The Commissioners of Inland Revenue v Nettlefold
| Jurisdiction | England & Wales |
| Judgment Date | 13 July 1933 |
| Date | 13 July 1933 |
| Court | King's Bench Division |
NO. 900.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
Sur-tax - Deductions - Payments under deed to trustees for benefit of charities and persons, excluding disponor, under disponor's directions - Income Tax Act, 1922 (12 & 13 Geo. V c. 17), Section 20 (1).
By a deed executed in August, 1930, F.J.N. covenanted to pay to trustees from his general taxed income for the period of eight years from 6th April, 1930, or during his life, whichever should be the shorter, a specified monthly sum commencing on 6th April, 1930. These monthly sums were to be held by the trustees in trust for distribution among certain charities or persons, other than the disponor, as he should direct, any surplus remaining in the hands of trustees at the end of the year to be held by them for his children in such shares as they should determine. The amount of the monthly payments was increased by a supplementary deed executed in November, 1930.
During the year 1930-31, the whole of the payments under the deeds were distributed by the trustees to various persons and societies under the disponor's directions.
On appeal against an assessment to Sur-tax for the year 1930-31, the disponor claimed that all the monthly payments as from 6th April, 1930, were deductions in arriving at his liability and that Section 20, Finance Act, 1922, did not apply to the deeds to make the payments part of his income for Sur-tax purposes.
The Special Commissioners allowed the deductions claimed, except the payments made under the principal deed for the months of April, May, June and July, 1930.
Held, that the payments made by the disponor under the deeds did not constitute part of his income for Sur-tax purposes.
Stated under the Income Tax Act, 1918, Sections 7 (6) and 149, and Section 42 (7) of the Finance Act, 1927, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on the 28th day of June, 1932, Frederick John Nettlefold appealed against an assessment to Sur-tax made upon him for the year 1930-31 in the sum of £21,672.
2. The sole question for the Court is the validity or not of certain deductions which Mr. Nettlefold claims should be allowed against his total income as computed for the purposes of Sur-tax.
3. On the 26th day of August, 1930, Mr. Nettlefold executed a deed, a copy of which, marked "A", is attached to and forms part of this Case(1). The parties to the said deed, hereinafter called "the principal deed", are Mr. Nettlefold, of the one part, and three of the partners in the firm of Ellis Peirs and Co., solicitors, of the other part, these three partners being the trustees under the principal deed. Under the provision of the principal deed, Mr. Nettlefold covenanted to pay to the trustees from his general taxed income, for the period of eight years from the 6th day of April, 1930, or during his life (whichever should be the shorter), the monthly sum of £250, commencing on the 6th day of April, 1930, and payable on the sixth day of every month.
These monthly sums were to be held by the trustees as follows:
(2) Upon trust for distribution among such charities or persons other than Mr. Nettlefold himself as Mr. Nettlefold should from time to time direct in writing.
(3) Subject to such directions, upon trust to pay fixed sums which total £168 6s. 0d. per annum to specified charities and persons set out in the schedule to the deed, such fixed sums being capable of variation as Mr. Nettlefold should direct.
(4) If, at the end of any year, there was a surplus remaining in the hands of the trustees, upon trust for the child or children of Mr. Nettlefold in such shares and in such manner as they, the trustees, should determine.
4. In the year under appeal, the whole of the monthly sums under the principal deed and the supplemental deed mentioned below were distributed by the trustees under Mr. Nettlefold's written directions and the trust in respect of the surplus did not, therefore, come into operation.
5. On the 3rd day of November, 1930, Mr. Nettlefold executed a second deed a copy of which, marked "B", is attached to and forms part of this Case(1). The parties to this deed (hereinafter called "the supplemental deed") are the same as the parties to the principal deed.
Under the supplemental deed, Mr. Nettlefold covenanted upon the same terms and conditions as obtain in the principal deed, to pay the further monthly sum of £73 to the trustees, commencing on the 6th day of April, 1930, "the payments for the months preceding these presents to be made immediately after the execution of these presents." No similar direction as to the payments for the period from the 6th day of April, 1930, to the date of execution occurs in the...
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