Westward Television Ltd v Hart
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DANCKWERTS,LORD JUSTICE SALMON,LORD JUSTICE FENTON ATKINSON |
| Judgment Date | 07 May 1968 |
| Judgment citation (vLex) | [1968] EWCA Civ J0507-1 |
| Date | 07 May 1968 |
| Court | Court of Appeal (Civil Division) |
[1968] EWCA Civ J0507-1
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Danckwerts
Lord Justice Salmon and
Lord Justice Fenton Atkinson
MR P.W. REES, (instructed by Messrs. Iliffe Sweet & Phillips) appeared on behalf of the Appellant.
MR G.B. GRAHAM, Q.C. and Mr J. RAYMOND PHILLIPS, Q.C. (instructed by The Solicitor of Inland Revenue) appeared on behalf of the Respondent.
This is an appeal from a Judgment of Mr. Justice Pennycuick dated 24th November, 1967, in which he dismissed an appeal from a decision of the Special Commissioners for Income Tax given at a hearing on the 24th October, 1966, and the Case Stated is dated 7th July, 1967.
The matter is complicated by the provisions of the relevant sections which are material for the purposes under the Income Tax Act 1952. Mr. Justice Pennycuick did not really, I think, decide the matter entirely for himself, but was following the case of The Commissioners of Inland Revenue -v- Scott Adamson, decided in 1957 and reported in 17 Tax Cases at page 679. He obviously, by his Judgment, felt some doubt about the matter, but he followed the case in question and did not really add any particular observations of his own.
I think I must refer to the Case Stated by the Commissioners before going any further into the matter. The facts are stated in the case at page 2 as follows: "We found the following facts admitted on the evidence adduced at the hearing of the appeal. The Appellant was incorporated on the 12th January, 1960, and on the 1st August, 1960, commenced the trade of television programme contractors. Accounts of the Appellants have been prepared for the following periods and have disclosed the following figures of profit and loss as a computation for income tax which are agreed by the parties. 1st August, 1960, to 28th April, 1961, a loss of £132,107; 29th April, 1961, to 30th April, 1962, a profit of £165,572 - and these two periods represent a period of twenty-one months. 1st May, 1962, to the 30th April, 1963, a profit of £74,735; 1st May, 1963, to the 30th April, 1964, a profit of £276,583.
The Case then continues: "The Appellant's liability to tax under Case I of Schedule for the year 1960/61, being the tax year in which it started its trade, was computed by reference to the profit (if any) of the period from the 1st August, 1960, to the 5th April, 1961. Such profits (if any) fell to be computed on the basis of the Appellant's first sot of accounts, viz., those for the period from the date of trading" - as it should be - "to the 28th April, 1961, apportioned on a time basis after disallowing expenditure incurred prior to the commencement of trading. On this basis the Appellant had incurred a loss and an assessment for the year 1960/61 which had boon raised in an estimated amount was discharged. The Appellant had other income subject to tax for the year 1960/61 amounting to£4,056 and it made and was allowed a claim for repayment of tax on this other income, under Section 341 of the Income Tax Act 1952. It is agreed that this£4,056 falls to be deducted from the losses available to be carried forward and set off against the assessable profits of subsequent tax years under Section 342 of the Income Tax Act 1952.
The Appellant fell to be assessed to tax for the year 1961/62, being the second year in which it carried on its trade, by reference to the profits (if any) of its first twelve months of trading, viz., the period from the 1st August, 1960 to the 31st July, 1961. No accounts were in fact prepared for that period and it was therefore agreed between the parties that the profits (if any) which should form the basis of assessment for 1961/62 should be computed by reference to those for the accounting periods from the 1st August, 1960 to the 28th April, and those for the 29th April, 1961 to the 30th April, apportioned on a time basis. On this basis it was agreed that a loss resulted and an assessment which had been raised on the Appellant in an estimated amount was discharged.
"For the year 1962/65 the basis period fell to be determined under Section 127 (2) (b) of the Income Tax Act 1952 and in accordance with normal practice the period of 12 months ended 31st July, 1961, was adopted. This basis is not in dispute. The result is the same as for 1961/62 and is not in dispute. Accordingly, no assessment was raised on the Appellant.
The Appellant was assessed to tax for the year 1963/64 by reference to the profits of its accounting period from the 29th April, 1961 to the 30th April, 1962 which amounted to£165,053, but the tax chargeable was discharged by offset of capital allowances under Section 323 of the Income Tax Act 1952. The unrelieved loss was therefore carried forward under the provisions of Section 342 of the Income Tax Act 1952. The amount of that unrelieved loss is in dispute.
The Appellant was assessed to tax for the year 1964/65 by reference to the profits of its accounting period from the 1st May, 1962 to the 30th April, 1963 which amounted to £74,735 which was reduced by capital allowances of £35,953. Although the amount of the Appellant's unrelieved loss is in dispute it is agreed that on either basis the loss carried forward from 1960/61 is sufficient to absorb the chargeable profits, of the Appellant for the year 1964/65 and no tax is payable.
It is agreed that the Appellant may by virtue of Section 345 of the Income Tax Act 1952 set against the amount of profits ultimately found to be assessable on it for the year 1965/66 a further sum of£20,328 on account of interest paid by it under deduction of tax in the years 1961/62, 1962/63, 1963/64 and 1964/65, in respect of which it has been assessed to tax under Section 170 of the Income Tax Act 1952.
The Appellant was assessed to tax for the year 1965/66 by reference to the profits of its accounting period from the 1st May, 1963 to the 30th April, 1964, which amounted to£276,583 reduced by capital allowances to £255,652. The Appellant claims to set against that amount the amount of the unrelieved loss carried forward from the year of assessment 1960/61. The Appellant claims that the unrelieved loss amounts to£80,886, computed as follows:" - and then is set out the way it is computed.
Before going into the intricacies of the Income Tax Act, it appears that so far no income tax has been paid by the company over the years in question, and the profits set out in this case have amounted to £516,890, and there is a loss no doubt to be set against that of £132,107. So it is rather startling to find that the company has not already received relief in respect of the losses, and that enormous profit has been earned in the intervening years. But what appears to be the truth when you come to deal with the Income Tax Act turns out to be something different sometimes, and a contention been put forward by Mr. Rees in his very able arguments which suggests that it is no good thinking about the actual profits or actual losses, because you have to compute the figures for accounts under the provisions of Sections 127 and 128 in such a way that he says he is able to claim that the company has not been relieved in respect of the loss of£132,000 odd.
I will now refer to the sections of the Income Tax Act 1952, and I will first read Section 341. That says: "Where any person sustains a loss in any trade, profession, employment or vocation, carried on by him either solely or in partnership, or in the occupation of woodlands in respect of which he has elected to be charged to tax under Schedule D, he may, upon giving notice"in writing to the surveyor within one year after the year of assessment apply to the General Commissioners or to the Special Commissioners for an adjustment of his liability by reference to the loss and to the aggregate amount of his income for that year estimated according to this Act." Then subsection (3) is material. That says: "For the purposes of this section, the amount of a loss sustained in a trade shall be computed in like manner as the profits or gains arising or accruing from the trade are computed under the provisions of this Act applicable to Case I of Schedule D."
The actual section upon which the case turns (this is the other section mentioned) is Section 342. Subsection (l) says: "Where a person has in any trade, profession or vocation carried on by him, either solely or in partnership, sustained a loss (to be computed in like manner as profits or gains under the provisions of this Act applicable to Cases I and II of Schedule D)" - and now I come to the important words - "in respect of which relief has not been wholly given either under the last preceding section or under any other provision of this Act, he may claim that any portion of the loss for which relief has not been so given shall be carried forward and, as far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under Schedule in respect of that trade profession or...
To continue reading
Request your trial
-
Maco Door and Window Hardware (UK) Ltd v HM Revenue and Customs
...is some compelling reason for differing from the decision: see Abbott v Philbin (Inspector of Taxes) [1960] Ch 27; Westward Television Ltd v Hart (Inspector of Taxes) [1969] 1 Ch 201. 49 The application of section 18(2) can be tested by reference to some possible commercial situations. Take......
-
Gascoine v Wharton (Inspector of Taxes)
...relief on £842 in 1991-92 and the appeal must be dismissed. 13. For the record I should state that Westward Television Ltd v Hart (HMIT) (1968) 45 TC 1 was cited.JUDGMENTLindsay J: I have before me an originating notice of motion by which a taxpayer, Mr DWH Gascoine, asks that a decision of......
-
Commissioners of Customs and Excise v Lord Fisher
... ... a revenue statute unless there should appear some clear reason for differing from it: see Westward Television Ltd. v. HartELR [1969] 1 Ch. 202, and Abbott v. PhilbinELR [1960] Ch. 27 at p. 49. I ... ...
-
Westward Television Ltd v Hart (HM Inspector of Taxes)
...Sweet & Phillips; Solicitor of Inland Revenue.] 1 Reported (Ch.D.) [1969] Ch. 201; [1968] 1 W.L.R .504; 111 S.J.946; [1968] 1 All E.R.303; (C.A.) [1969] 1 Ch. 201; [1968] 3 W.L.R.480; 112 S.J.484; [1968] 3 All E.R. 91. 1 1933 S.C.23. 1 As amended by the Income Tax Management Act 1964, Sch. ......