De Voil (HM Inspector of Taxes) v Welford Gravels, Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 20 June 1963 |
| Date | 20 June 1963 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION)-
COURT OF APPEAL-
HOUSE OF LORDS-
Income Tax, Schedule A - Gravel pit - Whether a new property - Income Tax Act, 1952 (15 & 16 Geo. VI & 1 Eliz. II, c. 10), Section 82, Schedule A, paragraph 2 (b), and Sections 84 and 108.
In February, 1957, B Ltd. bought 231/2 acres of a farm of 155 acres, including a small gravel pit which had been worked commercially during the war of 1914-18, so that one of its associated companies could extract sand and gravel commercially. Thereupon the Respondent Company was let into occupation; it erected buildings and installed plant, which was in operation by 31st March, 1957. On 31st December, 1957, B Ltd. granted the Respondent Company a lease at an annual rent of £60 and a licence to extract sand, gravel, etc., at a royalty of 4s. per cubic yard. Some 56,000 cubic yards were extracted in 1957 and some 60,000 cubic yards in 1958.
Before the Inspector of Taxes was informed of the sale to B Ltd. an assessment to Income Tax under Schedule A for the year 1957-58 was made in respect of the whole original farm at the annual value of £108 (being the annual value adopted for the preceding year). Subsequently, an additional assessment under Schedule A for that year was made on the Respondent Company in respect of the gravel pit at the annual value of £5,000. On appeal, the General Commissioners found that no new property had been created and determined the annual value of the gravel pit by apportioning the original assessment on the farm.
Held, (1) (Lord Jenkins dissenting) that, where land is divided into separate occupations, the annual assessment must be apportioned; (2) that revaluation might nevertheless be justified on the ground of a change of character in the property; (3) that the inevitable inference from the facts of this case was that a new item of property had been created.
Stated under the Income Tax Act, 1952, Section 64, by the Commissioners for the General Purposes of the Income Tax for the Division of Dengie in the County of Essex for the opinion of the High Court of Justice.
1. At a meeting of the said General Commissioners held at the County Court, Maldon, on 4th February, 1960, Welford Gravels, Ltd. (hereinafter called "the Appellant Company"), appealed against an assessment to Income Tax made upon it under Schedule A, Income Tax Act, 1952, for the year 1957-58 on an estimated annual value of £5,000 gross, £4,375 net, in respect of property described as "Gravel pit and premises, Stows Farm, Tillingham, Essex".
2. The question for our determination were, firstly, whether the annual value of the said property for Schedule A purposes should (a) represent the full annual value thereof as a gravel pit in the year 1957-58 or (b) be arrived at by apportionment of the annual value previously adopted for Stows Farm; and, secondly, if it should represent the full annual value as a gravel pit, what that value should be.
3. Evidence was given by Mr. R.L. Procter (a former owner of the land in question), by Mr. K.E. Partridge (secretary of the Appellant Company) and by Mr. P.W. de Voil, H.M. Inspector of Taxes, Witham District.
4. The following facts were admitted or proved:
(2) The assessment was in respect of about 231/2 acres of land which previously had formed part of Stows Farm, Tillingham, Essex, belonging to Messrs. W. and R.L. Procter, who had farmed the land for many years. On part of the 231/2 acres there was a small gravel pit, and sand and gravel had been taken from this pit by Messrs. Procter for commercial purposes in connection with the construction of airfields during the 1914-18 war. Since 1919 they had used it as required for making up farm roads and other farm purposes. When the pit was used commercially during the 1914-18 war machinery was not employed in the extraction of the sand and gravel, as there was no suitable mechanical plant available at that time. The area of this small sand and gravel pit, as it existed in 1956, is shown with reasonable accuracy on a plan of the area which is annexed hereto, marked "A", and forms part of this Case(1). The pit is shown near the north-west corner of field no. 140.
(3) In 1956 there was a great demand for gravel in the district owing to the building of a nuclear power station at Bradwell-on-Sea, a few miles distant from Tillingham, and with a view to selling the land for sand and gravel production Messrs. Procter applied for development permission in respect of an area (which included the small pit referred to) for extraction of sand and gravel, such area comprising O.S. fields nos. 140 and 143 containing together 21.100 acres. A copy of the grant of development permission dated 14th December, 1958, is annexed hereto, marked "B", and forms part of this Case(1).
-
(4) Development permission was given in respect of fields nos. 140 and 143 with a condition that all fixed plant or machinery, or structures or erections in the nature of plant or machinery, required in connection with the winning of the sand and gravel, or required in connection with its treatment or disposal, were to be erected in an adjoining enclosure, O.S. field no. 141. The reason for this direction was that the plant and machinery
were to be inconspicuous, field no. 141 being a wooded area. No extension of extraction workings beyond fields nos. 140 and 143 was envisaged in the grant of development permission, as the local planning authority endorsed the view of the Advisory Committee on Sand and Gravel that no new long-term workings should be introduced into this predominantly agricultural district. (5) Messrs. Procter sold the land (i.e., the area of 231/2 acres referred to above) to a company called Besbuilt, Ltd., of which company also Mr. K.E. Partridge is the secretary, and the sale was completed on 22nd February, 1957. Besbuilt is not itself engaged in farming nor in extracting sand and gravel. It bought the said land so that one of its associated companies could extract sand and gravel for commercial purposes.
(6) Immediately after the sale Besbuilt, Ltd., allowed the Appellant Company, which is an associated company, to enter into occupation of the land, and the Appellant Company immediately proceeded to prepare the site for the plant. A concrete apron was floated over half an acre, with steel stanchions for the plant to be attached to and from which the plant could easily be disconnected. The Company erected three small buildings, namely, a brick power-intake house, a brick pump-house and a nissen hut used as a workshop and office. These buildings were intended to be temporary and incidental to the workings. The cost of the buildings and the apron was put at approximately £1,000. The cost of the machinery was approximately £24,000. The machinery was conveyed to the site in parts, and erected on the site and bolted to the stanchions by means of bolts and nuts. The first attempt to win sand and gravel had been by non-mechanical means in order to get material for the apron, only excavators being used. It was the end of March, 1957, before the apron was down and the machinery in operation. The operations consisted of removing the grass and top soil, which was stored on the boundary of the site, and then removing the actual material by dragline. The sand and gravel was loaded into lorries on the site and taken to the ramp, where it was tipped into the hopper, which separated the sand from the gravel and graded the gravel into sizes-nothing was involved apart from the cleaning and sorting. It was intended that, when the workings were completed, all the machinery, plant and buildings should be removed and the top soil replaced.
-
(7) On 31st December, 1957, Besbuilt, Ltd., executed a lease of the whole of the land which it had bought from Messrs. Procter (comprising O.S. enclosures 140, 141, 141A and 143) to the Appellant Company. This document forms part of this Case and a copy is annexed hereto, marked "C"(1). The main provisions in the lease are as follows-term: 21 years from 1st March, 1957; rent: £60 per annum. Tenant's covenants included covenants (a) to pay all existing and future rates, taxes, assessments, duties, impositions, outgoings and burdens whatsoever imposed or charged upon the demised premises or the produce thereof or any buildings machinery or works thereon; (b) to keep all dwellinghouses, buildings and water courses then standing and being, or which during the said term should be constructed, erected, built, placed or made in or upon the said land, in good and substantial repair and working order; (c) to make and keep in repair sufficient fences for the protection of man and beast round every quarry, pit or other open place made, or thereafter during the said term to be made, in the said lands, and also sufficiently to fence off all roads and fields from the adjoining lands; (d) at the determination of the tenancy to deliver up the demised premises with all buildings and other conveniences which shall then be upon or within the
said lands (save such articles in the nature of trade fixtures as the tenant may by law be allowed to remove) in good and substantial repair condition and working order. Nothing in the lease was to authorise the tenant to get or carry away sand, gravel, ballast or any other mineral from the said land (clause 5 (3)). The land the subject of the said lease and the licence hereafter mentioned is shown edged in red in the plan marked "A"(1). (8) On the same day, viz., 31st December, 1957, Besbuilt, Ltd., granted a licence under seal to the Appellant Company in respect of the land comprised in the lease. This licence also forms part of this Case and a copy of same is annexed hereto, marked "D"(1) By the said licence Besbuilt, Ltd., licensed the Appellant Company, during the continuance in force of the said lease, to excavate for sand, gravel and ballast and all other minerals which might...
To continue reading
Request your trial