Salisbury House Estate, Ltd v Fry (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 04 April 1930 |
| Date | 04 April 1930 |
| Court | King's Bench Division |
NO. 752.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
COURT OF APPEAL.-
HOUSE OF LORDS.-
Income Tax, Schedule D - Profits from letting unfurnished rooms and premises with services - Estate company.
(1)The Appellant Company was the rated occupier of a large block of buildings let to tenants by rooms and by suites of rooms as unfurnished offices. The Company had no other business except the letting out and management of the one property. Income Tax, Schedule A, in respect of the property as a whole was assessed upon the Company.
In addition to the rents for the offices the Company derived profits from its tenants in connection with the provision of lighting, cleaning, caretaking and other services, and admitted that liability to Income Tax, Schedule D, arose with regard to such profits. The Crown contended that the Company was in respect of all its activities carrying on a trade and that accordingly in computing its profits for the purposes of assessment under Schedule D it was necessary to take into account all its receipts, including receipts from rents, an allowance being made for the amount of the assessments under Schedule A. Assessments under Schedule D were made upon the Company upon this basis.
(2)The Appellant Company was a company the main objects of which were the acquisition, development, management, leasing and letting of land and property. Its properties were for the most part shops and blocks of offices and of flats in London, let unfurnished to tenants. The larger blocks of offices, etc., contained lifts, the liftmen being provided by the Company. The Company also provided cleaning, heating, lighting and caretaking services in respect of which additional charges were made. They admitted that liability to Income Tax, Schedule D, arose in respect of profits arising from such additional charges.
The Crown contended that the Company was carrying on a trade, namely, the letting of accommodation and provision of various services; that in addition to the profits assessed under Schedule A in respect of the property in the premises the Company made a further profit by the user of the premises as a commercial enterprise; and that the Company was accordingly assessable to Income Tax, Schedule D, upon the basis of the excess of its total receipts, including rents, over its expenses plus the amount of the Schedule A assessments.
Held, that the Companies were not so assessable. Liability to tax in respect of the rents was covered by the Schedule A assessments, and the rents could not be brought into the computation of any liability under Schedule D.
(1) SALISBURY HOUSE ESTATE, LTD. v. FRY (H.M. INSPECTOR OF TAXES).
CASE
Stated by the Special Commissioners of Income Tax under the Income Tax Act, 1918, Section 149, for the opinion of the High Court.
At a meeting of the Commissioners for the Special Purposes of Income Tax held at York House, Kingsway, London, on 21st February, 1928, Salisbury House Estate Limited (hereinafter called "the Company") appealed against assessments made upon it under Schedule D of the Income Tax Acts for the four years ended 5th April, 1928, in the sums of £16,822, £18,585, £20,344 and £20,453 respectively by the Additional Commissioners of Income Tax for the City of London.
1. The Company was incorporated on 7th January, 1902, to take over some land with a block of buildings upon it in the City of London, known as Salisbury House. Salisbury House was at the time in course of erection or had been recently completed, and the object for which the Company was formed was to hold the same and let it out as offices and turn it to account in any way which might be possible or expedient. Under its Memorandum and Articles of Association a copy of which is annexed to and forms part of this Case(1), the Company has wide powers conducive to this object.
2. The Company has since 1902 held, maintained, let out and managed Salisbury House as contemplated at its inception. It has not acquired, managed or dealt in any other property.
Salisbury House has a very large floor space and contains some 800 rooms, and these rooms have been let out by the Company to some 200 tenants as offices singly or in suites, which may or may not be self-contained. The building itself is of nine floors and contains seven lifts and several entrances. The Company provides and operates the lifts and also provides a uniformed staff of 25 men for this purpose and to act as porters and watch and protect the building. There is also a staff of 61 cleaners. The halls, corridors and staircases of the building are lighted and kept clean by the Company and the building is under the care of a housekeeper whose duty it is to supervise the staff, to prevent the intrusion of unauthorised persons, to take in letters for the tenants and distribute the same, and to see that the building is locked up and safe at night. There are a few radiators in the passages which are provided by the Company for heating purposes. The Company is rated as occupier. It has retained an office for its own use in the building. It has a board of directors, a secretary, and a clerical staff of three persons. It maintains a share register, holds meetings of directors and shareholders and management committees and distributes dividends in the manner usual in the case of a limited company.
3. At the time of the appeal the rooms in Salisbury House had been let out subject to the arrangements made by the Company as indicated above for the whole building, under 78 leases, generally for periods of from 3 to 21 years, 89 tenancy agreements for shorter periods, and 26 tenancies by letter. The Company does not usually grant leases for more than 21 years but it has granted one lease of a part of the premises for a term of 78 years and another for a term of 28 years. The rents agreed upon had been fixed in all cases by having regard to the accommodation provided according to a general scale which takes account of the floor space and situations of the offices let. In no case were offices let furnished. A standard form of lease or agreement, which permits of modifications in certain
respects as indicated hereunder has been used by the Company, and under this form additional rents or charges are made for services provided by the Company beyond the rent for the rooms themselves. For the purpose of this Case it is agreed that the following form sufficiently represents the ordinary tenancy so created:-"THIS INDENTURE made the day of "One thousand nine hundred and twenty- BETWEEN "SALISBURY HOUSE ESTATE LIMITED whose registered office is "Salisbury House Finsbury Circus in the City of London (herein"after called "the Landlords" which expression shall include the "person or persons for the time being entitled to receive the rents "hereinafter reserved) of the one part and of " (hereinafter called "the Tenant" "which expression shall include where the "context so admits) of the other part WITNESSETH THAT IT IS "HEREBY AGREED between the parties hereto as follows:-
(2) "The Landlords will let and the Tenant will take ALL " on the Floor of "Salisbury House aforesaid numbered on the "letting plan thereof and delineated on the plan annexed hereto "and thereon coloured pink Together with the Landlords' fixtures "and fittings (if any) thereto belonging (hereinafter called "the "'said premises") for at the rent at the rate of " per annum clear of all deductions payable by "equal quarterly payments on the four usual quarter days the "first payment of rent to be paid on the day of " One thousand nine hundred and twenty- "and the last payment of rent to be made in advance one calendar "month before the expiration of the said tenancy.
(3) "And the Tenant hereby for and "assigns agree with the Landlords as follows:-
(4) "To pay the said rent on the days and in manner aforesaid "clear of all deductions whatsoever and also to pay on demand "as additional rents the sum of one shilling and threepence per "day for each fire lighted in the said premises hereby agreed to "be let the sum of per week for the cleaning of "the said premises (other than the work referred to in Clause (4) "hereof) and the sum of per quarter towards the "cost of lighting the halls corridors and staircases of Salisbury "House aforesaid or such higher sums for firing and cleaning as "may from time to time be charged to other tenants.
(5) "To keep the said premises internally in the same good "and tenantable repair and condition in which they shall be at the "commencement of the tenancy and in such repair and condition "to deliver up the same together with all Landlords' fixtures and "fittings at the expiration of the tenancy.
(6) "To thoroughly sweep and cleanse all chimneys and flues "and clean all the windows respectively belonging to the said "premises as need or occasion shall require.
(7) "To permit the Landlords and all persons authorised by "them at all reasonable times during the said term to enter upon "the said premises to repair the outside of the said building and "premises and to permit the Landlords or the ground or superior "Landlords for the time being and their respective Surveyors and "Agents with or without workmen from time to time and at all "reasonable times during the said tenancy to enter upon the said "premises to view the condition thereof.
(8) "Not to carry on or do or permit to be carried on or done "upon the said premises any hazardous trade or act whereby the "Landlords may be prevented from insuring the building of which "the said premises form part at the ordinary rate of premium or "whereby any insurance made by the Landlords may be invalidated "nor carry on use or permit the said premises or any part thereof "to be used for any noisy noisome offensive or dangerous trade "business or occupation nor use or permit to be...
To continue reading
Request your trial
-
Twomey (Inspector of Taxes) v Hennessy
... ... , MATER MISERICORDIAE HOSPITAL DUBLIN 1933 IR 480 FRY (INSPECTOR OF TAXES) v SALISBURY HOUSE ESTATE LTD 1930 AC 432 15 TC 266 BIRCH (INSPECTOR OF TAXES) v DELANEY 1936 IR 517 ... ...
-
Mr D S Maclean
Mrs L M Maclean v Her Majesty's Revenue & Customs, SPC 00594
...finding which I have made (finding 21) is justified on the evidence.SubmissionsMr Tyre relied upon Salisbury House Estate Ltd v Fry (1929) 15 TC 266,at 329-330, Sywell Aerodrome v Croft (1941) 24 TC 126, at 136-7, Gittos v Barclay (1982) STC at 395B and Griffiths v Jackson (1982) 56 TC 583 ......
-
Nash (Inspector of Taxes) v Tamplin & Sons Brewery Brighton Ltd ; Davies (Inspector of Taxes) v Webbs (Aberbeeg) Ltd
... ... [1951] UKHL J1025-3 House of Lords ... Lord Morton of Henryton ... Lord Reid ... Salisbury House Estate, Ld. [1930] A.C. 432. The Crown's contention is, in effect, that the right of the ... ...
-
Mitchell and Edon v Ross
... ... Mitchell and J. Edon (H.M. Inspectors of Taxes) Appellants and Harold Leslie Ross ... Taylor-Gooby (H.M. Inspector of Taxes) Appellant and Herman Peter ... by the Solicitor of Inland Revenue, Somerset House, Strand, London, W C 2.) appeared as Counsel for the ... It is now well established for example, by the Salisbury House case in the House of Lord:, 15 Tax Cases, 266 , ... ...