Rutledge v Inland Revenue
| Jurisdiction | Scotland |
| Judgment Date | 08 March 1929 |
| Date | 08 March 1929 |
| Docket Number | No. 50. |
| Court | Court of Session |
Lord President (Clyde), Lord Sands, Lord Blackburn, Lord Morison.
Revenue—income tax—Excess profits duty—Income assessable—Income from ‘adventure … in the nature of trade’—Profits on purchase abroad and re-sale in this country of consignment of paper—Isolated transaction outwith the scope of ordinary business—Income Tax Act, 1918 (8 and 9 Geo. V. cap. 40), sec. 237, and Sched. D, Case I.
A moneylender, visiting Berlin on business, purchased from a bankrupt German firm a large consignment of toilet paper, and arranged for its despatch to the United Kingdom. Before delivery had been made, he found a purchaser in London, to whom he re-sold the whole consignment at a profit of over £10,000. The transaction was out-with the scope of his ordinary business.
Held that the transaction, although isolated, was an adventure in the nature of trade, the profits of which were assessable to income tax under Schedule D, Case I., and to excess profits duty, in respect that the operations of purchase and re-sale involved in it were of the same kind, and carried on in the same way, as those which characterised ordinary dealing in the purchase and re-sale of paper.
Observations in Inland Revenue v. Livingston, 1927 S. C. 251, at p. 255, commented on and explained.
Andrew Henderson Rutledge, moneylender, 135 St Vincent Street, Glasgow, appealed to the Commissioners for the General Purposes of the Income Tax Acts for the Lower Ward of the County of Lanark against an additional first assessment to income tax under Schedule D of the Income Tax Act, 1918,* for the year ended 5th April 1921 on the sum of £11,000, and an assessment to excess profits duty for the two months ended September 1920 on the sum of £10,857. The Commissioners refused his appeal, and, at his request, stated a case for the opinion of the Court of Session as the Court of Exchequer in Scotland.
The case set forth:—
‘The following facts were admitted or proved:—(1) The appellant had occasion, while acting as a director of Messrs Mitchells
Pictures, Limited, to visit Belgium, accompanied by another director, regarding certain advertising rights on the Belgian State Railways. (2) They proceeded afterwards to Berlin for the purpose of purchasing raw film on behalf of the company. All transportation expenses to the Belgian frontier were borne by the Belgian State Railways. (3) While the appellant was staying in Berlin his guide put him into touch with a man interested in finding money for German firms, and through him he made a deal with a bankrupt firm of paper manufacturers to purchase one million rolls of toilet paper for £1000 sterling. (4) He paid £100 deposit, and arranged for the paper to be sent in four lots of a quarter million rolls each every two weeks, commencing September 1920. (5) On his return to London he made efforts to find customers for the paper, and got into touch with an east-end Jew who offered him 3d. per roll delivered at a London Dock. (6) The first consignment was then due, and the appellant accepted the offer for the whole consignment, and gave up the bill of lading in exchange for £500 sterling. The appellant remitted this money to Germany on 14th September 1920. About two weeks later he delivered the second bill of lading in exchange for £5000 sterling, and on 29th September remitted a further £500 sterling to Germany. (7) When the third consignment arrived the appellant received £6500 sterling in full settlement, after allowing the purchaser £500, as the purchaser had paid all clearance charges. (8) The net profit made by the appellant on the transaction was approximately £10,895, as shown in the following statement of profits:—
| Cost of paper | £1,000 |
| Commission paid to party giving introduction to German firm | 100 |
| Petty expenses, cables, &c. | 5 |
| Total Outlays | £1,105 |
| Proceeds of sale | £12,500 |
| Less allowance for freight charges paid by purchaser | 500 |
| Net proceeds | £12,000 |
| Net profit | £10,895 |
(9) Appellant is a moneylender, and his business interests at September 1920 were as follows:—[These business interests were then set forth. They consisted of interests in moneylending concerns, and in Mitchells Pictures, Limited. His connexion with the latter company, however, only lasted for about a year.] (10) The appellant's business interests since 1920 have been as follows:—[These business interests were then set...
To continue reading
Request your trial
-
Clark v Follett (HM Inspector of Taxes)
...26 T.C. 293; Cenlon Finance Co. Ltd. v. Ellwood 40 T.C. 176; [1962] A.C. 782;Rutledge v. Commissioners of Inland Revenue 14 T.C. 490; 1929 S.C. 379; Edwards v. Bairstow 36 T.C. 207; [1956] A.C. 14; Turner v. Last (1965) 42 T.C. 517;Shadford v. H. Fairweather & Co. Ltd. (1966) 43 T.C. 291. 8......
-
Clark v Follett
...26 T.C. 293; Cenlon Finance Co. Ltd. v. Ellwood 40 T.C. 176; [1962] A.C. 782;Rutledge v. Commissioners of Inland Revenue 14 T.C. 490; 1929 S.C. 379; Edwards v. Bairstow 36 T.C. 207; [1956] A.C. 14; Turner v. Last (1965) 42 T.C. 517;Shadford v. H. Fairweather & Co. Ltd. (1966) 43 T.C. 291. 8......
-
Griffiths v J. P. Harrison (Watford) Ltd
...or intention of the tax-payer in buying them or at the result of the initial purchase of the shares. Cases such as Rutledge v. Commissioners of Inland Revenue 1929S. C. 379: 14 T.C. 490, show that at least in the case of an individual his object and intention when buying property are very r......
-
J.P. Harrison (Watford)Ltd v Griffiths (HM Inspector of Taxes)
...taxpayer in buying them or at the result of the initial purchase of the shares. Cases such as Rutledgev. Commissioners of Inland Revenue (1929 S.C. 379, 14 T.C. 490) show that, at least in the case of an individual, his object and intention when buying property are very relevant. And where,......