| 20/5/2012 |
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| Board of Special Commissioners - Cases |
| Case no. 5/55 |
Decided: 7 June, 1955 |
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Remuneration for services rendered by an employee outside his normal duties was deemed to form part of employment income - article 5(1)(a) and (b), now 4(1)(a) and (b), Income Tax Act
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Taxpayer had worked practically the whole of his working life as a Secretary to the same company. At the end he was also entrusted with the liquidation of the company, to compensate him for his services in the past.
He was paid Lm3000 but one of the directors testified that he could not recollect what percentage of this was in compensation for past services and what percentage represented liquidation fees.
Appellant claimed that (a) no part of the payment was taxable as it was of a capital nature; (b) his services were those rendered as a Company Secretary not as its liquidator; and (c) such services had been rendered before the enactment of the Act.
The Board observed that article 5(1)(a) brought to charge gains from trade etc. for whatever period of time such trade etc. may have been carried on. Therefore the fact that appellant's activity as a liquidator was not of a recurring nature did not mean that it was not taxable or that it was of a capital nature.
The Board, basing itself on several U.K. cases, held that payments received by employees for services rendered outside their normal duties were part of the profits from employment.
Appellant had also said that the payment of Lm3000 had been received in respect of his 35-year service (before the enactment of the Act). The Board held that the payment had been in respect of his services given as company's liquidator, even though his past services may have influenced the company directors to appoint him as liquidator.
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