Pook v Owen
| Jurisdiction | England & Wales |
| Judge | Lord Guest,Lord Pearce,Lord Donovan,Lord Wilberforce,Lord Pearson |
| Judgment Date | 26 March 1969 |
| Judgment citation (vLex) | [1969] UKHL J0326-2 |
| Date | 26 March 1969 |
| Court | House of Lords |
[1969] UKHL J0326-2
Lord Guest
Lord Pearce
Lord Donovan
Lord Wilberforce
Lord Pearson
House of Lords
Upon Report from the Appellate Committee to whom was referred the Cause Owen against Pook (Inspector of Taxes), that the Committee had heard Counsel, as well on Monday the 3d as on Tuesday the 4th, days of February last, upon the Petition and Appeal of David Norman Howell Owen, of Bryn-y-Mor, Fishguard, in the County of Pembroke, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 9th of November 1967, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioner might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of John Philip Pook (Her Majesty's Inspector of Taxes), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 9th day of November 1967, complained of in the said Appeal, be, and the same is hereby, Reversed: And it is hereby Declared, That for the purposes of income tax the Appellant's travelling allowances should not have been included as part of his emoluments in the relevant assessments, and that the said determination of the General Commissioners was correct as regards the Appellant's claim to deduct any excess expenditure under Rule 7 of the Ninth Schedule to the Income Tax Act 1952: And it is further Ordered, that the Respondent do pay, or cause to be paid, to the said Appellant the Costs incurred by him in the Courts below, and also the Costs incurred by him in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
Dr. Owen is a general medical practitioner in practice at Fishguard. He also holds two part-time appointments with the South Wales Hospital Management Committee as obstetrician and anaesthetist at a hospital in Haverfordwest some 15 miles from Fishguard. Under the terms and conditions of these appointments he was on "stand by duty" as obstetrician, one weekend a month and as anaesthetist on Monday and Friday nights and one weekend a month. At such times he was required to be accessible by telephone, apart from being on call at all times for obstetric "flying squad" duties in any part of Pembrokeshire. He had no other duties at the hospital, all were concerned with emergency cases. The flying squad duties were very rare. On receipt of a telephone call from the hospital he gives instructions to the hospital staff. He usually sets out immediately by car to the hospital. He may advise treatment by telephone and await a further report. Sometimes the telephone call is received when he is out on his medical rounds. It is found in the Stated Case that his responsibility for a patient begins as soon as he receives a telephone call.
Under the Terms and Conditions of Service of Hospital Staff the Management Committee pay to the Appellant travelling expenses as a part time officer at a fixed rate per mile, said to be 8d., for single journeys between Fishguard and the hospital, limited to a single journey of 10 miles. The Appellant pays the cost of the additional five miles travel himself.
The Appellant in 1962-63 made about 140 journeys to the hospital and received payment of expenses amounting to £100. This sum was included in his income assessable for that year. In 1963-64 he made about 115 journeys receiving £82 which was also included in his assessment for 1963-64. Before the Commissioners he sought to deduct the whole cost of travelling incurred which for 1962-63 amounted to £150 and for 1963-64 to £123 for income tax purposes.
The General Commissioners sustained his appeal and allowed the deductions sought under Rule 7 of Schedule 9 of the Income Tax Act, 1952. Stamp J. reversed that determination and his judgment was upheld by the Court of Appeal (Diplock and Edmund Davies L.JJ., the Master of the Rolls dissenting).
Two questions arise—(1) whether the travelling allowances were properly included in the Appellant's emoluments for income tax purposes under Schedule E and (2) was the actual cost of the journeys deductible from his emoluments under the relevant Rule.
Schedule E of the Income Tax Act, 1952, provides as follows:
"Tax under this Schedule shall be charged in respect of any office or employment or emoluments therefrom which fall under Cases I, II and III."
Paragraph 1(1) of Schedule 2 to the Finance Act, 1956, provides inter alia:
"Tax under Case I, II or III shall, except as hereinafter mentioned, be chargeable on the full amount of the emoluments falling under that Case, subject to such deductions only as may be authorised by the Income Tax Acts, and the expression 'emoluments' shall include all salaries, fees, wages, perquisites and profits whatsoever."
Under the 9th Schedule to the Income Tax Act, 1952, Rule 7 applicable to Schedule E provides as follows:
"If the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
The first point, whether the travelling expenses paid to the Appellant were properly included as part of his emoluments was not taken before the General Commissioners or before Stamp J. It was, however, raised without objection before the Court of Appeal who decided it adversely to the taxpayer. No objection was taken to the argument being raised before your Lordships.
In view of the way in which the case went before the Commissioners—the only point being whether the actual travelling expenses were properly deductible—there is little material in the case on the point. The Appellant's entitlement to these expenses is contained in section 19 "Expenses":
"(iv) A part-time officer, when called out in an emergency to the hospital where his principal duties lie, shall receive expenses for such journeys."
The limitation to ten miles for a single journey is contained in section 19(b)(3)(iii) and under the heading:
"Travelling Expenses, Mileage Allowances, etc.":
"(iii) Where a part-time officer travels between his private consulting room or place of residence (whichever is the nearer) and the hospital where his principal duties lie before and/or after an official journey, expenses shall be payable for the whole distance provided that for journeys to and from the hospital where the officer's principal duties lie no expenses shall be paid for any distance exceeding ten miles each way unless circumstances warrant exceptional treatment."
The Court of Appeal, certainly the Master of the Rolls, appear to have treated the payments as allowances payable to the Appellant whether he incurred the expenses or not. But Edmund Davies L.J. would have decided the case the same way whether the payments were actual reimbursement for expenses incurred or allowances. From their reliance on Fergusson v. Noble (1919) 7 T.C. 176 I take it that the case was treated as one where the payment was truly an allowance and not a reimbursement.
There is, in my view, a distinction between the two cases. If the allowance was, as in Fergusson v. Noble (sup cit) a clothing allowance payable whether it was expended or not, I can see the argument that it was an emolument in the sense of a profit or gain and I do not wish to question the authority of that case; but if the payment was merely a reimbursement for actual expenditure, different considerations arise. This case is, in my view, distinguishable.
Mr. Heyworth Talbot for the Revenue was prepared to take the case upon the footing that it was a reimbursement for actual expenditure, and I so treat it.
The Revenue's contention, therefore, must be that where an officer assessed under Schedule E receives an allowance for travelling which is, under his conditions of service, pro tanto to reimburse him for the expense occasioned to him on travelling, this allowance is an emolument. The fact that "emolument" as defined includes "perquisites and profits" does not, in my view, advance the Revenue's argument. "Perquisite" is merely a casual emolument additional to regular salary or wages. But the allowance must, to be chargeable, accrue "in respect of the office or employment" (Schedule E). In Hochstrasser v. Mayes (1958) 38 T.C. 673 Viscount Simonds, at page 705, quotes with approval a passage from the judgment of Upjohn J. (as he then was) to the following effect:
"In my judgment" he said "the authorities show this, that it is a question to be answered in the light of the particular facts of every case whether or not a particular payment is or is not a profit arising from the employment. Disregarding entirely contracts for full consideration in money or money's worth and personal presents, in my judgment not every payment made to an employee is necessarily made to him as a profit arising from his employment....
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