Willson v Hooker (Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 06 November 1995 |
| Date | 06 November 1995 |
| Court | Chancery Division |
Chancery Division.
Sir John Vinelott.
Jeremy Woolf (instructed by Birkett Westhorp & Long) for the taxpayer.
Timothy Brennan (instructed by the Solicitor of Inland Revenue) for the Crown.
The following cases were referred to in the judgment:
Consolidated Goldfields plc v IR Commrs; Gold Fields Mining & Industrial Ltd v IR Commrs TAX[1990] BTC 263
Maclaine & Co (as agents for Maclaine, Watson & Co) v Eccott (HMIT) TAX(1926) 10 TC 481
Corporation tax - Non-resident company trading through branch or agency - Individual taxpayer resident in the UK chargeable as agent of company - Single trading transaction - Whether individual "regular agent" -Taxes Management Act 1970 section 78 subsec-or-para (1) section 82Taxes Management Act 1970, ss. 78(1), 82.
This was an appeal by an individual taxpayer from the decision of the general commissioners for Colchester that he was liable to corporation tax in respect of a gain realised by an Isle of Man company pursuant to the Taxes Management Act 1970 section 78 subsec-or-para (1)Taxes Management Act 1970, s. 78(1).
During October 1988 the taxpayer instructed a firm in the Isle of Man to arrange for the acquisition of an "off the shelf" company ("the company") whose first directors, secretary and shareholders were all resident outside England. He also instructed chartered surveyors and solicitors to effect the purchase and resale by the company of certain land in Mid-Glamorgan.
Assessments were issued to the taxpayer in the sum of £135,000 for the year ending 31 December 1988 and in the sum of £100,000 for the year ending 31 December 1989 in respect of profits gained by the company as a result of the purchase and sale of the land.
The assessments were made on the footing that the company was a company not resident in the UK but was carrying on business in the UK through the agency of the taxpayer. Accordingly, the taxpayer was chargeable to as agent of the company under the Income and Corporation Taxes Act 1988 section 78 subsec-or-para (1)Income and Corporation Taxes Act 1988, s. 78(1).
The taxpayer appealed to the general commissioners for Colchester who found that he acted as agent for a non-resident company and confirmed the assessments.
On appeal to the High Court the taxpayer contended that he was not liable to tax as the company's agent because he came within the exception provided by the Taxes Management Act 1970 section 82 subsec-or-para (1)Taxes Management Act 1970, s. 82(1) which provided that a non-resident person should not be chargeable in the name of an agent "not being an authorised person carrying on the regular agency of the non-resident person". Thus, he could not be regarded as the "regular agent" of the company in relation to a single transaction. A "regular agency" suggested a degree of repetition so that a person who acted in relation to one transaction only could not be said to be a "regular agent".
Held, dismissing the taxpayer's appeal:
A person was a "regular agent" within the meaning of Taxes Management Act 1970 section 78 subsec-or-para (1)s. 78(1) if he did everything that had to be done in connection with a single transaction. Consequently the taxpayer was to be regarded as the regular agent of the Isle of Man company, being the only person who gave instructions for the purchase and sale of the land.
1. At a meeting of the general commissioners for the division of Colchester held on 6 October 1992 Mr AR Willson appealed against assessments to corporation tax made on him as agent for Ashvale Investments Ltd for the year ending 31 December 1988 in the sum of £135,000 and for the year ending 31 December 1989 the sum of £100,000 in respect of profits gained by the company as a result of the purchase and sale of land.
2. Shortly stated the questions for determination were
(2) Whether or not the acceptance by the Revenue on the 23 August 1991 of an offer made by Ashvale Investments Ltd dated 16 July 1991 constituted an agreement under Taxes Management Act 1970 section 54s. 54 of the Taxes Management Act 1970 which precluded the commissioners from hearing the appeals.
(3) If the commissioners were not precluded from hearing the appeals, whether or not Ashvale Investments Ltd was a company not resident in the UK which was chargeable to corporation tax on the ground that at all material times it carried on a trade in the UK through a branch or agency: see the Income and Corporation Taxes Act 1988 section 11Income and Corporation Taxes Act 1988, s. 11.
(4) If Ashvale Investments Ltd was so chargeable to corporation tax, whether or not Mr Willson was assessable and chargeable to corporation tax under Taxes Management Act 1970 section 78s. 78(as read with Taxes Management Act 1970 section 85s. 85) of the Taxes Management Act 1970 as agent of Ashvale Investments Ltd.
3. Mr BR Ballard, solicitor, of Messrs Birkett Westhorp & Long appeared on behalf of Mr Willson who gave evidence as appellant. Mr Dillon, inspector of taxes, acted both as advocate presenting the Revenue case and witness giving evidence as regards the conduct and conclusion of his enquiries into Ashvale Investments Ltd's UK tax liability.
4. [Paragraph 4 listed the documents proved or admitted before the commissioners.]
5. As a result of the evidence both oral and documentary the commissioners found the following facts proved or admitted:
(2) During October 1988 Mr Willson instructed Freeport Services Ltd of 4 Athol Street, Douglas, Isle of Man to arrange for the acquisition of an "off the shelf" company Ashvale Investments Ltd to be made available against the delivery of a cheque for fees and disbursements. Confirmation of the arrangements concerning the company were set forth in a letter written by Freeport Services Ltd dated 25 October, 1988 wherein inter alia it was confirmed that certain documentation was being held to the order of Mr Willson and wherein information was given concerning the first directors, the first secretary and the first shareholders, all of which personnel were situated or resident out of England.
(3) During October 1988 as a result of communications between Mr Brian Wardhaugh of Brian Wardhaugh & Co, chartered surveyors of 43 Brookfields, Crickhowell, Powys and Mr Willson, Brian Wardhaugh was instructed by Mr Willson to enter a bid for land at Hirwaun in the sum of £250,000. Instructions were given that the transaction should be concluded and completed in the name of Ashvale Investments Ltd. It was found as a fact that at all material times Mr Willson was acting as an agent for Ashvale Investments Ltd.
(4) Contemporaneously with matters concerning the purchase of land, Mr Willson was negotiating concerning its sale at a higher price to a company known as Andmarc Holdings Ltd.
(5) By a letter dated 17 October 1988 and headed Ashvale Investments Ltd, Messrs Asher Prior Bates, solicitors of Blackburn House, Crough Street, Colchester, Essex were given specific detailed instructions concerning the purchase by Ashvale Investments Ltd of the property at the price of £250,000 from Eastland Construction Ltd and also the sale of the same property to Andmarc Holdings Ltd at a price of £385,000. The letter contained detailed instructions concerning the payment of a deposit and the planning aspect of the transaction and specifically emphasised that Messrs Asher Prior Bates should not inform Messrs Bentleys, the solicitors for Andmarc Holdings Ltd, of the figures concerning the transaction until such time as their clients would he under contract to purchase at £385,000. Although the letter was headed Ashvale Investments Ltd it was not disputed by the parties that it had been written by Mr Willson.
(6) During 1989 and 1990 enquiries were instituted by HM Inland Revenue concerning the status of Ashvale Investments Ltd and the position...
To continue reading
Request your trial