Re Cameron (Deceased)
| Jurisdiction | England & Wales |
| Judgment Date | 27 July 1965 |
| Date | 27 July 1965 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
Income Tax - Repayment of tax - Husband and wife - Reliefs in respect of trade carried on by wife - Repayment to husband of tax deducted from wife's dividends - Whether husband accountable to wife - Income Tax Act, 1952 (15 & 16 Geo. VI & 1 Eliz. II, c. 10), Sections 314, 341 and 354.
A husband and wife, each of whom had a substantial income, lived together and neither applied for separate assessment to Income Tax. Loss relief and capital allowances were due for the years 1957-58 and 1958-59 in respect of farming carried on by the wife. After the husband's death in November, 1958, his executors claimed and obtained on this account repayment of tax deducted from dividends payable to the wife.
The executors applied to the High Court by originating summons for a declaration whether the sums so received should be regarded as part of the husband's free personal estate for the purposes of estate duty. It was contended for the executors that the widow was entitled to the sums in question. For the Crown it was contended that, by virtue of Section 354, Income Tax Act, 1952, they were a windfall to the husband.
Held, that, although only the husband (or his representatives) could give a good receipt for the repayment, inasmuch as it represented tax borne by the wife out of her income it was part of her income and he must account for it to her.
By an originating summons dated 14th August, 1964, under Section 3 of the Administration of Justice (Miscellaneous Provisions) Act, 1933, to which the Commissioners of Inland Revenue were Defendants, the Executors of Archibald Anthony Lovett Cameron deceased as Plaintiffs claimed a declaration whether the whole or any and if so what part of the benefit of claims made under Sections 341, 314 and the proviso to Section 324 (1), Income Tax Act, 1952, for the repayment of sums paid for tax on the income of the deceased and his wife for the years 1957-58 and 1958-59, by reference to losses and capital expenditure incurred by the wife in carrying on her trade of farming, should be treated as part of his free personal estate at the date of his death (3rd November, 1958) for the purpose of computing the estate duty for which the Plaintiffs were accountable.
The case came before Harman, L.J., sitting as an additional Judge of the Chancery Division, on 7th and 8th July, 1965, when judgment was reserved. On 27th July, 1965, judgment was given against the Crown, with costs.
Harman, L.J.-This case, so I am told, is regarded by the Crown as a test case, and is designed to decide a question which has raised doubts in the past and has, I gather, been inconsistently answered. The question arises between husband and wife, or the personal representatives of the first of them to die, where the husband has received from the Revenue money representing repayments of tax arising out of his wife's financial affairs, and is whether he or his representatives can retain those moneys as part of his estate or whether he must account for them to the wife or her representatives.
The question is an artificial one, as it can only arise when no claim has been made by either of the spouses to the separate assessment for tax purposes to which each is entitled under Section 355 of the Income Tax Act, 1952. It would be odd if the omission to exercise this right, which is merely a cog in the Income Tax machinery, should alter the beneficial rights of the parties.
In the present case the husband was the first to die, and the claim of the Crown is that moneys received by his representatives form part of his estate for estate duty purposes and are liable to that duty accordingly. The question is raised by originating summons, entitled in the matter of the husband's estate and in the matter of the Administration of Justice (Miscellaneous Provisions) Act, 1933, and the parties are the personal representatives of the husband as Plaintiffs and the Commissioners of Inland Revenue as Defendants. In fact, the second Plaintiff is the testator's widow, who claims these moneys for herself, and the second and third Plaintiffs between them represent the beneficial interests under the husband's will.
The testator was a retired naval captain living with his wife at Cowfold in Sussex. He had a pension, some small investments and an interest in a relation's estate, his income in all amounting to some £3,400 a year. His wife had an income from investments amounting to nearly £11,000. She had been for some time, at any rate during the last two years of his life, carrying on at Cowfold a farming business which was remarkably unprofitable. He died in November, 1958, and during the period from 1st April, 1957, to that date losses amounting to several thousand pounds, as agreed with the Revenue authorities, were incurred by the wife in her farming business. During the same period certain capital allowances had been agreed to be due in respect of capital expenditure by her on the farm. Details are set out in...
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