Tax A - Trading Income Cases

Front 1

Ransom v Higgs (1974)

Back 1

trade - goods/services for reward

Front 2

Mann v Nash (1932)

Back 2

illegality of trade
provision of machines for unlawful gaming - taxable

Front 3

IRC v Aken (1990)

Back 3

illegality of trade
profits of prostitution taxable

Front 4

Marson v Morton (1986)

Back 4

Badges of Trade
Lord Brown-Wilkinson
list not comprehensive

Front 5

Re duty on the Estate of the Incorporated COuncil of Law Reporting (1888)

Back 5

badges of trade
profit motive
can be trade where no intention of profit

Front 6

IRC v Reinhold (1953)

Back 6

badges of trade
profit motive
TP bought 4 houses with view to resale - trade and taxable

Front 7

Taylor v Good (1974)

Back 7

badges of trade
profit motive
bought house by accident

Front 8

Esign Tankers (Leasing) v Stokes

Back 8

badges of trade
motive - tax advantage - must be sole reason
if profit impossible - not a trade in this instance

Front 9

Rutledge v IRC (1929)

Back 9

badges of trade
nature of asset
toilet paper

Front 10

Wisdom v Chamberlain

Back 10

badges of trade
nature of asset
no personal enjoyment - silver ingots in vault
high interest loan, quick sale
trade

Front 11

Cooke v Haddock (1960)

Back 11

badges of trade
source of finance
bought farm with high interest mortgage, sold off in lots

Front 12

IRC v Livingston (1927)

Back 12

badges of trade
changes to asset
changed cargo vessel into steam drifter and sold at profit - trade

Front 13

Cape Brandy Syndicate v IRC (1921)

Back 13

badges of trade
changes to asset/supplementary work
brandy - recasked, divided and sold etc - trade

Front 14

Taylor v Good

Back 14

badges of trade
changes to asset
got planning permission - enhanced value but didn't change asset itself
not a trade

Front 15

Martin v Lowry

Back 15

badges of trade
way sale carried out
aircraft linen - employed people to sell it - broke down into lots - sold to 1000 purchasers at massive profit

Front 16

Pickford v Quirke (1927)

Back 16

badges of trade
frequency of similar transactions
syndicate to buy mill-owning company, sold assets at profit - 3 similar transactions after - trade

Front 17

Clarke v BT Pension Scheme Trustees

Back 17

badges of trade
frequency of similar transactions
duties by trustees - underwriting activities - not trade

Front 18

West v Phillips (1958)

Back 18

badges of trade
circumstances responsible for the realisation
bought houses, some for resale some for investment
no longer profitable to keep the investment ones - sold them - not trade

Front 19

Glenboig Union Fireclay Co Ltd v IRC (1922)

Back 19

taxable receipts
compensation
permanent sterilisation of a capital asset
capital receipt

Front 20

Burmah Steam Ship Co v IRC (1931)

Back 20

taxable receipts
compensation
what hole is being filled
compensation for loss of profit due to delayed repairs
loss only temporary
income receipt

Front 21

Van den Berghs v Clark (1935)

Back 21

taxable receipts
compensation for loss of contract
depends on importance of contract
this one dictated the business - payment of £450,000
capital receipt

Front 22

Kelsall Parson + Co v IRC (1938)

Back 22

taxable receipts
compensation for loss of contract
depends on importance of contract
1 of 9-11 similar contracts - loss reasonable foreseeable, not a big deal
income receipt

Front 23

Barr Crombie + Co Ltd v IRC (1945)

Back 23

taxable receipts
compensation for loss of contract
depends on how important contract it
84% of profit making capacity
capital receipt

Front 24

IRC v John Lewis Properties plc (2003)

Back 24

taxable receipts
payment in lieu of income
payment merely a prepayment of income? or regarded as the payment for the sale of an asset - the asset being a right to income
CA - relevant factors

Front 25

Higgs v Olivier (1952)

Back 25

receipt of the trade
not abstaining from trade
payment for contract not to enter into films for 18 months
capital receipt

Front 26

Simpson v John Reynolds + co (1975)

Back 26

voluntary payments
distinction between payment for inadequate remuneration in past and payment as testimonial

Lord Justice Russel - when not a trading receipt - 5 points

Front 27

Murray v Goodhews (1978)

Back 27

voluntary payments
brewery reduces tenancies in tied houses
payment of 81,000 over 2 years in recognition of good relations
capital reciept

Front 28

McGowan v Brown + Cousins

Back 28

voluntary payments
estate agent - inadequately remunerated as thought would be given job as was usual custom
income receipt

Front 29

Sharkey v Wernher (1956)

Back 29

notional receipts
stud farm/racing stables
held to have received market value

Front 30

British insulated and Helsby Cables v Atherton

Back 30

allowable expenditure
nature of advantage attained by TP
enduring benefit test

Front 31

Tucker v Granada

Back 31

allowable expenditure
nature of advantage attained
identifiable asset test

Front 32

Pitt v Castle Hill Warehousing Co Ltd

Back 32

allowable expenditure
acquisition/disposal/modification of a capital asset
built road to preserve reputation as complaints by residents of noisy lorries on their road
- still capital expenditure - new asset

Front 33

ECC Quarries Ltd v Watkis (1975)

Back 33

allowable expenditure
capital or income?
costs to try and gain planning remission to extract sand and gravel from sites - capital expenditure as making a permanent alteration to a capital asset - improvement

Front 34

O'Grady v Markham Main Colliery ltd (1932)

Back 34

allowable expenditure
distinguish repairs from improvements and renewals
chimney separate from other surface buildings, connected by flues - chimney became unsafe - replaced with new better chimney on an adjacent site - chimney regarded as entirety - replacement/improvement - capital expenditure

Front 35

Samuel Johns + co v IRC

Back 35

allowable expenditure
distinguish repairs from improvements and renewals
chimney in middle of factory - new chimney built nearby, flus extended, no better than old - this was a repair - income expenditure - deductible

Front 36

Law Shipping Co Ltd v IRC (1924)

Back 36

allowable expenditure
capital or income?
initial repairs
not commercially viable as a ship without extensive repairs
costs of repairs capital

Front 37

Odeon Associated Theatres v Jones (1972)

Back 37

allowable expenditure
capital or income?
initial repairs
repair not needed for cinema to operate
repairs done after a few years - income expenditure - deductible

Front 38

Vodafone v Shaw

Back 38

allowable expenditure
capital or income?
intangible benefits
payment to cancel a fee agreement which meant they gave 10% of profits in exchange for future know-how
cancelling was in ordinary course of business - revenue expenditure - deductible

Front 39

Mitchell v Noble

Back 39

allowable expenditure
capital or income?
intangible benefits
payment to get rid of an unsatisfactory employee
revenue expenditure - deductible

Front 40

Tucker v Granada

Back 40

allowable expenditure
capital or income?
intangible benefits
services stations lease - payment to take tobacco out of profit percentage payable
capital expenditure - making asset (lease) more advantageous

Front 41

IRC v Carron Corp

Back 41

allowable expenditure
capital or income?
intangible benefits
payment for charter to remove barriers to profitable trade
payment to facilitate trade - revenue expenditure

Front 42

Lawson v Johnson Matthey

Back 42

allowable expenditure
capital or income?
intangible benefits
payment injected into insolvent subsid company so that bank of england would buy shares in the subsid to stop its collapse - its collapse would prevent TP from carrying on his business
held revenue expenditure - payment to save business

Front 43

Associated Portland and Cement v Kerr

Back 43

allowable expenditure
capital or income?
intangible benefits
payment to retiring directors for covenant not to compete with TP - enduring benefit - capital expenditure

Front 44

Bentleys, Stokes + Lowles v Beeson (1952)

Back 44

allowable expenditure
wholly and exclusively
exclusively - trade must be sole purpose - can't have dual purpose

Front 45

Murgatroyd v Evans-Jackson (1967)

Back 45

allowable expenditure
exclusively
mallalieu v drummond - motive of tax payer
claimed 60% of costs for private medical care
fatal to claim - not soley business

Front 46

Mallalieu v Drummond

Back 46

allowable expenditure
exclusively
unconscious motive
clothes for court - unconscious motive of being clothed
not deductible

Front 47

Mackinley v Arthur Young (1990)

Back 47

allowable expenditure
exclusively
unconscious motive
moving expenses - required to move for work
unconscious motive of having a place to live
not deductible

Front 48

McKnight v Sheppard

Back 48

allowable expenditure
exclusively
need to distinguish between object and effect
legal expenses for disciplinary hearings to save business - other benefit would be preserving private reputation - this is an incidental effect

Front 49

Commissioners for HMRC v Banerjie (2010)

Back 49

allowable expenditure
exclusively
need to distinguish between object and effect
training course required to keep job - fact that TP also gained advancement to knowledge etc ignored as incidental effect

Front 50

Parsons v Revenue + Customs Commissioners

Back 50

allowable expenditure
exclusively
need to distinguish between object and effect
stuntman - medical costs - dictated by employment, couldn't do business without treatment
incidental effect

Front 51

Newsom v Robertson (1953)

Back 51

allowable expenditure
travel expenses
barrister did a bit of work at home, claimed travel expenses from home to chambers
NAAAA soz

Front 52

Samadian v RCC (2013)

Back 52

allowable expenses
travel expenses
TP had no set work place but worked between only 2 hospitals - travel from home to hospitals not deductible

Front 53

Sargent v Barnes (1978)

Back 53

allowable expenses
travel expenses
dentist stopped off at lab on way to work
costs between lab and work not deductible as it don't negate the fact that his journeys purpose was to get from home to work

Front 54

Horton v Young (1971)

Back 54

allowable expenditure
travel expenses
TP goes to work where services required
no base - bricklayer - all sites within 55 miles - there for 3 weeks at time, kept tools at home, did accounts there
costs deductible

Front 55

Jackman v Powell (2004)

Back 55

allowable expenditure
travel expenses
TP goes to work where services required - not deductible if area of service far away from home
milkman travelled to area - picked up milk from depot - could not deduct costs from home to depot - area was his base of operations

Front 56

Bowden v Russel (1965)

Back 56

allowable expenditure
travel expenses
purpose behind travel? TP went to washington for meetings - also intended holiday with wife - travel expenses not deductible

Front 57

Strong + Co v Woodfield

Back 57

allowable expenditure
'for the purposes of trade'
falling chimney - damages paid to injured guest - held capacity of property owner not capacity as inn keeper
not deductible

Front 58

McKinight v SHeppard

Back 58

allowable expenditure
'for the purposes of trade'
fine imposed by stock exchange council - not deductible - punishment

Front 59

Smith's Potato Estates Ltd v Belland (1948)

Back 59

allowable expenditure
'for the purposes of trade'
legal and accountancy costs in bringing tax appeal - NO - this was expenditure regarding profits once they were made, not regarding making profits in the first place

Front 60

Harrodd v Taylor-Gooby (1964)

Back 60

allowable expenditure
'for the purposes of trade'
substitute tax so that could trade in argentina - deductible