Between: McMillan - Appellant
And: Guest - Respondent

Judges: Lord Atkin
Lord Wright
Lord Roche

Lord Porter

Subject References:
REVENUE
INCOME TAX
Public office
Director of company
Residence abroad
No duties performed in England
Voluntary work for the company abroad
Assessability

Legislative References:
Income Tax Act, 1918 (8 & 9 Geo. 5, c. 40) - sch. E; Rules applicable to sch. E, r. 6 (h)

Case References:
Pickles v. Foster - [1913] 1 K. B. 174
Proctor v. Ryall - (1928) 14 Tax Cas. 204

Judgment by:
Lord Porter

My Lords, I agree that this appeal should be dismissed. The points taken on behalf of the appellant were two in number:

(1.)

That his office was not within the United Kingdom; and

(2.)

that it was not public.

For the first point reliance was placed on the decisions in Pickles v. Foster ^[F25] and Proctor v. Ryall. ^[F26] The result of those cases was said to be that an office was not within the United Kingdom unless it was exercised there, and the appellant went on to argue that on the facts found he did not exercise his office in this country. The Crown did not dispute, and, indeed, I think it is plain under the rules applicable to sch. E, that tax is charged only on persons having or exercising an office mentioned in the schedule, and the only offices mentioned in the schedule are those within the United Kingdom. If, therefore, the office is not within the United Kingdom it is not the subject of tax under this schedule.

But though they made this admission, the Crown did not accept the view that the office must be exercised within the United Kingdom. Whether a person, who holds the office of director in a company resident and managed and, therefore, controlled in this country, who receives his fees from a pool provided in this country for himself and his co-directors - a pool divided up in the proportions which they agree - and who receives copies of minutes, annual balance sheets and managing directors' and auditors' reports, exercises or does not exercise his office in this country is a question which I do not think it necessary to decide. In the two cases quoted the problem was expressed with sufficient accuracy by asking whether the employment was exercised here or not.

No question of having an office arose, but it does arise in the present case, and, whatever views one may entertain as to the accuracy of the language used in the cases referred to when applied to those individual cases, it is not, I think, intended to apply to all cases under sch. E. For the present purpose it is enough to say that a person in the position of the appellant holds an office in this Kingdom despite the fact that he has not in fact attended any meetings in this country since 1931. He is a director of a company resident and managed in this country, entitled to attend any board meetings which may be held here, giving advice as to matters concerning its management, and supplied at least with its formal literature. In such a case it is, I think, immaterial that most, if not all, of the appellant's activities are carried out in America. He still holds an office in the United Kingdom.

If the appellant is, as I think he is, wrong on this point, he still has a second string to his bow. Even, he says, if he has or exercises an office in the United Kingdom, it yet is not a public one. That it is an office is, I think, plain. It has permanency apart from the temporary holder and is held in one of the specified corporations. One has only to refer to sections such as ss. 145 and 151 of the Companies Act, 1929, to find the phrase "office of director" expressly mentioned. Indeed, this is not in dispute.

What is controverted is the allegation that a directorship, at any rate in a so-called private company, is a public office. The argument is put on the ground that at worst - i.e., at worst for the appellant - directors of companies not by statute requiring any directors, if appointed at all (as they may be, but are not compelled to be, in the case of a private company), are not holders of a public office. There is no magic in the phrase "private company." It is true that it need not have directors or issue a prospectus, and that it is not permitted to have more than fifty shareholders and may have no more than two, but it still must be registered and keep an official register of its members. It is a corporate body constituted by Act of Parliament (now the Companies Act, 1929), and that Act imposes duties on the office itself and its holder for the time being. These obligations are imposed in the public interest that some public control over its organization and activities may be obtained. No doubt, less control is exercised in the case of a private than in the case of a public company, but the former is not private in the sense that it has no public formalities to carry out, and the word "private" is only used as a convenient label to distinguish it from the so-called "public" company. I think the office is a public one, and I agree with the motion proposed from the woolsack.

Appeal dismissed.

Solicitors for appellant: Goulden, Mesquita & Co.

Solicitor for respondent; Solicitor of Inland Revenue.