94 / 364
and Russell
L.JJ.late January). The Court held
that the def
endants were accountable for the whole
of the profit they had made when they were acting
as agents of a trust using information they had
obtained from a trustee to make a profit.
(Phipps
v.
Boardman & Ors. (1965) (All E.R.
849.)
No tax advantage
The English High Court dismissed an appeal by
the Revenue against a decision of the Special
Commissioners dischargingan assessmentof tax made
under section 28 of the British Finance Act, 1960
The question at issue was whether the sale of certain
shares by the taxpayers amounted to a transaction
in securities giving rise to a tax advantage, which
advantage the section was designed to cancel. Two
sisters held the whole share capital of two companies
Gleeson Developments Ltd. and M. J. Gleeson Ltd.
which carried on business as property holding
companies. Gleeson Developments had a balance
on profit and loss account of £180,000 of which
£130,000 was represented by cash at bank. In July
1961 the sisters sold all the shares in M. J. Gleeson
Ltd. to Gleeson Developments Ltd. for full con
sideration and received £121,000 in cash from the
company.
It was contended by the Revenue that
this sum represented money available for distribution
by way of dividend which would otherwise have
been subject to tax in the hands of the shareholder
and that a tax advantage arose which was caught by
section 28. The taxpayers argued that the payment
of cash by the company did not amount to a transfer
of assets within the meaning of the section. The
Court held that one could not look at a complete
transfer by way of sale whereby a member trans
ferred shares to a company in return for cash and
compare it with a single receipt by the member
from the company without consideration.
The
words "tax advantage" should be given a restricted
meaning and clear words were required to justify
treating a sale by a member to a company as a
gratuitous disposition by the company so as to
bring the receipt within the scope of the Act
(Commissioners of Inland Revenue
v.
Clery. Com
missioners of Inland Revenue
v.
Perrens. (S.J.
[Vol. 109] (1965), p. 357.)
Solicitor's income tax allowances
A Lancashire solicitor was accompanied by his
wife and went to the United States and Canada to
attend
the American Bar Association and
the
Commonwealth and Empire Law Conference.
It
was a six-week trip and when not actually attending
the conferences the solicitor visited several places
with his wife, sightseeing and staying with solicitors
and examining their methods.
In his evidence he
stated that his purposes of attending the conferences
was to maintain his status as a solicitor and to
improve his reputation in the United Kingdom, to
increase his clientele, and to have a holiday with his
wife at the same time. He claimed that he had
gained much valuable information on studying
the methods of other solicitors and had improved
his office equipment as a result and was contemplat
ing further improvements. He sought to deduct his
own expenses of attending
the conferences
in
computing the profits and gains of the firm for tax
purposes.
The inspector of taxes disallowed the
expenses on the ground that they were not wholly
and exclusively laid out or expended for the purposes
of his profession. The solicitor appealed against the
assessment to the general commissioners and the
commissioners allowed the appeal and discharged
the assessments. The Inland Revenue appealed, and
Pennycuick, J., in his judgment stated that where a
person had two distinct purposes in mind when
incurring such expenditure and one was a purpose
which was wholly distinct from the carrying on of
trade or profession, then Section 137
(a)
of the
Income Tax Act, 1952
(a)
prohibited that expense as
a deduction for tax purposes.
The solicitor's
admission was to the effect that the expenses were
incurred for a dual purpose; accordingly on that
ground the Commissioners had reached a conclusion
which was wrong in law. The Inland Revenue's
contention that the expenses were too remote was
a question of wide importance and it would be
undesirable for him to express any unnecessary
observations. Appeal allowed with costs.
(Solicitors Journal,
Friday, March 26, 1965. (Vol.
109) pp. 254, 255.) (Bowden (Inspector of Taxes)
v.
RusseU & Russell.)
Interest onjudgment
Order 41, Rule 6 of the Rules of the Superior
Court, 1962, provides that every judgment or order
when filed shall be deemed to be duly entered and
the date of such filing deemed to be the date of entry.
Under the 1905 Rules provision was made that
interest should run from the time the judgment
was entered or the order was made.
A similar
provision is to be found in the 1962 Rules. The
1905 Rules did not provide that interest on the
amount of a judgment should commence to run
from the date the order was perfected. There is,
however, a difference between the 1905 and 1962
Rules. The former contained a provision (Order 41,
Rule 2) that entry of the judgment should be dated
as of the date when the judgment was pronounced
and the judgment was to take effect from that date.
This particular rule does not appear to have been