Wing v O’Connell (Inspector of Taxes)

• Judge: Sullivan P,Hanna J and O’Byrne J.
• Judgment Date: 22 October 1926
• Court: High Court

Income tax - Sch E - vocation - professional jockey - whether present from employer taxable emolument or gift.

The appellant in his vocation as a jockey, is ordinarily remunerated for each race he rides, by a scale fee fixed by the turf club, but he may also be retained by a general fee. Some owners, upon their horse being successfully ridden, give the jockey a present in money or money’s worth.

The appellant, engaged to ride a horse in a particular race in 1921, had received from the owner, after winning, a sum of £400 “as a present”. He contended that the present being made (a) after the employment had ceased, (b) voluntarily, and (c) in respect of personal qualifications, no liability to tax, arose in respect of it.

The special commissioners upon the case being remitted to state further facts, found that the sum of £400 was the only present received in the period affecting the average for the years under appeal, 1922-23 and 1923-24, that it was an emolument arising to appellant by reason of his vocation, and was an annual profit or gain within ITA 1918 Sch D rule 1(a)(ii).

Held, in the Supreme Court (Murnaghan J, dissenting), reversing the decision of the High Court, that the amount of £400 was an emolument which arose or accrued to appellant by reason of his vocation, and therefore should be included in computing the average for the purpose of assessment.

Legislation

ITA 1918 Sch E, ITA 1967 s 53.

Cases referred to in judgment

Cowan v Seymour 7 TC 372, [1920] I KB 620.

Herbert v McQuade [1902] 2 KB 631, 4 TC 489.

Blakiston v Cooper 5 TC 347, [1907] 1 KB 702, 2 KB 688, [1909] AC 104.

Smyth v Stretton 20 TLR 443, 5 TC 41.

Poynting v Faulkner 92 LT 383,, 5 TC 145, 21 LTR 428 560, 92 LT 383.

In Re Strong 15 SC LR 704, ITC 207.

Partridge v Mallandaine 18 QBD 276, 2 TC 179.

Ryall v Hoare 8 TC 521, [1923] KB 447.

Martin v Lowry 11 TC 297, [1926] 1 KB 550.

Turton v Cooper 5 TC 138, 92 LTR 863, [1907] 2 KB 694.

Chibett Robinson 9 TC 48, 132 LTR 31.

Turner v Cuxson 2 TC 422, 22 QBD 150.

Reed v Seymour 11 TC 625, [1906] 2 KB 594, [1926] 1 KB 588, 42 TLR 514, 135 LTR 259.

Cases also cited

Humphrey v Peare 6 TC 201, [1913] 2 IR 462.

Cowan v Seymour 7 TC 372, [1920] I KB 500.

Blakiston v Cooper 5 TC 347, [1909] AC 104.

Chibett v Robinson 9 TC 48, 132 LT 26.

Inland Revenue Commissioners v Strong 15 SLR 704.

Turton v Cooper 5 TC 138, 92 LT 863.

Poynting v Faulkner 5 TC 145, 93 LT 367.

Turner v Cuxson 2 TC 422, 22 QBD 150.

Herbert v McQuade 4 TC 489, [1902] 2 KB 631.

Reed v Seymour 11 TC 625, [1926] WN 96, [1926] WN 177 and 42 TLR 377 (since reversed).

Case stated

Case stated under ITA 1918 s 149 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 18 March 1924, at Dublin, for the purpose of hearing appeals, Mr M A Wing of Walshestown House, Newbridge, (hereinafter called the appellant), appealed against estimated assessments to income tax in the sum of £1,000 for each of the years of assessment 1922-23 and 1923-24 made upon him in respect of his emoluments as jockey, under ITA 1918 Sch D.

2. The following facts were admitted or proved:

The appellant earns his livelihood as a jockey. His emoluments consist mainly of fees. The practice obtaining in Ireland in regard to the remuneration of jockeys is that for each horse a jockey rides at a public racemeeting he receives a fee regulated by a scale framed by the Turf Club and varying according to whether he has been successful or not in winning the race and according to the value of the stake for which the race is run.

On some occasions as a consequence of agreements made beforehand between the owners of racehorses and a jockey the latter may receive from such owners sums in excess of the scale fee for riding their horses in races.

3. Occasionally a jockey is retained for a definite term by a particular owner or a particular trainer and, in addition to the fees mentioned in the preceding paragraph, he receives a retaining fee in return for which he rides the horses belonging to the owner, or the horses being trained by the trainer, at exercise and at trials, and at racemeetings.

4. When a jockey is engaged to ride a horse at a race-meeting he is only subject to the orders of the owner and trainer from the time when he dons the racing colours of the owner and proceeds to weigh in for the race until he weighs in upon the completion of the race. His engagement is then at an end, and the fee he has earned is credited to him in the books of the Turf Club and subsequently paid to him.

5. The appellant like other jockeys sometimes receives a present from the owner by or for whom he is engaged, either in money or money’s worth (often in the form of jewellery), when he has been successful in winning a race for such owner. Such present is usually made within a week or a fortnight after the race has been run, and may represent a share of the stake for which the race has been run or a portion of the owner’s betting winnings upon the race.

6. It was contended upon behalf of the appellant that each of his engagements to ride a horse in a race was a separate employment and that presents received by him and not paid under any contract express or implied were not profits and earnings of such employments as they were only received when the relationship of employer and employee had ceased to exist.

7. The inspector of taxes resisted this contention on the ground that the appellant followed the vocation of a jockey and that presents were part of the emoluments of such vocation.

8. We, the commissioners who heard the appeal, determined that presents received by the appellant from owners of racehorses, for winning races for such owners, were profits or gains arising from his vocation as jockey and were accordingly properly chargeable to income tax under ITA 1918 Sch D.

9. Counsel for the appellant immediately upon the determination of the appeal declared to us his dissatisfaction therewith as being erroneous in point of law and in due course required us to state a case for the opinion of the High Court pursuant to ITA 1918 s 149, which case we have stated and do sign accordingly.

10. The question of law for the opinion of the High Court is whether the appellant is chargeable to income tax upon present received by him in the course of his occupation as jockey from owners of racehorses for winning races for such owners.

11. Should the answer be in the affirmative the case is to be remitted to us in order that we may fix the amount of the appellant’s liability.

Amendments to special case

I. At meetings of the Commissioners for the special purposes of the Income Tax Acts held on 26 January 1926, and 23 February 1926, at Dublin, for the purpose of complying with an order of the High Court of Justice dated Thursday 14 May 1925, the said commissioners having heard the respective parties, submit as follows by way of addition to an amendment of the special case stated herein, and dated 13 January 1925:

II. It is agreed:

• (a) that for each of the four years from 1919 to 1922 inclusive, the appellant received retaining fees and riding fees, and incurred expenses, as jockey, and that profits or gains arose or accrued to him in respect of such retaining fees and riding fees, as set out hereunder:

Retaining fees	Riding fees 2 & 3	Total of columns	Expenses incurred	Profits or gains Difference of columns 4 and 5
1	2	3	4	5	6
Year  ended  October 1919	Nil	£772	£772	£921	Loss £149
do  do  1920	£1,000	£245	£1,245	£842	Profit £403
do  do  1921	£800	£603	£1,403	£832	do £571
do  do  1922	£1,200	£588	£1,788	£832	do £956

• the retaining fee of £1,000 received in the year ended in October 1920 was paid by Mr W H Dixon, and the retaining fees of £800 and £1,200 received in the year ended in October 1921 and 1922 respectively were paid by Captain F E Bald,
• (b) that no present were received by the appellant in any of the years ended in October 1919, 1920 and 1922,
• (c) that in the year ended in October 1921, in addition to the retaining fees and riding fees received in that year the appellant received a cheque for £400 in the following circumstances:
• A cheque for £400 drawn and signed by Colonel Charteris was enclosed with the above letter,
• (d) that the only question now in dispute arising out of the assessments upon the appellant for 1922-23 and 1923-24 is the liability to assessment of the present of £400 received in the year ended in October 1921,
• (e) that if the present of £400 be excluded from the computation, the appellant’s liability to income tax in respect of his emoluments as jockey should be based upon an assessment of £275 for the year of assessment 1922-23, and of £643 for the year of assessment 1923-24,
• (f) that if the present of £400 be included in the computation, the assessment for the year of assessment 1922-23 should be £408, for the year of assessment 1923-24, £777.

III. We, the commissioners who heard the appeal, find that the present of £400 referred to in para II of this amended case was an emolument which arose or accrued to the appellant by reason of his vocation as jockey, and that it was an annual profit or gain within the meaning of ITA 1918 Sch D rule I(a)(ii).

We accordingly reduce the estimated assessments of £1,000 for each of the years of assessments 1922-23 and 1923-24 to £408 for the year of assessment 1922-23 and £777 for the year of assessment 1923-24.

IV. The question of law for the opinion of the High Court is whether we were right in deciding as set out in para III of this amended case.

V. Except so far as any statement made in the original case herein is modified or added to by amendments herein, we confirm the said case and find further as stated.

High Court of Justice - 22 October 1926

Sullivan, P. This case originally came before us on a case stated under ITA 1918, by the Commissioners for the special purposes of the...