The Revenue Commissioners v Latchford & Sons Ltd, Tralee

• Judge: Hanna J.
• Judgment Date: 17 January 1928
• Court: High Court

The Special Commissioners on appeal found:

• (a) that the property in the appellants’ proportion had passed to them before 31 December 1920, and
• (b) that they were entitled to treat it as stock-in-hand at that date, at the market price prevailing.

Held, in the High Court allowing the appeal of the revenue, with costs, that the property in the grain had not passed as claimed, and that the notional loss due to the fall in market value as on 31 December 1920, could not be deducted in the accounts for that period.

Legislation

FA 1915 (No 2) Sch 4 Pt I r 1, ITA 1967 s 53.

Cases referred to in judgment

Green v IRC ITC 142, [1927] IR 240

Hall v IRC 12 TC 382, [1921] LJ 1229

Young v IRC 12 TC 827, [1926] SC 30

Collins v IRC 12 TC 773, [1925] SC 151.

Case stated

Case stated under FA 1915 (No 2) s 45(5) and the Taxes Management Act 1880 s 59 by the Commissioners for the special purposes of the Income Tax Acts for the opinion of the High Court of Justice

1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 19 December 1922, at Dublin for the purpose of hearing appeals, Messrs Latchford & Sons Ltd, (hereinafter referred to as “the respondent company”) appealed against an assessment to excess profits duty in the sum of £752 (60 per cent of £1,254) for the final accounting period of twelve months ended on the 31 December 1920, (hereinafter referred to as “the final accounting period”) made upon the respondent company by the Commissioners of Inland Revenue under the provisions of FA 1915 (No 2) Pt III, and subsequent enactments.

2. The sole question at issue was whether, in computing the profits of the business of the respondent company in the final accounting period for the purpose of excess profits duty, the sum of £3,594 referred to hereinafter in para 16 of this case, should be allowed as a loss sustained by the respondent company.

3. The following facts were admitted or proved:

The respondent company is a limited company, registered and incorporated under the Companies Acts. It carries on the business of millers and general merchants at Tralee.

4. Four milling companies in Tralee, including the respondent company and Messrs John Donovan & Sons Ltd, had formed a combination known as “the Kerry Millers’ Pool” for the purpose of making joint purchases of grain.

5. On 22 October 1920, at Liverpool, Messrs Kirby & Co, Brokers of London and Liverpool, signed a contract, hereinafter referred to as “the contract”, with Messrs Louis Dreyfus & Co of London and Liverpool, for account of Messrs John Donovan & Sons Ltd, who were acting on behalf of the Kerry Millers’ Pool. The contract was for the purchase of a cargo of maize and it was understood that the respondent company’s share of the cargo was to be three-tenths.

6. The contract in its main essentials was as follows:

Liverpool, 22 October 1920.

Bought of:

Messrs Louis Dreyfus & Co, London and Liverpool for account of Messrs John Donovan & Sons Ltd, Tralee, on the printed conditions and rules endorsed on this contract a cargo of yellow La Plata maize, new crop of fair average quality of the season’s shipments at time of shipment.

Shipment in good condition per steamer “Baependy” expected ready (early November 1920 loading) from a port or ports in the Argentine Republic and/or Uruguay.

As per bill or bills of lading to be dated accordingly say (6,000) six thousand tons of 2,240 lbs (or what a steamer may carry)

• at the price of 61/9 .... per 480 lbs

including freight and insurance to any safe port in the United Kingdom of Great Britain .... and Ireland.

Payment by cash in London in exchange for shipping documents on or before the arrival of the vessel at port of discharge, but in no case later than 14 days after receipt of invoice.

Seller to give all policies and/or certificates of insurance (for original and for increased value, if any) on the cargo, all duly stamped, and for not less than 2 per cent over the invoice amount, any amount over the 2 per cent to be for seller’s account.

7. The following conditions, inter alia were endorsed on the contract:

• (1) Notice of appropriation with ship’s name, date of last bill or bills of lading and approximate quantity loaded shall be given by the shipper of the grain tendered under this contract, direct or through his house or representative or agent in Europe to his buyer within 10 days from the date of bill of lading, and by each other seller within 10 days or in due course if received by him after that time. Should the shipper’s notice be delayed beyond 10 days through any cause beyond his control, it shall be given within 24 hours from arrival of documents in Europe, and shall be passed on by each other seller to his buyer in due course on receipt. On demand of buyer, sellers shall give a copy of the particulars contained in the notice of appropriation received from his seller, and buyer shall, on demand, give to seller a written receipt of notice of appropriation. A valid notice of appropriation when once given shall not be withdrawn. Provisional invoice based on bill of lading weight with ship’s name and date of bill or bills of lading shall be sent by shipper’s house or representative in Europe to his buyer within seven days after arrival of documents in Europe and by other sellers to their buyers respectively in due course after receipt. A notice or tender to the buying broker or agent shall be deemed a notice or tender under this contract. If documents are tendered within the time stipulated, but after arrival of the vessel, landing charges incurred shall, be borne by seller and allowed for in final invoice.
• (2) Any commission on freight to be for seller’s benefit but any discount for payment of freight in cash to be for account of buyer. Any reduction in freight or insurance for ending voyage at any particular port to be for buyer’s benefit, but any return of premium for not going to the continent to be for seller’s account.
• (3) Bill of lading to be considered proof of date of shipment in the absence of evidence to the contrary.

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