Scottish Woollen Technical College v Inland Revenue
| Jurisdiction | Scotland |
| Date | 1926 |
| Court | Sheriff Court |
No. 581.-COURT OF SESSION, SCOTLAND (FIRST DIVISION).-
Income Tax - Schedule A - Exemption - Public school - Charity - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule A, No. VI, Rule 1(c) - Finance Act, 1921 (11 & 12 Geo. V, c. 32), Section 30 (1)(a).
The Appellants were incorporated under the Companies Acts as a company limited by guarantee. Membership was restricted to persons engaged in the woollen industry in Scotland, and such persons constituted the majority of the governing body. The main object of the Association was, "with a view to the advancement of "the woollen industry in Scotland, to promote .... systematic "education, instruction and study in all branches of the said "industry." In 1923, in pursuance of this object, the Association took over from the local Education Authority the Technical College, Galashiels, which had been originally built and equipped out of subscriptions from Scottish woollen manufacturers and others, supplemented by a grant of equal amount from the Scottish Education Department. The transfer was made subject to the right of the Education Authority to hold continuation classes-in all kinds of subjects-on the premises in the evenings, but the instruction given
during the day was wholly related to the principles and practice of woollen manufacture. All classes were open to anyone on payment of the prescribed fees. The fees for students nominated by members were at a lower rate than those for other students. In addition to fees, the income of the College also included Government grants and subscriptions from members of the AssociationThe Appellants claimed exemption from Income Tax under Schedule A in respect of the College either as a public school under Rule 1 (c) of No. VI of Schedule A, Income Tax Act, 1918, or as a charity under Section 30 (1) (a) of the Finance Act, 1921, but the General Commissioners rejected the claim under both heads.
Held, that the College was not a public school within the meaning of No. VI of Schedule A of the Income Tax Act, 1918, but (Lord Blackburn dissenting) that it was a charity within the meaning of Section 30 of the Finance Act, 1921, and, as such, was entitled to the exemption sought.
At a meeting of the Commissioners for the General Purposes of the Income Tax Acts held at Selkirk on 16th April, 1924, for the purpose of hearing appeals against assessments under the Income Tax Acts, the Scottish Woollen Technical College, Galashiels (hereinafter called the Appellants) appealed against assessments of £57 and £312 10s.made under Schedule A of the Income Tax Act, 1918, the assessment of £57 being for part of the year ending 5th April, 1923, and the assessment of £312 10s. for the year ending 5th April, 1924, and both being in respect of buildings in Galashiels known as The Scottish Woollen Technical College.
I. -The following facts were admitted or proved:-
1. The Scottish Woollen Technical College is a limited company incorporated in 1922 under the Companies Acts, 1908 to 1917, as a company having no share capital and limited by guarantee. In respect that the Association is formed to promote objects of the nature contemplated by Section 20 of the Companies (Consolidation) Act, 1908, and that division of profits among the members is prohibited, the word "Limited" is omitted from the name under Licence of the Board of Trade. The College has been recognised by the Scottish Education Department as a Central Institution for the purposes of the Education (Scotland) Acts.
2. Its objects are set forth in Clause 3 of the Memorandum of Association, from which it appears that the Association was formed "with a view to the advancement of "the Woollen Industry in Scotland, to promote by "means of a College or Colleges, School or Schools, "lectures, scholarships, and bursaries or otherwise "systematic education, instruction and study in all "branches of the said industry." It is provided by Clause 4 that "the income and property of the "Association from whatever source derived shall be "applied solely towards the promotion and furtherance "of the objects of the Association as set forth "in the Memorandum of Association, and no part "thereof shall be paid or transferred directly, or "indirectly, by way of profit to the members of the "Association," and by Clause 9 that if the Association should be wound up any property remaining after satisfaction of all debts should, subject to the conditions on which such property is held, be transferred to some other body having objects similar to those of the Association.
3. By the Articles of Association membership is restricted to individuals, firms and companies engaged in the woollen industry in Scotland (Article 5). The governing body consists of twenty members, of whom twelve are elected by the members of the Association from their own number. The others are two members of the Education Authority of the County of Selkirk nominated by the Authority; one member of each of the Education Authorities of the Counties of Roxburgh and Peebles nominated by these Authorities respectively; three employees engaged in the woollen industry-one in each of the said Counties nominated by the respective Authority-and one representative of Edinburgh University nominated by the Senatus. The Scottish Education Department has power to nominate an Assessor who shall have the right to attend all meeting of Governors and take part in the proceedings but shall have no vote (Article 46).
4. The College Buildings, the assessment of which is in dispute, were disponed to the Appellants under an Agreement, dated 3rd May, 1923, by the Selkirk Education Authority. The said College was erected and equipped in 1909 as a Technical College. The money for this purpose was raised by subscriptions from manufacturers and others to the amount of £11,000, supplemented by a grant of equal amount from the Scottish Education Department. The title was vested in the Burgh of Galashiels School Board until 1918, when it was, by the Education Act, 1918, automatically transferred to the County of Selkirk Education Authority, by whom the College was managed and financed until the said Agreement in 1923 with the Appellants. The Agreement, a copy of which (marked E) is attached hereto, and forms part of this Case, proceeds upon the preamble that the first parties (the Selkirk Education Authority) could not reasonably ask their ratepayers to bear the cost of conducting such Central Institution on a scale to do justice to advanced technical education for the whole woollen industry of Scotland. The heritable subjects were disponed to the second parties (the Appellants), and the equipment delivered to them, with certain exceptions connected with the continuation classes, for which the first parties reserved right to certain accommodation and facilities in the College buildings. It was provided that if the second parties, in the opinion of the Department, ceased to perform the functions for which they were incorporated, or to maintain the whole property transferred to them free of bond, and for the purposes for which they were constituted, the whole site, buildings and plant should be at the disposal of the Department, subject to reservations.
5. Classes for instruction in the principles and practice of woollen and worsted cloth manufacture are held in the College during the day, and continuation classes, under the auspices of the County of Selkirk Education Authority, are held in the evenings. The subjects taught in the continuation classes include not only those relating to the textile trade, but also Engineering, Plumbing, Building Construction, Art, Painting, Darning, etc. None of the classes is restricted to members. They are open to anyone, and the day classes include ex-service men sent by the Ministry of Labour. The number of day students is about 120, and the number of students attending the continuation classes is about 250, and the ages of all the students are 15 years and upwards. The fees are as follows:-Full Day Course-per term, £5 for students nominated by members, £10 for students not so nominated, £50 per annum for foreign students. Special "One day per week" Courses-per session of two terms (Autumn and Spring), 30s. for students nominated by members, and £3 for others. Full Day Courses for "Department Apprentices" £3 per session. Part-time Courses are charged proportionately to time occupied, and value of the subject-matter.
5. There are also correspondence courses, and courses of lectures for which special fees are charged.
-
6. The income of the College from 31st October, 1922, (date of incorporation) to 31st July, 1923, was as follows:-
£
s.
d.
(1) Government Grants
1032
0
0
(2) Membership Subscriptions
981
6
8
(3) Students' Fees
695
5
11
(4) Interest on Endowment Fund
54
12
11
(5) Interest on Deposit Receipts
1
16
8
(6) Payment for work done
2
14
5
£2,767
16
7
7. As long as the College was under the management of the School Board and the Education Authority exclusively the buildings were exempted from Income Tax, and the same, or similar, subjects were taught.
8. Prints of the following, which were lodged and are signed as relative hereto, may be referred to as part of this Case, viz.:-
(2) Memorandum and Articles of...
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