Scottish Woollen Technical College v Inland Revenue
| Jurisdiction | Scotland |
| Judgment Date | 26 June 1926 |
| Date | 26 June 1926 |
| Docket Number | No. 93. |
| Court | Court of Session |
Lord President (Clyde), Lord Sands, Lord Blackburn, Lord Ashmore.
RevenueIncome TaxExemptionsPublic SchoolHeritages owned and occupied by a charity Woollen Technical College Whether such college was a public schoolWhether such college was occupied by a charity Income Tax Act, 1918 (8 and 9 Geo. V. cap. 40), First Schedule, Sched. A, No. VI, Rule 1 (c) Finance Act, 1921 (11 and 12 Geo. V. cap. 32), sec. 30 (1) (a).
A limited company, membership of which was restricted to persons engaged in the woollen industry in Scotland, was formed with a view to the advancement of the woollen industry in Scotland, to promote by means of a college systematic education, instruction and study in all branches of the said industry. Its income and property were dedicated to these objects, and no profits could be distributed among its members. It owned and occupied a college at which classes were held for instruction in the principles and practice of woollen and worsted cloth manufacture. The students were fifteen years of age and upwards, and paid fees for the courses of instruction.
Held (1) that the Company was not entitled to exemption from income tax under Schedule A, No. VI., Rule 1 (c), of the Income Tax Act, 1918, the college not being a public school within the meaning of the rule; but (2) (diss. Lord Blackburn), that it was entitled to exemption under sec. 30 (1) (a) of the Finance Act, 1921, on the ground that the college buildings were heritages owned and occupied by a charity.
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, the Scottish Woollen Technical College, Galashiels, appealed against assessments made under Schedule A of the Income Tax Act, 1918, in respect of buildings in Galashiels known as the Scottish Woollen Technical College.
The Commissioners dismissed the appeal, and at the request of the appellants stated a case for appeal to the Court of Session.
The case set forth:
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. 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 industryone in each of the said counties nominated by the respective authorityand 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 meetings of governors and take part in the proceedings, but shall have no vote. (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 is attached hereto, and forms part of this case, proceeds upon the preamble that the first parties (the Selkirkshire 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, &c. 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 fifteen years and upwards. The fees are as follows:Full day courseper 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 apprentices3 per session. Part-time courses are charged proportionately to time occupied and value of the subject-matter. There are also correspondence courses, and courses of lectures for which special fees are charged. (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.
II. Mr Edgar L. Brown, solicitor, Galashiels, for the appellants, contended:(1) That as the College was founded partly by Government grants and partly by voluntary subscriptions for the purposes of technical education, and was held and used by the appellants expressly for these...
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