Scottish Court of Session Decisions

William Petrie, hotel-keeper, appealed to the Income Tax Commissioners for the Forfar district of the county of Forfar against the assessment made upon him for the year 1891–92 of £1, 19s., being the inhabited-house-duty at the rate of 6d. per pound on £78, the annual value of the hotel and stables and coach-house occupied by him, so far as the said assessment included the stables and coach-house.

The Commissioners having sustained the appeal, Robert S. Smith, the Surveyor of Taxes, expressed his dissatisfaction with the decision as being erroneous in point of law, and requested a case to be stated for the opinion of the Court of Exchequer.

The following facts were set forth in the case stated by the Commissioners—“First, the appellant is proprietor and occupier of the licensed premises situated as after mentioned, known as the Salutation Hotel, and of stables and coach-house adjoining. Second, the said hotel has a frontage both to East High Street and South Street, Forfar, with a bar entrance at the junction of those streets. The principal entrance to the hotel is from South Street. There is another entrance to the hotel from East High Street. The kitchen door of the hotel enters from a passage running from South Street to East High Street at the back and side of the hotel. The said passage separates the hotel from the stables and coach-house, which are under an entirely separate roof from the hotel building, and are situated at the back corner thereof. The carriage entrance to the stables and coach-house is from East High Street, the said passage being only a foot-passage from South Street. Third, it was stated by the appellant that the general public have a right-of-way over this passage, and that it is subject to a servitude of passage in favour of three feuars having properties adjoining. This statement was accepted as correct by the Surveyor. Fourth, in addition to the hotel business the appellant carries on a horse-hiring business, and puts up horses at livery in the said stables. It was admitted by him that people who put up their horses in the said stables frequently partake of refreshment in the said hotel. Fifth, it was agreed by both parties that the value of the hotel was £58 per annum, and that the value of the stables and coach-house was £20 per annum. The appellant claimed relief from the assessment as far as it included the stables and coach-house, on the ground that the hotel and the stables and coach-house are distinct tenements separated from each other by the public right-of-way and servitude of passage above mentioned. The Surveyor Mr R. S. Smith, on the other hand, contended that the hotel and stables and coach-house formed one assessable subject, and were all chargeable under the second rule of Schedule B of the Act 48 Geo. III. c. 55, and in support of his contention

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he referred to the case of the Inland Revenue v. Douglas, November 15, 1879, 7 R. 229.”

The Inhabited-House-Duty Act 1808 (48 Geo. III. c. 55), Schedule B, rule 2, provides that “Every coach-house, stable, … and all other offices … belonging to and occupied with any dwelling-house, shall, in charging the said duties, be valued together with such dwelling-house.”

The Customs and Inland Revenue Act 1878 (41 Vict. c. 15), sec. 13, sub-sec. 1, enacts—“Where any house being one property shall be divided into and let in different tenements, and any of such tenements are occupied solely for the purposes of trade or business or of any profession or calling by which the occupier seeks a livelihood or profit, or are unoccupied, the person chargeable as occupier of the house shall be at liberty to give notice in writing at any time during the year, if convenient, to the surveyor of taxes for the parish or place in which the house is situate, stating therein the facts, and after the receipt of such notice by the surveyor, the Commissioners, acting in the execution of the Acts relating to the inhabited-house-duties, shall, upon proof of the facts to their satisfaction, grant relief from the amount of duty charged on the assessment so as to confine the same to the duty on the value according to which the house should in their opinion have been assessed if it had been a house comprising only the tenements other than such as are occupied as aforesaid or are unoccupied.”

No appearance was made for Petrie, the respondent, but counsel was heard for the Surveyor of Taxes, who maintained that the stables belonged to and were occupied with the hotel, and therefore fell to be assessed along with it. The mere fact that the stables were physically separated from the hotel by a road or passage was no ground for holding them to be a distinct tenement liable to be assessed separately. The cases of Douglas v. Young, November 14, 1879, 7 R. 229, and Cheape v. Kinmont, November 27, 1888, 16 R. 144, conclusively settled that mere physical severance did not affect the unity of an assessable subject.

At advising—