Taylor v Provan
| Jurisdiction | England & Wales |
| Judge | Lord Morris of Borth-y-Gest,Lord Reid,Lord Wilberforce,Lord Simon of Glaisdale |
| Judgment Date | 13 March 1974 |
| Judgment citation (vLex) | [1974] UKHL J0313-2 |
| Date | 13 March 1974 |
| Court | House of Lords |
[1974] UKHL J0313-2
Lord Reid
Lord Morris of Borth-y-Gest
Lord Wilberforce
Lord Simon of Glaisdale
Lord Salmon
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Taylor against Provan (Inspector of Taxes), that the Committee had heard Counsel as well on Tuesday the 15th, as on Wednesday the 16th and Thursday the 17th, days of January last upon the Petition and Appeal of Edward Plunket Taylor of Post Office Box No. 7776, Nassau, Bahamas, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 15th of March 1973, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the Case of Frank Williamson Provan (one of Her Majesty's Inspectors of Taxes), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 15th day of March 1973, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Vice-Chancellor of the 30th day of June 1972, thereby Reversed, be, and the same is hereby, Restored: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellant the Costs incurred by him in the Court of Appeal, and also the Costs incurred by him in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The Appellant is a Canadian who has never resided in England. After acquiring experience in brewing and finance he was successful in bringing about several brewery amalgamations in Canada and he became a wealthy man. In 1958 he became involved in the affairs of a brewery in Sheffield which wished to expand. "As a kind of business recreation" he enabled them to acquire three other breweries. They then became United Breweries Limited. Then in 1962, as a result of his further efforts, United Breweries merged with Charrington and in 1967 there was a further merger to form Bass Charrington Limited.
Throughout this period the Appellant resided in Canada. In later years he also resided for considerable periods in the Bahamas. He had offices in both places from which he directed his Canadian interests. He did most of his work in connection with the English amalgamations in Canada or the Bahamas but made frequent visits to England.
He neither sought nor received remuneration from these English companies but they repaid to him the expenses of his visits to England. "For reasons of prestige" he was made a director of each of these companies but he did none of the ordinary work of a director. He was given "special assignments" to deal with the work involved in these mergers and amalgamations.
In 1967 he was assessed to Income Tax in respect of the sums which he had received as repayment of his expenses during the years 1961-2 to 1965-6. Later the assessment was limited to the sum which he had received in repayment of fares for journeys between Canada and England, the total for the five years being over £8,000.
Two questions arose (1) whether these sums were emoluments within the scope of Schedule E and (2) if they were, were they deductions allowable under paragraph 7 of the Ninth Schedule of the Income Tax Act, 1952.
I have no doubt that these sums were emoluments. It was argued that they were not paid to the Appellant as a director because they were paid under special assignments independent of his directorships. I can see no ground for splitting up his duties in that way. He was made a director with a special assignment. There was one appointment not two. Section 160 of the 1952 Act provides that any sum paid to a director in respect of expenses shall be treated as a perquisite of the office and included in the emoluments thereof assessable to income tax.
The substantial question in the case is whether these expenses of travelling are a permissible deduction. If so, then the whole of the sum assessed to tax is deductible and the appeal succeeds. This depends entirely on the proper construction of paragraph 7 of the Ninth Schedule:
"7. If the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
Before proceeding further it is necessary to deal with the precise terms of the special assignment. This was not set out in writing until 1967 but it is admitted that a resolution of the Board of Charrington United Breweries of 21st September, 1967, sets out the terms of the agreements between the Appellant and each of the successive companies of which he was a director. The Resolution was in the following terms:
" Mr. E. P. Taylor The Board recalled its decision to set up the Expansion Committee of the Board on 10 July 1962 and formally resolved that in view of the Company's merger with Bass, Mitchells & Butlers Ltd., this Committee be and is hereby dissolved. The Board wished to express its appreciation to Mr. Taylor of the special services he has contributed in guiding the Expansion Committee in the continuous work upon which it has been engaged over the last 5 years and in particular for the many journeys he has made to the United Kingdom for this purpose.
The Board recalled that the principal business commitments of Mr. Taylor were in Canada and the Bahamas and the consequent arrangement that he would perform his duties on behalf of his Company as far as he could from his offices in those countries, but that it was necessarily envisaged that he would be required to visit the United Kingdom from time to time as well. The Board having felt that a reconfirmation of its arrangements with Mr. Taylor was desirable, it was Resolved:—
(1) that he was to receive no remuneration for his services;
(2) that he had no day to day administrative duties and was not normally required to attend the Company's offices or routine Board Meetings;
(3) that his special assignment was the expansion and development of the Group, and, in particular, to take charge of negotiations for other brewery companies to join the Group;
(4) that it was recognised that he did not reside in the United Kingdom and that, accordingly, his duties were to be performed so far as possible from his residence abroad. If and to the extent that it was necessary for him to come to the United Kingdom to carry out the duties of his special assignment, he would be regarded as travelling on the business of the Company, and consequently the Company would bear all expenses of such visits to the United Kingdom."
The case for the Revenue is that the Appellant was not "necessarily obliged" to incur these travelling expenses because if he had so chosen he could have resided during these five years in England and then there would have been no need to cross the Atlantic. To that the Appellant replies that the terms of his office or employment were that he was to perform his duties so far as he could in Canada or the Bahamas and only to visit the United Kingdom when necessary. Then the Revenue say that the test is not what the parties had agreed, however reasonable their agreement might be, but what his work required. Here they say that all his work could equally well have been done if he had resided throughout in England. There is no finding to that effect but I shall assume that that is so.
I can understand a distinction between what the parties' contract requires and what the work requires when the office has an independent existence so that if this man had not been appointed someone else would have been. But here the office or employment was created for the Appellant because of his special qualifications and there is nothing to suggest that if he had not been available anyone else would or could have been appointed for this very special work. The Appellant clearly would not have agreed to reside in England. So I do not see how in any reasonable sense it can be said that this travelling was unnecessary if this peculiar work was to be done. I think that the Court of Appeal were in error in saying: "There is no evidence that no one could hold the office and perform its duties other than a person living across the Atlantic" ( [1973] 2 W.L.R. at p.682).
It was argued that the Special Commissioners had found otherwise. They say in their decision:—
"Having considered the facts as a whole we are not satisfied that the Appellant's offices in Toronto and Nassau were or should be regarded as places of work for the purposes of his special assignment and we have reached the conclusion that the travelling expenses in question arose, not from the nature of the Appellant's office, but from circumstances personal to himself."
But that is not a finding of fact. It is an inference which they draw from the findings which precede the decision in the Case Stated, and...
To continue reading
Request your trial
-
Reed Employment Plc v Revenue and Customs Comrs
...he was travelling not to his work but on his work. [266]When the House of Lords came to consider Pook v Owen in Taylor v Provan (HMIT)TAX(1974) 49 TC 579 they appeared to have no doubt that Pook v Owen had been decided on this basis. That case considered the issue as to whether expenses inc......
-
Fitzpatrick v Commissioners of Inland Revenue (No.2)
...v Owen ELR[1970] AC 244 Ricketts v Colquhoun (HMIT) ELR[1926] AC 1 Simpson (HMIT) v Tate ELR[1925] 2 KB 214 Taylor v Provan (HMIT) ELR[1975] AC 194 Peter Whiteman QC, Marion Simmons and Richard Anderson (instructed by Berwin Leighton) for the journalists in the Scottish cases. Peter Whitema......
-
Ransom (HM Inspector of Taxes) v Higgs
...288, per Lord Wright, at pages 289-90 and per Lord Porter, at pages 292-3. This fits in with the double purpose argument. Taylor v.Provan 49 T.C. 579; [1975] A.C. 194 shows that the terms of the contract are not conclusive. As to Cecil Bros. Pty. Ltd. v.Commissioner of Taxation of the Commo......
-
Taylor v Provan (HM Inspector of Taxes)
...costs. Russell L.J.-The judgment I am about to read is the judgment of the Court. This appeal from the decision of Pennycuick V.-C. ([1972] 1 W.L.R. 1459) raises a number of points of argument on the question whether in the years of assessment 1961-62 to 1965-66 inclusive the taxpayer was r......
-
Deductibility of travel expenses: Is Australia moving from a global to a schedular income tax?
...1 KB 725; Nolder v Walters (1930) 15 Tax Cas 380; Blackwell v Mills (1946) 174 LT 217; Durbidge v Sanderson (1955) 3 All ER 154. (138) [1975] AC 194. (139) Payne (AAT) (1997) 46 ALD 718, (140) Income Tax Act 1952 (UK) c 10, sch D. (141) Newsom [1953] Ch 7, 15 (Somervell LJ), 16 (Denning LJ)......