The Committee of A.B. (A Lunatic) v Simpson (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 15 June 1928 |
| Date | 15 June 1928 |
| Court | King's Bench Division |
NO. 682.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
Income Tax-Computation of lunatic's income-No deduction for "lunacy percentage".
Under the Lunacy Act, 1890, and the "Rules in Lunacy, 1892", the Crown is in certain circumstances entitled to receive 4 per cent. (but not exceeding £400) of the clear annual income of a lunatic. A.B., a lunatic, had a considerable income and the whole of the funds were in Court. The income as it came in was credited to the lunatic's account by the Paymaster-General and the appropriate lunacy percentage was debited annually in that account. The Appellant, the Committee of A.B., was assessed under Case III of Schedule D for the year 1926-27 in the sum of £452, the amount of War Loan interest arising in 1925-26; the remainder of the lunatic's income was received under deduction of Income Tax. The Appellant claimed that a deduction of £161, the lunacy percentage for 1925-26 on the whole of the lunatic's income, should be made from the assessment, on the grounds that the lunacy percentage did not form part of the lunatic's income and that there was no authority for charging it to Income Tax. The Crown contended that there was no provision in the Income Tax Acts for allowing such a deduction, that the payment was merely an application of the lunatic's income, or alternatively that the deduction from the assessment should be restricted to the percentage appropriate to that source of income.
Held, that lunacy percentage is a payment out of the lunatic's income, and that no deduction is admissible for Income Tax purposes.
Stated under the Income Tax Act, 1918, Section 149, 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 24th June, 1927, for the purpose of hearing appeals, the Committee of A.B. a lunatic so found by inquisition (hereinafter called the Appellant), appealed against an assessment to Income Tax in the sum of £452 for the year ending the 5th April, 1927, made upon the Appellant by the Additional Commissioners for the Division of St. Margaret and St. John, Westminster, under the provisions of the Income Tax Acts.
2. The assessment appealed against was made under Case III of Schedule D of the Income Tax Act, 1918, in respect of interest on 5 per cent. War Loan 1929-47. It was not disputed that £452 was the amount of War Loan interest received in the year preceding the year of assessment but it was claimed that in making the assessment for 1926-27 the Commissioners should have allowed a deduction of £161 in respect of...
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