Stevens v Tirard
| Jurisdiction | England & Wales |
| Date | 1939 |
| Court | Court of Appeal |
Revenue - Income tax - Deduction in respect of children - Payments for maintenance and education of children - Payments made to wife as custodian of children under Divorce Court order - Whether income of child “in his own right” -
In divorce proceedings brought by the wife she was given the custody of the three children of the marriage and the husband (respondent in the present appeal) was ordered by the Court to pay to the wife, during the joint lives of the petitioner and the respondent, for the maintenance and education of the three children, sums of 90 l., 90 l. and 70 l. per annum, less tax, in equal monthly instalments. The husband claimed that on the true construction of the order of the Divorce Court the said payments formed part of the alimony which he paid to the wife, and that he was entitled to a deduction in his assessment for income tax in respect of children's allowances under s. 21 of the Finance Act, 1920. For the Crown, on the other hand, it was contended that the said payments were income to which the children were entitled in their own right and therefore no deductions were allowable by reason of sub-s. 3 of s. 21:—
Held, by the Court of Appeal, that the money formed part of the alimony paid to the wife for the maintenance of the children and was not income of the children in their own right; and therefore, that the husband was entitled to the deduction which he claimed in respect of the children.
APPEAL from the judgment of Lawrence J., on a Case stated by the Commissioners for the General Purposes of the Income Tax for the Division of Kensington in the County of Middlesex.
The material portions of the Case were as follow:—
At a meeting of the Commissioners held on June 29, 1938, Nestor Seppings Tirard (hereinafter called “the respondent”) appealed against the following additional assessments made on him under Schedule D of the
For the year |
ending |
April 5, |
1933, |
in the |
sum of |
6 l. |
” |
” |
” |
1934, |
” |
” |
130 l. |
” |
” |
” |
1935, |
” |
” |
130 l. |
” |
” |
” |
1936, |
” |
” |
100 l. |
” |
” |
” |
1938, |
” |
” |
60 l. |
The following facts were admitted or agreed:—
(a) In the year 1929 the respondent was divorced on the petition of his then wife and she was given the custody of the three children of the marriage.
(b) By an order of the High Court of Justice, P. D. and A. Division (Divorce) dated January 21, 1930, the respondent was ordered to pay to his former wife: (i.) for the maintenance of the said wife the sum of 500 l. per annum during the joint lives of the respondent and the said wife; (ii.) for the maintenance and education of the said three children of the marriage the following sums respectively: John 90 l. per annum, Robert 90 l. per annum, and Ann 70 l. per annum, in each case less tax.
The order of the Court was in the following terms:—
(1.) That during the joint lives of the petitioner and the respondent until further order the respondent do pay to the petitioner the sum of 500 l. per annum less tax as from July 4, 1929, in equal monthly instalments payable in advance on the first day of each month.
(2.) That during the joint lives and until further order the respondent do pay to the petitioner for the maintenance and education of the child John until he shall attain the age of twenty-one years or marry under that age the sum of 90 l. per annum less tax as from July 4, 1929, in equal instalments payable in advance of the first day of each month.
Clause (3.) and (4.) of the order made provision for the children Robert and Ann respectively in terms similar to those of clause (2.).
The respondent had duly paid to his former wife the sums mentioned for the children (less tax) and she, as guardian of the respective children, had preferred repayment claims on their behalf, on the basis that the said sums were the income of the respective children, which claims had been allowed.
For the years in question the respondent claimed, and was allowed, children's allowance at the appropriate rate of tax, in respect of these three children, in the first assessments made on him.
The respondent's return for income tax did not disclose the amounts of the sums payable to his former wife in respect of each child, but merely referred to them as “share in alimony.”
On the attention of the appellant, the Inspector of Taxes, being drawn to the said claims for repayment of tax made by the respondent's former wife on behalf of the said children, as aforesaid, in respect of the amount payable by the respondent under the said order, the matter was brought before the additional Commissioners acting for the Division, who made the additional assessments now under appeal.
On behalf of the respondent it was contended: that the only question for the decision of the Commissioners was the correct interpretation to be placed on the said order, so far as the payments made to the respondent's former wife in respect of the children were concerned; that on a true construction of the order the said payments were income of the respondent's said former wife, and were not income of the children, the case of Jodrell v. JodrellF1 being referred to on this point; that the children's allowances referred to above had been rightly made to the respondent in the first assessments made on him, and the additional assessments appealed against were wrong in law and ought to be discharged.
The Inspector of Taxes, on behalf of the Crown, contended: that the case of Jodrell v. JodrellF1 had no application to the facts of the present case; that the said order in this case provided for the payment of three separate sums for the maintenance and education of the said three children respectively, that the wife received the said sums as guardian having custody of the children, and that she was bound to account to them for those sums if required, and the cases of Drummond v. CollinsF2 and Johnstone v. ChamberlainF3 were referred to; that each of the said three children of the respondent was entitled in his or her own right to an income which by s. 21, sub-s. 3, of the Finance Act, 1920F4, as amended by subsequent enactments, precluded the respondent from being entitled to any deduction under s. 21 of the Finance Act, 1920, or any other section in respect of any of the said three children; and that the additional assessments should be confirmed.
The Commissioners discharged the additional assessments.
The Inspector of Taxes, on behalf of the Crown, appealed.
On May 16, 17, 18 and 26, 1939, the appeal was heard by Lawrence J., who on the last mentioned date gave judgment. He held that the decision of the Commissioners was right. The words of s. 21...
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Morley-Clarke v Jones
...ordered as "maintenance for the child" or children, it was clearly established by the decision of this court inStevens v. Tirard ELR[1940] 1 K.B. 204 that the moneys paid under such an order were the income of the recipient parent beneficially for all purposes and unaffected by any right or......
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Sherdley v Sherdley
...… maintenance and education of the children, the marriage of whose parents is the subject of the proceedings." 7 In Stevens v. Tirard [1940] 1 K.B. 204 the custody of the three children of a dissolved marriage was granted to the mother, and an order was made under section 193(1) above that ......
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Yates (Inspector of Taxes) v Starkey
...children. Upon this part of the case I was referred to a decision of the Court of Appeal in the case of Stevens v.Tirard, reported in [1940] 1 K.B. 204, and 23 T.C. 321. That case, however, in my judgment, was a very different one and really affords very little assistance to me on this occa......
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Yates (HM Inspector of Taxes) v Starkey
...children. Upon this part of the case I was referred to a decision of the Court of Appeal in the case of Stevens v.Tirard, reported in [1940] 1 K.B. 204, and 23 T.C. 321. That case, however, in my judgment, was a very different one and really affords very little assistance to me on this occa......