Monks v Fox's Executors
| Jurisdiction | England & Wales |
| Judgment Date | 25 November 1927 |
| Date | 25 November 1927 |
| Court | King's Bench Division |
NO. 636.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
Income Tax-Surrender of Government securities accepted at par value in payment of death duties, with addition for interest accrued to date of transfer - Whether interest is assessable - Finance Act, 1917 (7 & 8 Geo. V, c. 31), Section 34.
On 13th May, 1925, £100,000 Victory Bonds were transferred to the Commissioners of Inland Revenue in payment of Estate Duty, and at that date interest amounting to £800 had accrued due on the Bonds but remained unpaid. The Commissioners accepted the Bonds and interest in satisfaction of £100,800 of the Estate Duty due.
An assessment to Income Tax under Case III of Schedule D was made upon the Respondents in a sum including the accrued interest on the Bonds but was discharged by the Special Commissioners on appeal.
Held, that the interest formed part of the value at which the Bonds were accepted and that it was not assessable to Income Tax.
Stated under 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.
At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 15th February, 1927, for the purpose of hearing appeals, the executors of Sir G. W. Fox (deceased), hereinafter called the Respondents, appealed against an assessment to Income Tax in the sum of £704 for the year ending 5th April, 1926, made upon them under the provisions of the Income Tax Acts.
1. Sir G. W. Fox died on 21st February, 1925. The appropriate amount of Estate Duty payable in respect of his estate was the sum of £257,126 9s. 2d.
A portion of his estate consisted of £100,000 4 per cent. Victory Bonds. It was provided in the prospectus relating to the issue of 4 per cent. Victory Bonds that they might be surrendered in payment of Estate Duty at their face value. A copy of this prospectus is annexed to and forms part of the Case.(1)
2. Section 34 of the Finance Act, 1917, provides for the acceptance by the Commissioners of Inland Revenue of any Stock or Bonds issued in connection with the war in satisfaction or part satisfaction of any death duty and the method of valuing such bonds. Sub-section (4) enacts that:-
Stock or bonds so transferred shall for the purpose of "this section be valued at the price of issue with the addition "of any interest accrued due at the date of transfer but then "remaining unpaid, after deducting the amount of any interest "which may be receivable by the transferor after that date.
Sub-section (5) of Section 34 enacts that:-
For the purposes of this section interest shall be deemed "to accrue from day to day.
Section 42 of the Finance Act, 1918, enacts as follows:-
"Section thirty-four of the Finance Act, 1917, shall have "effect as though there were inserted therein after the words ""price of issue," in sub-section (3) and sub-section (4) thereof, "the words "or such other price as was specified in the conditions "subject to which the stock or bonds were issued as "'the price at which the stock or bonds were to be valued "'for the purposes of...
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Monks (HM Inspector of Taxes) v Fox's Executors
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