6 |
all the clearance by Ward’s summary in 1992:14 a sum is taxable if it is received in respect of (a) having acted as or having been an employee, (b) acting as or being an employee, (c) continuing to act as or continuing to be an employee, (d) becoming an employee or (e) undertaking to do anything within (b)–(d). |
In applying these tests the courts take a realistic view of the facts. In O’Leary v McKinlay15 a football club made a long loan to trustees who held the money for a player. The income from the resulting investments was held to be income from the employment and so within schedule E, and not income from a loan, which would have brought it within schedule D, case V. |
One remaining issue concerns the question of whether a payment is an emolument: is this a question of law or of fact? In Hochstrasser v Mayes (above) Upjohn J took the question to be one of inference from primary fact and of legal inference, thus making the question one of law. In Tyrer v Smart, however, the inference seems to have been treated as one of the fact and so within the sole jurisdiction of the Commissioners. The position is as confused as it is unfortunate; the earlier view seems preferable.16 |
14A.1.4 Consequences of Causation Test |
14A.1.4.1 Causation not Consideration |
Since the question is one of causation, and not consideration, the court is not confined to any expressions of consideration in any service contract. In Pritchard v Arundale17 a payment expressed in the contract of service to be in consideration of that service escaped tax. Conversely, in IRC v Duke of Westminster,18 Lord Atkin would have held the payment to be an emolument notwithstanding that the service was expressed not to be the consideration. |
14A1.4.2 Condition, Consideration and Causation |
In Bridges v Bearsley19 property (shares in the employer company) was transferred by other shareholders (X and Y) to an employee, B, under a deed which said that the transfer was in consideration of B remaining a director of the company. When the court looked at the circumstances surrounding the transfer it was clearly due to a wish to |