De Voil v Welford Gravels Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Jenkins,Lord Hodson,Lord Guest |
| Judgment Date | 20 June 1963 |
| Judgment citation (vLex) | [1963] UKHL J0620-3 |
| Date | 20 June 1963 |
| Court | House of Lords |
[1963] UKHL J0620-3
House of Lords
Lord Jenkins
Lord Hodson
Lord Guest
Lord Pearce
Upon Report from the Appellate Committee, to whom was referred the Cause Welford Gravels Limited against De Voil (Inspector of Taxes), that the Committee had heard Counsel, as well on Thursday the 9th, as on Monday the 13th, Tuesday the 14th, Wednesday the 15th, Thursday the 16th and Monday the 20th, days of May last, upon the Petition and Appeal of Welford Gravels Limited, whose registered office is situate at Seaton Buildings, Jameson Street, Kingston upon Hull, 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 17th of April 1962, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners 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 Paul Walter De Voil (Her Majesty's Inspector of Taxes), 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 17th day of April, 1962, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This case concerns an assessment to Income Tax, Schedule A, made on the Appellant Company, Welford Gravel Limited, 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".
The circumstances in which the disputed assessment came to be made are fully set out in the Case Stated, and I need not repeat them at unnecessary length in this judgment.
The property in question comprised farm lands extending to 155 acres or thereabouts and included a very valuable feature in the shape of a sand and gravel pit of some 23 1/2 acres in extent. The farm had for many years been in the ownership of Messrs. W. & R. L. Procter, who had extracted gravel from the pit for use in connection with the building of airfields during the first world war, and since that war had from time to time also made some use of gravel so extracted for farm roads and other farming purposes.
An important development took place in 1956, in the shape of a great demand for gravel in connection with the construction at Bradwell on Sea (in the neighbourhood of Stows Farm) of a nuclear power station.
In these circumstances Messrs. Procter applied for and obtained from the appropriate authority the development permission required for the extraction of sand or gravel from the 23 1/2 acres already mentioned.
In February 1957 Messrs. Procter sold the 23 1/2 acres to a company called Besbuilt Limited, which bought the land in order that one of its associate companies could extract sand and gravel for commercial purposes. The sale was completed on 22nd February, 1957, and immediately thereafter Besbuilt allowed the Appellant Company to go into occupation of the land and prepare the site for the plant. The apparatus required seems to have been fairly elaborate, and for details of it reference should be made to the Stated Case. There was a concrete apron 1/2 acre in extent with stanchions for the plant to be attached to and from which it could easily be detached. There were also three small buildings described as a brick power-house, a brick pump-house and a nissen hut. These buildings cost some £1,000 and were intended to be temporary and incidental to the workings. Machinery was installed on the site at a cost of some £24,000. It was the end of March, 1957, before the apron was down and the machinery was in operation. It was intended that when the pit had been worked to the extent proposed all the machinery plant and buildings would be removed and the top-soil replaced.
On the 31st December, 1957, Besbuilt Limited executed a lease to the Appellant Company of the whole of the land which it had bought from Messrs. Procter for 21 years from 1st March, 1957, at the rent of £60 per annum. This document forms part of the Case Stated and need not be repeated here. A curious feature of the transaction was that the lease provided that nothing it contained was to authorise the tenant to get or carry away sand, gravel, ballast or any other mineral from the said land. However, on the same date, namely the 31st December, 1957, Besbuilt Limited granted a licence under seal to the Appellant Company in respect of the land comprised in the lease. This licence likewise forms part of the Stated Case, and, to put it shortly, permits the extraction for sale of sand, gravel, ballast and other minerals from the land comprised in the lease at 4s. per cubic yard. Some 56,000 cubic yards were extracted in 1957 and some 69,000 in 1958, these being in effect the lastest available figures. The estimated potential of this pit was only 250,000 cubic yards, but the company had an option over further land in the area.
Before the sale of the 23 1/2 acres the Schedule A assessment on Stows Farm containing 155 acres was £108 gross and £56 net. The Revenue first became aware of the sale of the 23 1/2 acres to Besbuilt Limited after the 1957/58 assessment had been raised on the farm as a whole. Then there seems to have been a good deal of confusion as to the true position, but I do not think it necessary to say more about that than what has been said in this passage at the end of paragraph 4 of the Case:—
"A fresh additional assessment under Schedule A was raised for the year 1957/58 upon the Appellant Company on a revised estimated annual value of £5,000 gross £4,375 net in respect of 'gravel pit and premises Stows Farm, Tillingham, Essex,' and this assessment is the subject of the appeal by the Appellant Company".
At the hearing before the Commissioners the following points amongst others were made on behalf of the Appellant Company:—
"(1) that the basis of a Schedule 'A' Assessment was a quinquennial valuation of specific property and this could only be departed from ( a) where in connection with the valuation of such property a revelant and significant factor had been overlooked in the pre-quinquennial year (which was not so in this case), ( b) where there might have been some significant alteration in the property (although it was doubtful whether this was legally valid) in which case an apportionment could be made, ( c) where a new property had come into being, as distinct from a new use of property, e.g., a new house built on a bare piece of land."
"(2) that the getting of sand and gravel from land was merely making use of the natural potentialities of the lands. There had been a continuous getting of sand and gravel from the land in question for many years, and the more intensive getting of sand and gravel from the land in the period relevant to the present appeal did not create a new property.
(3) that if it was decided there was a new property the basis of the Schedule 'A' assessment was the rack rent of the property. The rack rent was evidenced by the Lease and for the purpose of Schedule 'A' any payments under the ancillary Agreement which represented the measure of damages done to the freehold by waste and did not form part of the rent reserved were not to be taken into account.
(4) if, however, account had to be taken of the amount payable under the Licence, which is obviously a fluctuating amount, then an average should be taken over the period of the Lease and Licence which in this case would be 21 years."
"1. that in the year 1957/58 the area of 23 1/2 acres no longer formed part of Stows Farm, but was a separate piece of property in respect of which tax under Schedule 'A' could only be charged by an assessment on the new occupiers—section 105, Income Tax Act, 1952;
2. that no annual value had been adopted for that property for any previous year of assessment and section 84 (3) of the Income Tax Act, 1952, did not apply;
3. that under section 82, Schedule 'A' paragraph 2 ( b) of the said Act, the annual value of the said property must be understood to be the rack rent at which it was worth to be let by the year for use as a gravel pit;
4. …
7. The Commissioners were asked by the representative for the Appellant Company to come to a decision on the preliminary points raised by him (reserving the evidence of the Valuers for later if in fact it was needed) the preliminary points being (1) whether there must be a new property, that is, a property significantly different from the 23 acres of land plus the sand pit which existed prior to February, 1957, before an Additional Schedule 'A' Assessment could be raised, (2) whether there was such a property here and if so what was it and how did it differ from the property that had been there previously, and (3) if there was a new property how should the annual value be determined—in particular whether it should be limited to the amount of the rent reserved by the Lease.
The Commissioners … agreed to adopt this course and after consideration decided (1) that there must be a new property before an additional Schedule 'A' Assessment could be raised, and (2) that there was no new property in this case. The third point did not therefore arise."
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