Thomson v Moyse
| Jurisdiction | England & Wales |
| Judge | Viscount Simonds,Lord Reid,Lord Radcliffe,Lord Cohen,Lord Denning |
| Judgment Date | 22 November 1960 |
| Judgment citation (vLex) | [1960] UKHL J1122-2 |
| Date | 22 November 1960 |
| Court | House of Lords |
[1960] UKHL J1122-2
House of Lords
Viscount Simonds
Lord Reid
Lord Radcliffe
Lord Cohen
Lord Denning
Upon Report from the Appellate Committee, to whom was referred the Cause Thomson (Inspector of Taxes) against Moyse, that the Committee had heard Counsel, as well on Monday the 30th and Tuesday the 31st, days of May last, as on Wednesday the 1st day of June last and Wednesday the 5th, Thursday the 6th and Monday the 10th, days of October last, upon the Petition and Appeal of Andrew Thomson, of Edinburgh 1st District, Lothian House, Edinburgh 3 (one of Her Majesty's Inspectors of Taxes), 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 9th of March 1959, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, 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 Stephen Dickson Moyse, 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 9th day of March 1959, in part complained of in the said Appeal, be, and the same is hereby. Reversed except as to Costs, and that the following Assessments to Income Tax made upon the Respondent under Cases IV and V of Schedule "D" of the Income Tax Act, 1918, namely—
( a) under Case IV for the year 1949/50 in the sum of £2,335 and for the years 1950/51 and 1951/52 in the sum of £2,500 for each year; and
( b)under Case V for the year 1949/50 in the sum of £3,457 and for the years 1950/51 and 1951/52 in the sum of £3,500 for each year.
be, and the same are hereby Restored: 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,
At the conclusion of the argument in this case I was clearly of opinion that the appeal must succeed. I wrote my Opinion accordingly, but, having had the privilege of reading the Opinion which my noble and learned friend, Lord Radcliffe, is about to deliver, I have decided to withdraw it. For I am in complete agreement with his reasoning and conclusions and think it on the whole desirable in this difficult branch of the law that the same result should not be reached by the use of slightly different words.
I shall, therefore, content myself with moving that the appeal should be allowed and the assessments of the Respondent to income tax restored. The Order in the Courts below in regard to costs will not be disturbed, and there will be no Order as to costs in this House.
My Lords,
The Respondent was born in the United States of America: he is now a British subject resident in this country but he retains his American domicile of origin. He was in receipt of income in the United States part of which arose from "securities out of the United Kingdom" within the meaning of Case IV and the remainder of which arose from "possessions out of the United Kingdom" within the meaning of Case V of Schedule D of the Income Tax Act, 1918.
During the years 1949-50, 1950- 51 and 1951-52 he held money derived from income from those sources in the Bank of New York in New York. On some sixteen occasions he drew cheques on the Bank of New York and sold these cheques in London to Seligmans or the Midland Bank, whereupon he was paid immediately the sterling equivalents of the number of dollars in the cheques. Thereafter the English banks sent the cheques to New York, and cashed them and collected the dollars there.
I accept the finding of the Commissioners that these transactions were sales of the cheques so that the English banks acted as principals and not as collecting agents in cashing the cheques and collecting the proceeds. But if any of the cheques had been dishonoured the banks would have had recourse against the Respondent.
The final result of each transaction was that the amount of accrued income held by the Respondent in New York was diminished by the number of dollars in the cheque and that the Respondent had in his hands in London a sum in sterling equivalent to that number of dollars. The question in this case is whether the sums which he received in London by these transactions come within the scope of Cases IV and V of Schedule D. If they do there is no dispute about the allocation of these sums between the two Cases.
The Respondent not having been domiciled in the United Kingdom the relevant provisions of the Income Tax Act, 1918, are Rule 2 ( a) of the Rules applicable to Case IV:
"The tax in any such case shall be computed on the full amount, so far as the same can be computed, of the sums which have been, or will be, received in the United Kingdom in the year of assessment without any deduction or abatement.",
and Rule 2 of the Rules applicable to Case V:
"The tax in respect of income arising from possessions out of the United Kingdom, other than income to which rule 1 applies, shall be computed on the full amount of the actual sums annually received in the United Kingdom from remittances payable in the United Kingdom, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of any such remittances, property, money, or value brought or to be brought into the United Kingdom, on an average of the three preceding years as directed in Case I, without any deduction or abatement other than is therein allowed."
By reason of section 29 of the Finance Act, 1926, the computation directed by the latter Rule must be made in respect of the year preceding the year of assessment and not on a three years' average.
At first sight it would seem that the requirements of these provisions are satisfied. As regards Case IV the Respondent undoubtedly received in the United Kingdom the sums paid to him as the price of the cheques and in each case, by virtue of the contract under which he received the sum, the amount of accrued income held by him in New York was diminished by a corresponding amount. And as regards Case V again he undoubtedly received such sums and they would appear to be money arising from property not imported, that is, his accrued income in New York which he assigned in order to get these sums. But obviously this case cannot be disposed of as easily as that. There is a wealth of authority about these provisions and on the strength of that authority the Commissioners, Wynn Parry, J. and the majority of the Court of Appeal all held that the facts of this case do not satisfy the statutory provisions.
The main ground of judgment in each case was that the sums paid to the Respondent had not been brought into the United Kingdom and that there is nothing to show that any money was ever brought into the United Kingdom in connection with these transactions. That is quite true. But there is nothing in Case IV requiring that money should be brought into the United Kingdom and this requirement is only attached to one head of Case V which does not apply to the present case. The views of these learned judges do, however, receive much support from a number of authorities if statements made in them are really of general application.
Before considering these authorities I think it well to see what the effect would be if this view were right. I take a case which no one has ever even suggested would not be within the scope of these provisions—the case of a bank acting as a collecting agent. If a customer hands to an English bank for collection a cheque drawn on a foreign bank, the English bank will send the cheque abroad for collection and, when notified that the money has been collected, it will give to the customer in this country the equivalent in sterling at the current rate of exchange. If all the money held by the foreign bank was accrued income of the customer no one would doubt that he must pay income tax on the sum which he receives in this country. But it does not in the least follow that any money will have been remitted from the foreign country or brought into the United Kingdom in connection with the transaction. If when the cheque was handed to it for collection the bank required to send say £100,000 abroad either physically by exporting cash or bullion or by buying here a right to receive that sum in that country, the cheque when collected would provide say £10,000 worth of the foreign currency which the bank wants and now the bank would only have to send out £90,000. So collecting the cheque abroad and giving the customer sterling here would not involve bringing anything at all into the United Kingdom: it would only involve less being sent out than would otherwise have been necessary. But it would be quite absurd to suggest that the customer escapes paying income tax merely because of the accident that in his particular case collecting his cheque did not involve anything being brought into the United Kingdom.
With such a case in mind I turn to the authorities. The first which I need consider is Gresham Life Assurance Society, Limited v. Bishop (Surveyor of Taxes) [1902] A.C. 287. There no sum had in fact been received by the Society in the United Kingdom. The argument for the Crown was that received in the United Kingdom" is not confined to physical receipt and that it was enough that the Society's foreign income had been used to...
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