The Gazette 1964/67

M shall as from ist March 1956 be entitled to the book debts, furniture, books, all documents and files, office equipment, credits and effects of the said partnership, including all money at the bankers to the credit of the partnership subject to the claims of clients in respect thereof." By clause 3 M agreed to indemnify the taxpayer against such claims and demands relating to the partnership. It was further provided, by clause 4: "As from ist March, 1956, M shall pay to the taxpayer for the period of 15 years from such date one equal fourth part of the net profits of the said practice computed before paying any salary to M or his wife and shall furnish him with a certified copy of the audited accounts of the said practice in each year of the said period of 15 years". The clause continued to the effect that the payments to the taxpayer were in consideration of the taxpayer rendering assistance and advice to M in connection with the practice during the period of 15 years and that M would be at liberty to consult the taxpayer on any matter connected with the said practice. M paid the taxpayer £3,000 in the year 1961-62. The inspector assessed the taxpayer under case VI of Sch. D. on that sum on the basis that it was not earned income within the definition in sect. 525 (i) (a) or (b) of the Income Tax Act 1952. The General Commissioners confirmed that assessment. The tax payer appealed against the refusal of the inspector to grant earned income tax relief, contending : (i) that under the terms of the agreement with M he under took to act as consultant solicitor; (2) that the quantum of the advice and assistance required to be given to him under clause 4 of the agreement was to be decided by M ; and (3) that the amount payable to him under the agreement was, within the meaning of pars, (a) and (b) of Sect. 525 (i) of the Act of 1952, earned income as being remuneration from an office or the emoluments of an office of profit. The Crown contended that: (i) under the terms of the agreement the taxpayer was laying down a burden rather than assuming one; (2) the payment under the agreement was made substantially in respect of the taxpayer's share of goodwill and the items in clause 2 ; (3) the relationship of M and the taxpayer after the taxpayer retired from the partner ship was not that of employer and employee; (4) that the terms of clause 4 of the agreement did not create any office or employment for the tax payer ; (5) that the sum payable under the agreement was not derived by the taxpayer from the carrying on of any trade, profession or vocation ; (6) that the sum was correctly assessed under Case VI of schedule D ; (7) that the taxpayer had not ceased to hold any office or employment such that the sum payable under the agreement was an annuity pension or

annual payment to which Sect. 376 of the Act of 1952 applied; and (8) that the sum was not earned income within the meaning of the Act. Buckley J. dismissed the taxpayer's appeal. As he read clause 4, the transfer to M. of the taxpayer's share in the partnership was expressed to be "in consideration of the agreement on the part of M hereinafter contained." He refused to limit those words exclusively to the covenant for indemnity contained in clause 3. The judge rejected the con tention that clause 4 was a self-contained clause distinct and separate from the agreement. He con sidered he had to construe the document as a whole and that the transfer of the assets was made in con sideration of everything that M agreed to do under the agreement. M had agreed to indemnify the tax payer, to pay the taxpayer a quarter of the profits and in certain events to pay the taxpayer's widow an annuity. Buckley J. felt that he was not entitled to come to the conclusion that clause 4 should be treated as though it was segregated from the rest of the agreement. He regretfully reached the con clusion that he must read the document as a whole and treat these payments of a share of profit as being made not only in consideration of such service as the taxpayer might thereafter render to M but also in consideration of the transfer of the taxpayer's share of the assets of the partnership. Towards the end of his judgment the learned judge said : "I reach this conclusion with regret, because I strongly suspect that, in fact, the parties did intend that the payment of a share of the profits should be treated as between them as being in consideration of the services to be rendered by the taxpayer; but I must ascertain their intention from the language they have used, and I do not feel that I can escape from the effect of the terms of clause 2 of the agreement." The 1964 supplement to the 3rd edition of Encyclopaedia of Forms and Precedents (p. 709) contains a clause which though somewhat verbose, indicates the points which have to be covered. The clause in such form in a deed of retirement should enable the ex partner to claim relief in respect of earned income. (Hale v. Shea (Inspector of Taxes) (1965) i All E.R. I55). REGISTRATION OF TITLE ACTS, 1891 AND 1942 Issue of New Land Certificate Applications have been received from the registered owners mentioned in the Schedule annexed hereto, for the issue of Certificates of Title in sub. 21