Todd (HM Inspector of Taxes) v The Egyptian Delta Land and Investment Company, Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 23 July 1928 |
| Date | 23 July 1928 |
| Court | King's Bench Division |
NO. 692.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
COURT OF APPEAL.-27TH, 28TH AND 31ST JANUARY, AND
HOUSE OF LORDS.-23RD AND 24TH JANUARY, 12TH JUNE AND
Income Tax, Schedule D - English Company controlled abroad - Residence - Mortgage interest and rents arising abroad - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule D, Cases IV and V.
To meet the requirements of the Companies Acts the Company appointed a London secretary, who provides them with a registered office at his own business address in London, but no room or part of a room is appropriated to the Company. Registers of members, of directors and of bearer warrants are kept at this address, and the London secretary makes the statutory returns required by the Companies Acts. It was stated, however, that he has no power of attorney from the Company, that his position is purely formal, and that, although he performs certain incidental services on behalf of the Company, he has no authority to do anything more than the law requires the Company to do here.
The Company was assessed to Income Tax under Cases IV and V of Schedule D in respect of mortgage interest and rents arising abroad, but the General Commissioners allowed the Company's appeal on the ground that it was not resident within the United Kingdom.
Held, that incorporation under the Companies Acts and the consequential arrangements necessary to comply with those Acts did not alone render a company resident in the United Kingdom. The Commissioners' decision could not be disturbed as being, in this respect, erroneous in point of law.
Stated by the Commissioners for the General Purposes of the Income Tax for the City of London pursuant to the provisions of Section 149 of the Income Tax Act, 1918, for the opinion of the High Court of Justice.
1. At a meeting of the Commissioners for the General Purposes of the Income Tax Act for the City of London held on the 16th day of November, 1925, at Gresham College, Basinghall Street, in the City of London, the Egyptian Delta Land and Investment Company, Limited, whose registered office is at No. 211/214, Gresham House, Old Broad Street (hereinafter called "the Company"), appealed against assessments to Income Tax made upon it pursuant to the Rules of Schedule D of the Income Tax Act, 1918, as follows:-
1919-20 |
£3,212 |
Case V on Rents. |
1920-21 |
£3,504 |
do. |
1921-22 |
£3,732 |
do. |
1922-23 |
£4,785 |
do. |
1923-24 |
£3,000 |
Case IV on Interest on Mortgages. Case V on Rents. |
£6,000 |
||
1924-25 |
£3,000 |
Case IV on Interest on Mortgages Case V on Rents. |
£7,000 |
2. The Company was incorporated in England on the 20th day of April, 1904, under the Companies Acts, 1862 to 1900, as a company limited by shares. The nominal capital of the Company is £500,000 divided into 500,000 shares of £1 each of which 324,250 shares have been issued.
3. The objects for which the Company was established included the following:-
(a) To purchase, or otherwise acquire, develop, hold, sell, "let, or otherwise dispose of and deal in land, or other "immovable property situate in any district in Egypt in "which the Railways belonging to or that may at any "time hereafter belong to the Egyptian Delta Light "Railways, Limited, or any extension or branch thereof "existing or hereafter constructed or proposed to be "constructed may serve or be intended to serve.
(b) "To develop the sources of any such lands or other "property by building, planting, draining, levelling, "filling in, reclaiming, irrigating, clearing, farming, "cultivating, colonising, stockraising, timber-growing, "mining, quarrying, and otherwise dealing with the "same, in such ways as may seem capable of improving "directly or indirectly the property and undertaking of "the Company.
A print of the Memorandum and Articles of Association of the Company marked "A" is annexed to and forms part of this Case.(1)
4. By special resolution of the Company passed on the 16th April, 1907, and confirmed on the 7th May, 1907, it was resolved (inter alia):-
III. That it is desirable that the business and affairs of "the Company should henceforth be managed and directed "entirely from Egypt, and that accordingly the Articles of "Association …… be ....... varied ……
Prints of the above and other special resolutions from time to time passed at extraordinary general meetings of the Company are contained in Exhibit "A" above mentioned and form part of this Case.
5. In pursuance of the said resolutions the business of the Company was in 1907 transferred to Cairo and has since that date been controlled managed directed and carried on entirely in Cairo with the results following all of which were proved in evidence before us and apply to the whole period since 1907:-
(a) In 1907 all the London directors retired and a new board of directors was appointed consisting of four members all of whom have been permanently resident in Cairo. Since 1907 no meeting of directors has been held in the United Kingdom. There has been no committee of directors in the United Kingdom.
(b) The secretary-general of the Company has resided and resides in Egypt.
(c) The seal was removed to and has been kept in Egypt. There is no duplicate seal. The minute books and all books of account of the Company were also removed to Egypt and have remained there.
(d) The banking account of the Company is with the National Bank of Egypt at Cairo but the Company's former account with the London agency of the same Bank has never been formally closed but is only used by the London agency of the Bank for debiting small disbursements not exceeding £8 or £9 in any year made by the agency on instructions from Egypt no cheques being drawn on the account.
(e) The register of transfers is kept in Cairo where transfers of shares are passed before being registered in London. Under one per cent. of the issued shares are registered shares.
(f) The accounts of the Company and the books of account have been kept and made up and audited in Cairo.
(g) Dividends have been declared in and paid exclusively from Cairo.
(h) All meetings of the Company have been held in Cairo.
(i) The reports of the directors are prepared and sent out from Cairo and there is a duplicate register of shareholders in Cairo.
6. In order to comply with the requirements of the Companies Acts there is a registered office of the Company in London at which the registers of members and directors and also a register of bearer warrants are kept. To meet these statutory requirements the Company pay a fee to Mr. F.J. Horn who carries on the business of secretary of public companies and provides them with a registered office at his address at Gresham House, Old Broad Street, where the name of the Company appears with those of five other companies on the door. Mr. Horn receives for these services and for small incidental expenses £35 per quarter which he pays into an account in his own name with the London agency of the National Bank of Egypt. No separate room or part of a room is appropriated to the Company and in fact there are more companies than rooms. The statutory duties of the London secretary involve the filing of the annual summary with the Registrar of Joint Stock Companies after it has been checked in Egypt and signed there and of any other documents required to be filed with the Registrar. The transfers of shares are kept in his office after they have been passed in Cairo and the certificates issued from there. The share certificate book is kept in Cairo. The London secretary occasionally receives and deals with correspondence from shareholders. He would also receive any application for share warrants and any transfers which might be lodged at the registered office and would transmit the same to the Company in Egypt to be there dealt with. Certificates of shares in respect of London applications when received from Cairo would be handed by him to the person entitled thereto. The London secretary would also insert an advertisement of the closing by the Company of the share register as directed by the Board in Egypt. Further, he would receive from a shareholder and pay over to the Revenue any stamp duty due in respect of share warrants. In April, 1922, he received from Egypt and paid on behalf of the Company a sum due in respect of Corporation Profits Tax. The London secretary keeps a cash book in which he enters any expenditure on behalf of the Company and he would recoup himself out of the sums paid to him as aforesaid. It was stated to us by the London secretary that he held no power of attorney from the Company and that his position was purely formal and that he had no authority to do anything more than the law required the Company to do here.
7. The reports of the directors of the Company for the years 1920 to 1925 inclusive are annexed hereto marked "B" and may be referred to as part of this Case.(1)
8. The Company contended that in the circumstances as above stated the case of The Swedish Central Railway Company, Ltd. v.Thompson(2), [1925] A.C. 495, was distinguishable and that the Company was resident in Egypt and not in the United Kingdom and that the mere fact that it had been registered in the United
Kingdom and therefore had a registered office here and otherwise complied with...To continue reading
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Unit Construction Company Ltd v Bullock (Inspector of Taxes)
... ... Company case to which I have referred and the Egyptian Delta case, 14 T.C. 119 ... 6 ... Conversely, when the case of Todd v. The Egyptian Delta Land and Investment Company Limited , ... ...