Payne v Barratt Developments (Luton) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Scarman,Lord Keith of Kinkel,Lord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Brightman |
| Judgment Date | 13 December 1984 |
| Judgment citation (vLex) | [1984] UKHL J1213-1 |
| Date | 13 December 1984 |
| Court | House of Lords |
[1984] UKHL J1213-1
House of Lords
Lord Scarman
Lord Keith of Kinkel
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Lord Brightman
My Lords,
I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend Lord Keith of Kinkel. I agree with it, and for the reasons he gives I would allow the appeal.
My Lords,
The principal trade of the respondent taxpayers is the building of houses for sale. They found that potential buyers were often inhibited because they encountered difficulty in selling their existing dwellings in order to raise the funds necessary for their intended purchases. So they adopted a scheme whereby they accepted customers' properties in satisfaction or part satisfaction of the purchase price of houses which they had for sale. The properties so acquired were sold as soon as possible in their existing condition.
At the end of their accounting year to 30 June 1979 the respondents had on their books five properties acquired under this scheme, namely, two freehold semi-detached houses with gardens, a freehold terraced house with garden, a ground-floor leasehold flat without exclusive garden rights and a second-floor leasehold flat with no garden rights. They claimed stock relief in respect of all five properties under section 37 of and Schedule 5 to the Finance Act 1976. By virtue of paragraph 9 of that Schedule a trading company, where the value of its trading stock at the end of an accounting period exceeds its value at the beginning of that period, is entitled to relief against corporation tax assessed on Case I, Schedule D income tax principles. The amount of the relief is the amount of the increase in stock value during any accounting period less 15 per cent. of the relevant income of the trade for that period.
"Trading stock" is defined in paragraph 29 of the Schedule, which in so far as material provides:
"(1) Subject to the provisions of this paragraph, in this Schedule 'trading stock' means property of any description, whether real or personal, being either — ( a) property such as is sold in the ordinary course of the trade, profession or vocation in question, or would be sold if it were mature or if its manufacture, preparation or construction were complete; or ( b) materials such as are used in the manufacture, preparation or construction of any such property as is referred to in paragraph ( a) above, and includes work in progress. (2) Sub—paragraph (1) above does not apply to — ( a) securities, which for this purpose includes stocks and shares; or ( b) land, other than such as is ordinarily sold in the course of the trade, profession or vocation only — (i) after being developed by the person carrying on the trade, profession or vocation, or (ii) in the case of a company which is a member of a group, for the purpose of being developed by another company in that group; or ( c) goods which the person carrying on the trade, profession or vocation has let on hire or hire—purchase. (3) In sub—paragraph (2) above, references to development are references to the construction or substantial reconstruction of buildings on the land in question and 'group' shall be construed in accordance with section 272 of the Taxes Act [Income and Corporation Taxes Act 1970]."
The appellant inspector of taxes accepted that the five properties were such as were sold in the ordinary course of the respondents' trade, but he rejected the claim on the ground that they were excluded by sub—paragraph (2) as being land other than such as was ordinarily sold only after being developed by the respondents. The respondents appealed to the special commissioners, who held that they were entitled to relief except in respect of the gardens of the three freehold properties. The appellant in turn appealed to the High Court. On 18 November 1983 Vinelott J. [1984] S.T.C. 65 dismissed the appeal, but granted a certificate under sections 12( 1) and (3)( b) of the Administration of Justice Act 1969. Leave to appeal directly to this House was given on 20 February 1984. The principal reason why the certificate and the leave to appeal were granted was the existence of a previous decision directly in point by the Inner House of the Court of Session, namely, Inland Revenue Commissioners v. Clydebridge Properties Ltd., 1980 S.C. 68, which Vinelott J. felt constrained, somewhat reluctantly, to follow.
That case was decided under section 56 of and Schedule 10 to the...
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Northern Gas Networks Ltd
...paragraph 12(1)(a). In that regard, there was authority in the House of Lords decision in Payne (HMIT) v Barratt Developments (Luton) Ltd [1985] BTC 3 (Payne) for the proposition that a definition should not slavishly be applied where the context required otherwise. In Payne, the House of L......
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G (A Child)
...Those seeking to appeal such decisions must heed not only the well-known decision of the House of Lords in G v G (Minors: Custody Appeal) [1985] 1 WLR 1 WLR 647 but also what ought to be, but I fear is not, the equally well-known decision of the House of Lords in Piglowska v Piglowski [1999......