Pickles v Foulsham (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 19 February 1925 |
| Date | 19 February 1925 |
| Court | King's Bench Division |
NO. 509.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
COURT OF APPEAL.-
HOUSE OF LORDS.-
Income Tax, Schedule D - Resident in the United Kingdom employed out of the United Kingdom - Foreign possessions - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule D, Case V.
An agent in West Africa of a British Company was assessed to Income Tax for the year 1919-20 under Case V of Schedule D of the Income Tax Act, 1918, in respect of his earnings as agent. His duties were wholly performed in West Africa. Under his agreement with the Company the commission which formed the bulk of his remuneration was payable by the Company in the United Kingdom. The whole of this remuneration was paid by the Company into a banking account in England on which his wife had the power of drawing. He rented and was the rated occupier of a house in the United Kingdom in which his wife and family resided. He spent a few days in the United Kingdom during the year of assessment.
The Special Commissioners held on appeal that he was resident in the United Kingdom and that he was assessable to Income Tax under Case V of Schedule D in respect of his earnings as agent.
Held, that the Special Commissioners were entitled to regard him as resident in the United Kingdom, but that the earnings were not income from a foreign possession assessable under Case V of Schedule D as the source of income was not wholly abroad.
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.
1. At meetings of the Commissioners for the Special Purposes of the Income Tax Acts held on the 21st September, 1920, and the 8th June, 1921, for the purposes of hearing appeals, Mr. J.A. Pickles, hereinafter called the Appellant, appealed against an assessment to Income Tax in the sum of £500 for the year ending 5th April, 1920, made upon him by the General Commissioners under the provisions of the Income Tax Acts.
2. The assessment was made under Schedule D of the Income Tax Act, 1918, in respect of the Appellant's possessions out of the United Kingdom, viz., his earnings from his employment in West Africa under the agreement hereinafter referred to. It was stated at the hearing by the representative of the Crown that the tax was charged under Case V of Schedule D.
3. The Appellant has been for many years in the employ of the African Association, Limited, now the African and Eastern Trade Corporation, Limited, and hereinafter called the Company, under agreements which have been renewed from time to time and in pursuance of these agreements, and in point of fact, has for many years past spent the greater part of his time in West Africa. The agreements for employment in the year of assessment are dated the 26th April, 1917, and the 6th May, 1919, and copies are annexed and form part of the Case. The Appellant was employed under the former agreement from the 5th April, 1919, until the 6th May, 1919. The latter agreement was entered into before the previous agreement for employment with the Company had expired.
4. Under this agreement (which cancelled all previous agreements) the Appellant agreed to serve the Company for a period of two years in West Africa as District Supervising Agent. He was to spend nine months of each year in the execution of his duties in Africa and the remaining six months interval between the two periods of nine months was to represent time occupied in voyaging from and to Africa and on furlough. The Company was to pay the Appellant a salary of £500 per annum while in Africa and voyaging and also for his board and other necessary expenses. While at home the Company was to pay him salary at the rate of £750 per annum. The Company also agreed to pay the Appellant a commission on the net profits realised on certain of their factories, the minimum commission being £500. Payment of the commission was to be made to the Appellant through the Company's Offices in Liverpool only.
5. Prior to the 6th April, 1919, the Appellant had rented a house in Blackpool, Lancashire, and he continued to rent and was rated as occupier of the house during the whole of the year of assessment. The Appellant's wife and family resided in that house during his absence in Africa. The Appellant was not in the United Kingdom between the 6th April, 1919, and some date towards the end of March, 1920. He was however in the United Kingdom between the latter date and the 5th April, 1920.
6. The whole of the salary and commission was paid by the Company into a banking account in England on which the Appellant's wife had the power of drawing.
7. On the adjournment of the meeting held on the 21st September, 1920, the Appellant's representative undertook to furnish us within one month with the amounts of the total payments by the Company into the Appellant's banking account in England for each of the 3 years ended the 5th April, 1917, 5th April, 1918, and 5th April, 1919. No particulars of these amounts were however furnished to us at that or any subsequent time, and the representative was not in a position to give us these figures at the meeting held on the 8th June, 1921. Particulars of the salary and commission paid to the Appellant for the three years ended 31st December, 1918, were furnished by the Company to the Inspector of Taxes. A copy of the letter containing these figures is annexed and forms part of the Case. The average for the three years of the aggregate salary and commission as shown by this letter amounts to £2,245.
8. On behalf of the Appellant it was contended:-
(i) That the assessment was bad.
(ii) That if any assessment could be made it should have been made on Mrs. Pickles in accordance with the second proviso to Rule 16 of the General Rules applicable to Schedules A, B, C, D, and E, of the Income Tax Act, 1918, but that remittances from salary were not within this proviso, which applies only to allowances or remittances from property.
(iii) That the Appellant's absence from the United Kingdom was not voluntary but was obligatory on him under the agreement between himself and the Company.
-
(iv) That except for ten days or so the Appellant was not in the United Kingdom in the year of assessment and that he was not in the United Kingdom when-
(a) The Church Door Notice was posted.
(b) The Form of Return was served at Blackpool.
(c) The assessment under appeal was made.
(d) The Notice of Assessment was issued.
(e) The payment of the tax was first demanded.
(v) That the renting of a residence in the United Kingdom did not make the Appellant liable to tax as a person residing in the United Kingdom.
(vi) That the Appellant's legal residence was in Africa, this case being distinguishable from the case of Thomson v. Bensted(56 S.L.R. 10; 7 T.C. 137) in respect that while Thomson was serving under a separate agreement with his Company for each journey to West Africa, and was therefore clearly resident in the United Kingdom when he was not in Africa, in this case the employment was continuous, one agreement commencing from the date, or before the date, when the previous agreement ceased.
(vii) That it was repugnant to the whole scheme of the Income Tax Acts that a bachelor should be treated preferentially as compared with a married man, which would be the case if this assessment were allowed to stand.
9. On behalf of the Crown it was contended (inter alia):-
(i) That the Appellant was liable to assessment and rightly assessed under Schedule D.
(ii) That the case was entirely covered by the decision inThomson v. Bensted and that we were bound by that decision.
(iii) That it was not possible to differentiate this case from that ofThomson v. Bensted on the point of residence, and that the Appellant was resident in this country in the year of assessment within the meaning of the Income Tax Acts.
(iv) That, in the absence of information from the Appellant as to the amounts of salary and commission received, the assessment should be increased.
10. We, the Commissioners who heard the appeal, were of opinion that the assessments were correctly made as to form, and that the appeal was covered by the decision in the case of Thomson v.Bensted. As regards the amount of the liability we considered that ample time had been allowed for the purpose of producing figures but none had been supplied. We therefore accepted the figures furnished by the Company and increased the assessment to the sum of £2,245.
11. The Appellant immediately upon the determination of the appeal declared to us his dissatisfaction therewith as being erroneous in point of law and in due course required us to state a Case for the opinion of the High Court pursuant to the Income Tax Act, 1918, Section 149, which Case we have stated and do sign accordingly.
12. The point of law for the decision of the Court is whether the Appellant has been correctly assessed in respect of the amounts received in or remitted to the United Kingdom out of the earnings arising from his employment in West Africa.
J. JACOB, Commissioner for the Special Purposes of the Income Tax Acts.
(Mr. G.F. Howe, the other Commissioner who heard the appeal, has since retired from the Public Service.)
York House,
23, Kingsway,
London, W.C.2.
14th June, 1922.
AGREEMENT entered into this 6th day of May 1919 BETWEEN AFRICAN ASSOCIATION LIMITED of Liverpool (hereinafter referred to as "the Company") of the one part and JAMES ARTHUR PICKLES of 341, Lytham Road, Blackpool (hereinafter referred to as "the Agent") of the other part.
1. The said Agent hereby agrees to proceed to the Colony of Nigeria West Africa (hereinafter called the Colony) as and when required by the Company and to serve there in the employ of the Company for a period of two years (unless the Agreement shall be previously terminated as hereinafter provided)...
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