- (1.) THIS is an appeal against an order of Walton, J. (1986) STC 96 made on 20th January, 1986 and entered on 18th February, 1986 reversing in part the decision of a Special Commissioner on an appeal by the Crown by way of case stated under s. 56 of the Taxes Management Act, 1970. On 30th and 31st January and 1st February, 1984, the Special Commissioner heard the appeals of the taxpayer against 21 assessments to income tax under Sch. E set out in the Income and Corporation Taxes Act, 1970 for the fiscal years 1958 -59 to 1978 -79 all inclusive (the employment years). On 2nd August, 1984 the Special Commissioner determined the appeals by discharging the assessments for the years 1958 -59 to 1977 -78 all inclusive and by reducing that for 1978 -79 to the agreed figure of Pounds 8,111, being the excess over Pounds 10,000 of the aggregate moneys in dispute and accepted by the taxpayer as liable to tax pursuant to ss. 187 and 188 of the 1970 Act.
(2.) THE relevant statutory provisions are limited, Under Case 1 of Sch. E in s. 181(1) of the 1970 Act (although amended in immaterial respects in relation to foreign emoluments in 1974 and again in 1977), tax under the schedule is chargeable in respect of any office or employment on any emoluments therefrom for a chargeable period. Sec. 183(1) defines emoluments as including all salaries, fees, wages, perquisites and profits whatsoever. Sec. 526(5) defines chargeable period as an accounting period of a company or a year of assessment. In the instant case, as the taxpayer is not a company, we are thus concerned with years of assessment. The background to this case can be shortly stated in the words of the Special Commissioner in the case stated (set out at (1986) STC 97 -108), which I gratefully adopt. The taxpayer was employed from a date in the fiscal year 1958 -59 to 1st April, 1979 (in the fiscal year 1978 -79) by A Gallenkamp and Co. Ltd. (the company). On the latter date he (and all the other employees of the company) transferred to the employ of the companys parent company. Just before that transfer, and in anticipation of it, the trustees of two for the benefit of the companys employees exercised their powers to bring into effect provisions leading to the winding up of the trusts and the distribution of their net assets. In the course of the next fiscal year, 1979 -80, the taxpayer became entitled, pursuant to the exercise of discretions vested in the trustees of each of the trusts, to two sums totalling Pounds 18,111 a part of the trust funds. On those facts the taxpayer accepted liability to income tax for the year of assessment 1978 -79 in respect of the two sums under s. 187 of the 1970 Act, that is to say to tax only on the excess over Pounds 10,000 (s. 188(3)). The Revenue, however, took the view that the sums were emoluments of or from the taxpayers employment with the company within the charge to tax under s. 181 (to which the benefit of no special relief is attached). The questions for the commissioners decision were therefore : (i) whether, in relation to the taxpayers employment with the company, the payments were emoluments therefrom within s. 181(1), Sch. E, para 1, and, if so (ii) whether, in relation to the words for the chargeable period in Case 1 of Sch. E, (a) the payments should be treated as income of different chargeable periods and spread accordingly over the whole of the period of the taxpayers employment (the course actually adopted by the Revenue) or (b) the year of assessment 1978 -79 (the last year of such employment) was the sole chargeable period and the whole of the payments constituted income of that year or (c) the payments could not be attributed to any one or more of the years of assessment during which the taxpayer was employed by the company and there was accordingly no chargeable period within the meaning of the statute. In so far as the last sub -paragraph is concerned, the issue was whether the receipt of the Pounds 18,111 by the taxpayer should properly to be attributed to the fiscal year 1979 -80 (the distribution year), during which period there was no employment that is to say no source for any emolument which would mean that the receipt could not be chargeable to tax. The Special Commissioner first held that the moneys received by the taxpayer from the trustees were emoluments from his employment. This point is no longer disputed. But the Special Commissioner then held that the emoluments could not be attributed to any one or more of the relevant employment years from 1958 to 1979. If followed that there could be no chargeable period for the reason I have indicated.
(3.) THE Revenue then asked for a case stated and appealed the Special Commissioners findings against them. It seems that the taxpayer in his turn also argued before Walton, J. that the moneys he had received were not emoluments from his employment. The judge rejected this contention and, as I have said, it is not longer persisted in.;