Mitchell and Edon (HM Inspectors of Taxes) v Ross
| Jurisdiction | England & Wales |
| Judgment Date | 06 July 1961 |
| Date | 06 July 1961 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)
COURT OF APPEAL-
HOUSE OF LORDS-
Income Tax - Part-time specialists under the National Health Service Act, 1946 - Whether remuneration assessable under Schedule D or under Schedule E - Deduction - Expenses.
Under the National Health Service Act, 1946, which, inter alia, required the Minister of Health to provide the services of specialists, the Respondents held part-time appointments as consultants with regional hospital boards. In addition to their hospital work, the Respondents under their terms of service paid visits to patients in their homes at the request of general practitioners; separate remuneration was paid for these "domiciliary visits". Certain of the Respondents also received payments for locum tenens work under the National Health Service. All the Respondents also had private practices.
Assessments to Income Tax were made upon the Respondents under Schedules D and E on the footing that all payments received from regional hospital boards, including fees for domiciliary visits and locum tenens work, should be assessed under Schedule E; that income from private practice should be assessed
under Schedule D; and that deductions for expenses should be given in each assessment only so far as the expenses had been incurred in connection with the income assessed under the respective Schedule and were properly allowable under the Rules applicable theretoOn appeal to the Special Commissioners the Respondents contended that their activities as consultants constituted as a whole the carrying on of professions; that the holding of their part-time appointments was an incident of these professions and the appointments were not offices or employments within the meaning of Schedule E; that if they were such offices or employments, any expenses in respect of them not allowable under the Rules applicable to Schedule E should be allowed in their Schedule D assessments; and that in any case the receipts attributable to domiciliary visits and locum tenens work should be assessed under Schedule D.
The Special Commissioners found that the part-time appointments were offices or "posts" and that the remuneration derived therefrom, together with the fees received in respect of domiciliary visits and locum tenens work, were profits of offices within the meaning of Schedule E. They also found, however, that at all material times the Respondents exercised the profession of consultant and that their part-time hospital appointments were necessary parts of the exercise of their profession. In these circumstances, the Commissioners considered that they were bound by the decisions in Davies v. Braithwaite, 18 T.C. 198, and Household v. Grimshaw, 34 T.C. 366, and held that the remuneration from the appointments fell to be assessed under Case II of Schedule D, as also did the fees for the domiciliary visits and the locum tenens work.
Held, (1) in the Court of Appeal, that the part-time appointments were offices and that the remuneration from them, including payments in respect of the domiciliary visits and the locum tenens work, was assessable under Schedule E; and
(2) in the House of Lords, that expenses attributable thereto could only be allowed so far as they satisfied the Rules applicable to Schedule E.
(1) Mitchell and Edon (H.M. Inspectors of Taxes) v. Ross
CASE
Stated under the Income Tax Act, 1952, Section 64, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 23rd March, 1956, and thence adjourned to 26th, 27th and 28th March, 23rd, 24th and 25th April, 1956, and 23rd April, 1957, Dr. Harold Leslie Ross (hereinafter called "the Respondent") appealed against the undermentioned assessments, viz.:
1951-52 |
Income Tax, Schedule E |
£3,024 |
1952-53 |
Income Tax, Schedule E |
£3,276 |
1952-53 |
Income Tax, Schedule D |
£1,500 |
1953-54 |
Income Tax, Schedule E |
£3,385 |
" |
Income Tax, Schedule D |
£1,000 |
1954-55 |
Income Tax, Schedule D |
£1,000 |
The grounds of the appeal were: firstly, as regards the assessments made under Schedule E, that, in computing the profits or gains of the Respondent for the accounting periods relative to the said assessments under appeal, the Respondent's remuneration as a consultant radiologist under the Birmingham Regional Hospital Board and payments made to him in respect of domiciliary visits as hereinafter appeareth had been included contrary to law, and that the said assessments should be reduced accordingly; and, secondly, as regards the assessments made under Schedule D, that the assessments, being estimated, should be adjusted in accordance with the accounts of the profits or gains of the Respondent for the accounting periods relative to the said assessments.
2. Evidence was given at the hearing of the appeal by the Respondent and by Dr. Thomas Rowland Hill, a registered medical practitioner, Doctor of Medicine (London University), Fellow of the Royal College of Physicians, Member of the Association of British Neurologists, Fellow of the Royal Society of Medicine, Member of the North-Eastern Metropolitan Regional Hospital Board, Chairman of the Medical Advisory Council of the North-Eastern Metropolitan Regional Hospital Board, Member of the Advisory Committee of the Ministry of Health on Consultants' Establishments, Chairman of the North-East Metropolitan Regional Consultants' and Specialists' Committee, Vice-Chairman of the Central Consultants' and Specialists' Committee of the British Medical Association, Member of the Central Consultants' and Specialists' Committee of the British Medical Association, Chairman of the Medical Advisory Committee of the North-Eastern Metropolitan Regional Hospital Board and Senior Physician to the West End Hospital for Neurology and Neuro-Surgery.
The following documents were produced and admitted or proved:
(i) A statement in writing, furnished by the Respondent, and supporting documents, as follows:
Ministry of Health Report, 1949 (Cmd. 7910).
Ministry of Health Report, 1950 (Cmd. 8342).
Ministry of Health Report for year to 31st December, 1951 (Cmd. 8655).
Ministry of Health Report, 1953 (Cmd. 9321).
Terms and conditions of service of hospital medical and dental staff (England and Wales).
M.D.B. circulars Nos. 1 to 16 inclusive.
Model forms of contract and explanatory memorandum attached thereto.
A copy of form B.R.H.B./Stat/20 (Revised).
(ii) A copy of a memorandum entitled "National Health Service, Medical Committees in Hospitals and Hospital Groups", issued by the Ministry of Health, dated 15th August, 1953.
(iii) Revenue accounts of the Respondent for the years ended 28th February, 1952, 1953 and 1954.
(iv) A letter and schedule dated 9th November, 1950, from the secretary of the Birmingham Regional Hospital Board to the Respondent, together with a form of acceptance dated 14th November, 1950, signed by the Respondent, and an undertaking regarding domiciliary consultations dated 14th November, 1950, signed by the Respondent.
(v) Copy of a brochure entitled "Specialist Services in the Home (as at 1st September, 1955)", issued by the Birmingham Regional Hospital Board.
(vi) Bundle "D" of correspondence.
Such of the above documents as are not attached to, and do not form part of, this Case are available for the use of the High Court of Justice if required.
3. Certain conclusions of mixed fact and law were agreed between the parties and admitted at the hearing of the appeal. They were as follows:
(2) The National Health Service Act, 1946 (hereinafter referred to as "the Act"), laid upon the Minister of Health (hereinafter referred to as "the Minister") the duty to promote the establishment in England and Wales of a comprehensive health service designed to secure improvement in the physical and mental health of the people of England and Wales and the prevention, diagnosis and treatment of illness; and for that purpose the Minister is under a duty to provide or secure the effective provision of services in accordance with the Act (Section 1 (1) and (2)). Such services are provided free of charge, except where express provision is made for the making and recovery of charges. Any expenses incurred by the Minister in the exercise of his functions under the Act are defrayed out of moneys provided by Parliament (Sections 1 (2) and 52).
(3) The Minister is advised on matters of general policy relating to the services provided under the Act, and to services provided by local health authorities, by the Central Health Services Council (hereinafter referred to as "the Central Council"), a body composed of 41 members (Section 2). In addition, standing advisory committees (for example, medical, maternity and midwifery, mental health and ophthalmic committees) advise the Minister and the Central Council on matters within their respective fields (Section 2 and First Schedule).
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(4) The services provided are the following:
(i) Hospital and specialist services (Part II of the Act);
(ii) Health services provided by local health authorities (Part III);
(iii) General medical and dental services, pharmaceutical services and supplementary ophthalmic services (Part IV);
(5) and, in addition, Part V of the Act contains special provisions as to mental health services.
(6) As shown below, the Minister delegates nearly the whole of the administration of the National Health Service, so far as it relates to hospital and specialist services, to various regional hospital boards as regards hospitals other than teaching hospitals and to boards of governors as regards teaching hospitals (i.e., hospitals...
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