Owen v Pook (Inspector of Taxes)
[1969] 2 All ER 1Owen
v Pook (Inspector of Taxes)
Judges:
Lord Guest
Lord Pearce
Lord Donovan
Lord Wilberforce
Lord Pearson
Subject References:
Income Tax
Income
Emoluments
Perquisites or profits of office or employment
Travelling expenses
Medical practitioner practising at residence and also holding part-time appointments at hospital 15 miles away as obstetrician and anaesthetist
Emergency cases
Payment of allowance for travel by car to hospital
Payment irrespective of the method of travel
Whether emoluments of office
Deduction in computing profits
Expenses
Medical practitioner
General medical practitioner practising at his residence and also holding part-time appointments at hospital 15 miles away
Hospital work as obstetrician and anaesthetist
Emergency cases
Expenses of travel by car to and from hospital
Whether expenses deductible
Legislative References:
Finance Act 1956 (4 & 5 Eliz 2 c 54) - Sch 2, para 1(1)
Income Tax Act 1952 (15 & 16 Geo 6 & 1 Eliz 2 c 10) - s 156, Sch E, Case 1, as substituted by Finance Act 1956 (4 & 5 Eliz 2 c 54), s 10(1), and Sch 9, r 7 to the Act of 1952
Case References:
Fergusson (Surveyor of Taxes) v Noble - [1919] SC 534; 7 Tax Cas 176; 28 Digest (Repl) 237, *565
Hochstrasser (Inspector of Taxes) v Mayes - [1958] 1 All ER 369; [1959] Ch 22; [1958] 2 WLR 982, affd CA; [1958] 3 All ER 285; [1959] Ch 22; [1958] 3 WLR 215, affd HL; [1959] 3 All ER 817; [1960] AC 376; [1960] 2 WLR 63; 38 Tax Cas 673; Digest (Cont Vol A) 888, 987
Newsom v Robertson - [1952] 2 All ER 728; [1953] Ch 7; 33 Tax Cas 452; 28 Digest (Repl) 158, 618
Nolder v Walters - (1930), 15 Tax Cas 380; 28 Digest (Repl) 244, 1074
R v Postmaster General - (1878), 3 QBD 428; 47 LJQB 435; 38 LT 89; 38 Digest (Repl) 78, 539
Ricketts v Colquhoun (Inspector of Taxes) - [1924] 2 KB 347, affd CA; [1925] 1 KB 725, affd HL; [1926] AC 1; 95 LJKB 82; 134 LT 106; 90 JP 9; 10 Tax Cas 118; 28 Digest (Repl) 242, 1059
Judgment date: 26 March 1969
The taxpayer was a medical practitioner and resided at Fishguard. He held part-time appointments as obstetrician and anaesthetist at Haverfordwest, 15 miles away. Under his appointments he was on stand-by duty for emergencies, as an obstetrician one weekend a month, as an anaesthetist one weekend a month, and on Monday and Friday nights. He had to be accessible on the telephone at those times, and on receipt of a telephone call telling him of an emergency he would give instructions over the telephone to the hospital staff and then, usually, would set off immediately for the hospital by car, although he might advise treatment on the telephone and await a further report. His responsibility for the patient began as soon as he received the telephone call. He was paid travelling expenses at a fixed rate per mile for journeys between Fishguard and the hospital; but the travelling expenses were not payable for a single journey in excess of ten miles, and the taxpayer bore the cost of the additional five miles himself. He was assessed to income tax under Sch E on the amounts received for travelling expenses as being emoluments of his office, and he claimed to deduct from his income the expenses that he incurred in such travelling to and from the hospital.
Held:
(i) (Lord Pearson dissenting) so far as the taxpayer's actual travelling expenses were re-imbursed they were not emoluments as defined in para 1(1) of Sch 2 of the Finance Act 1956 and accordingly were not chargeable (see p 5, letter i, p 8, letter e, and p 9, letter h, post);
(ii) (Lord Donovan and Lord Pearson dissenting) the taxpayer had, in respect of the employment in question, two places of work, and the expenses which were necessarily incurred in travelling between them in the performance of his duties properly fell within the scope of r 7 of Sch 9 of the Income Tax Act 1952; accordingly the expenditure was deductible (see p 6, letter g, p 7, letter i, and p 12, letter g, post).
Ricketts v Colquhoun (Inspector of Taxes) ([1926] AC 1) distinguished.
Decision of the Court of Appeal (sub nom Pook (Inspector of Taxes) v Owen [1968] 1 All ER 261) reversed.
Notes
As to what constitutes an emolument of an office or employment under Sch 2 to the Finance Act 1956, see 20 Halsbury's Laws (3rd Edn) 312-314, paras 574-576; and for cases on the subject, see 28 Digest (Repl) 225-237, 971-1040.
As to deductions in respect of travelling expenses in computing assessable emoluments, see 20 Halsbury's Laws (3rd Edn) 327, 328, para 600; and for cases on the subject, see 28 Digest (Repl) 242-247, 1059-1099.
For the Finance Act 1956, Sch 2, see 36 Halsbury's Statutes (2nd Edn) 448.
For the Income Tax Act 1952, s 156, as amended, see Supplement to 31 Halsbury's Statutes (2nd Edn), para [158] Amended Texts; and for r 7 of Sch 9 to the Act of 1952, see 31 Halsbury's Statutes (2nd Edn) 524.
Appeal
This was an appeal by the taxpayer, David Norman Howell Owen from an order of the Court of Appeal (Diplock and Edmund Davies LJJ Lord Denning MR dissenting) dated 9 November 1967, and reported [1968] 1 All ER 261, dismissing an appeal made by the taxpayer from an order of Stamp J dated 3 March 1967, and reported [1967] 2 All ER 579, allowing an appeal by the Crown through John Philip Pook (Inspector of Taxes) from a determination of the Commissioners for the General Purposes of the Income Tax for Kemes in the county of Pembroke. The taxpayer had appealed against assessments made on him under Sch E of the Income Tax Act 1952: 1962-63 (additional assessment) employment, etc, £412, plus superannuation disallowed £39, £451; 1963-64, employment, etc, £1,481, less superannuation £48, £1,433.
The following facts are taken from the Case Stated: The taxpayer was in practice as a general medical practitioner at his residence at Fishguard. He held part-time appointments with the South West Wales Hospital Management Committee as (i) obstetrician, and (ii) anaesthetist, at the Pembroke County War Memorial Hospital at Haverfordwest in the county of Pembroke which was 15 miles from Fishguard. There was a scarcity in the area of persons duly qualified to do this work. Under the terms of the appointments he was on stand-by duty at the following times:
- (i)
- as obstetrician-one weekend a month;
- (ii)
- as anaesthetist-on Monday and Friday nights and one weekend a month.
During those periods he was required to be accessible by telephone. All his work in connection with those appointments was concerned with emergency cases at the hospital. On receipt of a telephone call from the hospital he would give instructions to the hospital staff (eg, to prepare the patient for an operation). Usually he then set out immediately to the hospital by car. Sometimes he advised treatment by telephone and then awaited a further report. Not every telephone call resulted in a visit to the hospital. Sometimes the telephone call was received when he was out on his medical rounds and not thus necessarily at his house. His responsibility for a patient began as soon as he received a telephone call. Under the terms and conditions of service of hospital medical and dental staffs the hospital management committee paid to the taxpayer travelling expenses at a fixed rate per mile for journeys between Fishguard and the hospital at Haverfordwest. Expenses were not payable for a single journey in excess of ten miles and the taxpayer bore the cost of the additional five miles himself. In 1962-63 he made about 140 journeys to the hospital and the expenses payments for the outward and return journeys totalled £100. This sum was included in the £412 assessed for that year. In 1963-64 he made about 115 journeys, receiving £82, which was included in the assessment for 1963-64. At all times the taxpayer was on call for obstetric "flying squad" duties which meant that he might be called to attend an obstetric emergency in any part of Pembrokeshire. Such calls were rare.
The commissioners decided that the taxpayer's duties commenced at the moment he was first contacted by the hospital authorities; thereafter his travelling expenses to and from the hospital or to and from an emergency were wholly, exclusively and necessarily incurred or expended in the duties of that office.
Their Lordships took time for consideration.