Russell v Hird & Mercer
| Jurisdiction | England & Wales |
| Judgment Date | 20 May 1983 |
| Date | 20 May 1983 |
| Court | Chancery Division |
Chancery Division.
Mr. R. Carnwath (instructed by the Solicitor of Inland Revenue) for the Crown.
Mr. J. Matthew (instructed by Messrs. Speechly, Bircham & Co.) for the taxpayers.
Before: Warner J.
Income tax - Woodlands - Taxpayer contracted to fell timber - Whether taxpayer had "use" of land - Whether taxpayer "occupied" land - Whether assessable under Sch. B or Case I of Sch. D - Income and Corporation Taxes Act 1970 section 91 section 92Income and Corporation Taxes Act 1970, sec. 91, 92.
This was an appeal by the Crown from a decision of the General Commissioners who discharged an assessment to income tax made on the taxpayers in respect of their "profits as timber dealers" under Sch. D, Case I.
In 1976 the taxpayer (H) agreed to purchase from the owner the timber in certain woods. H entered into a second agreement with another taxpayer (M) to sell him a half share in the timber. They also formed a syndicate to market and sell the wood.
For two years the taxpayers carried out work on the wood in conjunction with the owner's conditions. Roads were constructed, machinery provided and fellers employed. The land was kept in good maintenance and any damage righted; finally it was cleared and prepared for the next planting.
The taxpayers were assessed jointly to income tax under Sch. D, Case I for the year 1978-79. On appeal against this the General Commissioners discharged the assessment, agreeing with the taxpayer's argument that during the relevant period they had been occupiers of the land, and as such fell to be taxed under Sch. B.
On appeal to the High Court, the Crown argued that a person could not be said to have "the use" of woodland for Sch. B purposes, unless he had the exclusive or paramount use of it. In the present case, it was submitted, the taxpayers had only a limited right of entry for specific purposes. Consequently their position was subordinate to that of the land owner.
Held, appeal dismissed.
1. The authorities show that not only is the question who was the occupier of particular land at a particular time one of fact, but it is a question that cannot be answered by looking only at the legal rights of the persons concerned.
2. The owner of the land was entitled to exercise all the rights of his position provided he did not interfere with the work being carried out by the taxpayers on the land. The landowner had conferred rights by contract onto the taxpayers.
3. The Commissioners could have found that the taxpayers' position was paramount to that of the landowner. As they had not it would not be right to reverse their decision.
4. The case should not be remitted to the Commissioners for the finding of further facts as to do so would serve to allow the Crown a second review of essentially the same facts.
Warner J.: These are appeals by the Crown against two decisions of the General Commissioners for the Division of Leath, in Cumbria, given on the same day and on the same facts. By the first decision the Commissioners discharged an assessment to income tax made on Mr. John Goldby Hird and Mr. Fred Mercer jointly, under Sch. D, Case I, in respect of what was expressed to be their "profits as timber dealers". By the second decision the Commissioners discharged a similar assessment made on Mr. Hird alone. It looks as thought the assessments were estimated and were alternative, the one on Mr. Hird and Mr. Mercer jointly being in the sum of £80,000 and the one on Mr. Hird alone being in the sum of £40,000. Like counsel in their arguments I propose to consider, in the main, the questions arising on the appeal relating to the joint assessment, it being, so I understand, common ground that no different question arises in relation to the assessment on Mr. Hird alone.
Essentially, the question that the Commissioners had to decide was whether the profits derived by Mr. Hird and Mr. Mercer from dealing in the timber from two woods near Armathwaite, in Cumbria, called respectively "Nelson Hill Wood" and "Priory Wood", were assessable to income tax under Sch. D, Case I, or whether Mr. Hird and Mr. Mercer were the occupiers of those woods during the relevant period for the purposes of Income and Corporation Taxes Act 1970 section 91 section 92sec. 91 and 92 of the Income and Corporation Taxes Act 1970, so as to be assessable in respect of those profits only under Sch. B.
The facts found by the Commissioners were these. On or about 25 February 1976, Mr. Hird agreed to purchase from Mr. Edward Peter Ecroyd, who was the owner of the woods, the timber in them at the price of £28,345, on terms that were set out in an appendix to a letter written to Mr. Hird by Mr. Ecroyd's agents on 11 February 1976. That document is annexed to the case stated and I think that I should read it. It is headed, "E.P. Ecroyd, Esq. - Sale of Timber at Priory and Nelson Hill Woods, Armathwaite", and the text of it is as follows:
1. Timber Offered: A clear fell of approximately 37 acres on which are about 15,000 trees; the estimated volume is 112,500 hoppus feet and the main species is Scots Pine. The 35 yard wide strip, shown on the plan, is excluded from this sale and the trees along its inner edge have been marked with red paint.
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2. Purchase Money:
(a) To be paid in full on...
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