Court held that the lunatic was not entitled to earned in......
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