- Terminal payments in connection with the ending of
an office or employment may escape tax in whole or in part.84
Compensation for the loss of a trading asset will usually be a trading
receipt.85
In IRC v Brander and Cruickshank86 the House of Lords held that
where a firm of Scottish advocates with a substantial general legal business
also acted as secretaries and/or registrars for some 30 to 40 companies,
each appointment was a separate office. Therefore, sums received on the
termination of two such appointments escaped tax.87
The status of the earlier decision in Blackburn v
Close Bros Ltd,88 where sums were held to be trading receipts, is uncertain.
It was doubted by Lord Guest,89 with whom Lord Upjohn agreed, but Lord Morris
regarded the facts of the earlier case as being quite different90 and considered
that the offices were not trading assets. Lord Donovan would have followed
the earlier case if there had been a finding of fact that the taxpayer
had sought the office as part and parcel of his trade or profession.91 On
such a finding Lord Donovan would have been prepared to hold that income
payments fell within ITEPA and terminal payments within schedule D. Lord
Reid dismissed the appeal ‘for the reasons given by your Lordships’.92
Given the logic of Mitchell and Edon v Ross it
is hard to understand any conclusion other than that of Lord Guest.93 If
an office falls exclusively within ITEPA it does not cease to be an office
simply because it was sought; while if different payments from the same
source can fall under two schedules, as Lord Donovan suggested, the selection
of the applicable rules from the range offered by the two schedules seems
arbitrary. Hall v Lorimer can be reconciled with this on the
basis either that it is still possible for a person carrying on a profession
to hold an office taxable under ITEPA or, if the boundary between office
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