Decided on March 26,1969

Owen Appellant
Pook (Inspector Of Taxes) Respondents

Referred Judgements :-



- (1.)My Lords, Dr. Owen is a general medical practitioner in practice at Fishguard. He also holds two part-time appointments with the South Wales Hospital Management Committee as obstetrician and anaesthetist at a hospital in Haverfrdwest some 15 miles from Fishguard. Under the terms and conditions of these appointments he was on stand-by duty as obstetrician, one weekend a month and as anaesthetist on Monday and Friday nights and one weekend a month. At such times he was required to be accessible by telephone, apart from being on call at all times for obstetric flying squad duties in any part of Pembrokeshire. He had no other duties at the hospital, all were concerned with emergency cases. The flying squad duties were very rare. On receipt of a telephone call from the hospital he gives instructions to the hospital staff. He usually sets out immediately by car to the hospital. He may advise treatment by telephone and await a further report. Sometimes the telephone call is received when he is out on his medical rounds. It is found in the stated case that his responsibility for a patient begins as soon as he received a telephone call.
Under the terms and conditions of service of hospital staff the management committee pay to the appellant travelling expenses as a part time officer at a fixed rate per mile, said to be 8b., for single journey between Fishguard and the hospital, limited to a single journey of 10 miles. The appellant pays the cost of the additional five miles travel himself.

(2.)The appellant in 1962-63 made about 140 journeys to the hospital and received payment of expenses amounting to Pounds 100. This sum was included in his income assessable for that year. In 1963-64 he made about 115 journeys receiving Pounds 82 which was also included in his assessment for 1963-64. Before the commissioners he sought to deducted the whole cost of traveling incurred which for 1962-63 amounted to Pounds 150 and for 1963-64 to Pounds 123 for income tax purposes.
(3.)The general commissioners sustained his appeal and allowed the deductions sought under rule 7 of Schedule 9 to the Income Tax Act, 1952. Stamp J. reversed that determination and his judgment was upheld by the Court of Appeal (Diplock and Edmund Davies L. JJ., Lord Denning M. R. dissenting).
Two questions arise-(1) whether the travelling allowances were properly included in the appellants emoluments for income tax purposes under Schedule E and (2) was the actual cost of the journeys deductible from his emoluments under the relevant rule.

Schedule E of the Income Tax Act, 1952, provides as follows : Tax under this Schedule shall be charged in respect of any office or employment on emoluments therefrom which fall under Cases I, II and III. Paragraph 1(1) of schedule 2 to the Finance Act, 1956, provides inter alia :

Tax under Case I, II or III shall, except as hereinafter mentioned, be chargeable on the full amount of the emoluments falling under that case, subject to such deductions only as may be authorised by the Income Tax Acts, and the expression only as may be authorised by the Income Tax Acts, and the expression emoluments shall include all salaries, fees, wages, perquisites and profits whatsoever.

Under Schedule 9 to the Income Tax Act, 1952, rule 7 applicable to Schedule E provides as follows :

If the holder of an office or employment of profit is necessarily obliged to incur and defray our of the emoluments thereof the expenses of travelling the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.


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