Scottish Court of Session Decisions

At a meeting of the General Commissioners of Income-tax for the county of Sutherland held at Dornoch on 20th November 1894, Mr Tom Scott, farmer, Rhifail, appealed against an assessment of £1042, 17s. 6d. made on him under Schedule B of the Income-tax Acts for the year ended 5th April 1895, in respect of the occupation of Rhifail sheep-farm and shootings.

The Commissioners were of opinion that the assessment under Schedule B ought not to include the appellant's shooting rental, and that appellant was only liable to be assessed under said schedule on his rent as grazing tenant, and they reduced the assessment to £672, 17s. 6d. accordingly.

The present case was stated for the opinion of the Court at the request of the Surveyor of Taxes.

The case contained the following statements:—“Mr Scott is tenant under the Duke of Sutherland of Rhifail sheep-farm, in virtue of a fourteen years' lease as from Whitsunday 1889, and he is also the lessee under another lease, applicable to the same period, of the landlord's shooting rights over said farm, and also of his angling rights over one heat of the river Naver. According to such leases he pays yearly the following separate rents, viz., £670 in respect of the occupancy and grazing of the farm, £370 for the shootings, including a furnished lodge-keeper's house and offices, and £100 for the angling, together with a further sum of £2, 17s. 6d. yearly of fire insurance, payable on the farm and other buildings rented by him. Mr Scott is in the actual occupation of Rhifail farm and resides upon the same all the year round. No assessment under Schedule B has been made in previous years upon Mr Scott in respect of the shootings and angling until the year 1893–94, when the Schedule B assessment, so far as it included the shooting rental, was discharged after a hearing before the Commissioners.

The appellant contended (and his contention was admitted by the Surveyor) that if the shooting of Rhifail during his occupancy of the grazing right had been let by the proprietor to another person, the shooting tenant would not have been liable to income-tax under Schedule B in respect of the shooting rent; and that no distinction can be drawn between his position and that of a shooting tenant who pays a separate rent for the shootings. … This is the first occasion in the county of Sutherland, since the passing of the Income-Tax Act 1862, that the occupancy of shootings over and above the primary and beneficial occupation of the land as a sheep grazing farm (apart from deer forests) has been made the subject of assessment in respect of income-tax under Schedule B. …

It was contended on behalf of the Crown that the Schedule B assessment of £1042, 17s. 6d., being the annual value of the farm and shootings thereon in the occupancy of the appellant (less the sum of £70 allocated to the shooting lodges), was rightly made according to No. vii., Schedule B, section 63 of the Income-Tax Act of 1845 (5 and 6 Vict. cap. 35).” …

Argued for the Surveyor of Taxes—The appellant was undoubtedly an occupier of land by his possession under his shooting lease just as much as in virtue of his agricultural lease. The case of Middleton v. Lord Advocate, March 16, 1876, 3 R. 599 was directly in point. There, as here, the tenant had the exclusive use or occupation of the land, and the rent paid by him was its agreed-on actual value, in that case as a deer forest, in this for farming and shooting combined. Rule vii., Schedule B, section 63, of the Act of 1842 provided for the duty under Schedule B being charged in addition to the duty under Schedule A, according to the general provision in rule 1, Schedule A,

Page: 586↓

section 60, on the full amount of the annual value of the lands. That rule extended to all lands “for whatever purpose occupied or enjoyed,” and the annual value was in this case the full rent paid, on which accordingly the appellant must be assessed— Menzies v. Solicitor of Inland Revenue, January 18, 1878, 5 R. 531— 15 S.L.R. 285; Stewart v. Bulloch, January 14, 1881, 8 R. 381, where the shooting rent was reckoned in calculating the amount of a composition — Paterson v. Johnston, November 12, 1879, 7 R. 12, at pp. 24–7.

Argued for appellant—(1) Only one rent was contemplated by Schedule B, and that was for the “occupation” of the land in the statutory sense, which did not embrace shooting purposes. It was merely a fiction of law to hold that the right of a game tenant was “occupation.” (2) All the rules contemplated only the assessment of profits, but the tenant of a shooting could not be said to make a profit out of his shooting rights. This constituted the differences between assessment under the Property and Income Tax Acts and that under the Poor Law Act, where a game tenant had been held to be in the occupation of land and so assessable. The terms and objects of the Acts were different — Stirling Crawfurd v. Stewart, June 6, 1861, 23 D. 965. The headings of the Income Tax Acts showed that they were intended to exact duties on “profits,” and thus an agricultural tenant was exempted if he did not make profits—14 Vict. c. 12, sec. 3; 16 and 17 Vict. c. 34, sec. 46; 43 and 44 Vict. c. 20, sec. 52; 53 and 54 Vict. c. 8, sec. 23. Schedule B of the 1853 Act (16 and 17 Vict.) was subordinate to Schedule A, and unless the ownership was assessable the occupancy could not be. But shooting rents were not assessed qua ownership, under Schedule A but under Schedule D; therefore they were not assessed under Schedule B qua occupancy. Under the 1842 Act this contention would be equally valued.

At advising—