1992 P T D 1088

[(1992) 1 WLR 201]

[Chancery Division]

Before Waner, J

SMITH (INSPECTOR OF TAXES) v. ABBOTT

SAME v. HOLT

SAME v. SCOVELLL

SAME v. SHUTTLEWORTH

SAME v. WOODHOUSE

Income-tax---

----Employment---Emolument---Allowance paid to journalists to purchase newspapers and magazines---Whether expenditure on purchases "wholly, exclusively and necessarily", incurred in performance of journalists duties---Whether allowance deductible in assessing emoluments---Income and Corporation Taxes Ac`, 1970, S. 189.

The tax payers were journalists. In the first case the taxpayer was a news lay-out journalist. The tax payers in the second to fifth cases were a staff photographer, a sports reporter, an assistant chief sub-editor and a picture editor. They each received from their employers an allowance as reimbursement of some of the expenditure incurred by them on purchasing newspapers and periodicals. For years from 1980-81 to 1985-86 they were each assessed to income-tax under Schedule E in amounts that included the sums reimbursed to them by way of the allowances. They appealed against the assessments to General Commissioners contending that .the amounts of the allowances were deductible under section 189 of the Income and Corporation Taxes Act, 1970. In all except the first case the Commissioners found that the reading of the publications was a necessary part of the duties of the taxpayers' employments and was not merely required to qualify them or maintain their qualifications to do their duties. In the first case there was no such finding. The Commissioners allowed all the appeals holding that the amounts reimbursed were in respect of expenditure incurred by the taxpayers wholly, exclusively and necessarily in the performance of the tax payers duties and accordingly were deductible.

On appeal by the Crown:---

Held. (1) dismissing the appeals in the second to fifth cases, that although expenditure incurred by the holder of an employment on reading so as to keep himself qualified to perform his duties was not incurred by him in the performance of those duties, expenditure on publications that were read in the actual performance of the duties could be deductible under the provisions of section 189 of the Income and Corporation Taxes Act, 1970; that the findings of the Commissioners in each of the four cases led to the conclusion that reading the publications was a necessary part of the performance of the duties of the taxpayers so that the expenditure they had incurred was wholly, exclusively and necessarily in the performance of the duties; and that, accordingly, the reimbursement allowances were deductible in computing the amount of their Schedule E income-tax liability.

(2) Allowing the appeal in the first case, that the findings of the Commissioners in relation to the taxpayer did not establish that reading the publications was undertaken by him exclusively in the performance of his duties; and that the only possible conclusion was that the expenditure was not deductible in computing his liability to the tax.

Blackwell v. Mills (1945) 26 T.C. 468; Brown v. Bullock (1961) 1 W.L.R. 53; (1961) 1 All E.R. 206; (1961) 1 W.L.R. 1095; (1961) 3 All E.R. 129; 40 T.C. 1, CA.; Edwards v. Bairstow (1956) A.C. 14; (1955) 3 W.L.R. 410; (1955) 3 All E.R. 48; 36 T.C. 207, H.L. (E).; Humbles v. Brooks (1962) 40 T.C, 500; Lomax v. Newton (1953) 1 W.L.R. 1123; (1953) 2 All E.R. 801; 34 T.C. 558; Ricketts v. Colquhoun (1926) A.C. 1; (1925) 10 T.C. 118, H.L. (E.); Simpson v. Tate (1925) 2 K.B. 214; 9 T.C. 314; Taylor v. Provan (1975) A.C. 194; (1974) 2 W.L.R. 394; (1974) 1 All E.R. 1201 and 49 T.C. 579, H.L. (E.) ref.

Bentleys, Stokes & Lowless v. Beeson (1951) 2 All E.R. 667; (1952) 2 All E.R. 82; 33 T.C. 491, CA.: Elwood v. Utitz (1965) 42 T.C. 482, CA. (N.1).; Mckie v. Warner (1961) 1 W.L.R. 1230; (1961) 3 All E.R. 348; 40 T.C. 65; Nolder v. Walters (1930) 15 T.C. 380; Pook v. Owen (1970) A.C. 244; (1969) 2 W.L.R. 775; (1969) 2 All E.R. 1 and 45 T.C. 571, H.L. (E.) cited.

The tax payers, Patrick Abbott, Kevin Holt. Brian Scovell, Terence Shuttleworth and Gary Woodhouse, were at the material times employed by Associated Newspapers Ltd. They each received from their employers an annual allowance in reimbursement of part of the cost of newspapers and periodicals bought by them. They each appealed against various assessments to income tax under Schedule E in respect of years from 1980-81 to 1985-86 claiming that the amounts of the allowances were deductible under the provisions of section 189 of the Income and Corporation Taxes Act, 1970. The Commissioners allowed all the appeals holding that in each case the expenditure on the publications had been incurred wholly, exclusively and necessarily by the taxpayers in the performance of the duties of their employments. The Crown requested cases to be stated for the opinion of the High Court.

The facts relevant to the case of each of the taxpayers are set out in the judgment.

Alan Moses Q.C. and Nicholas Warren for the Crown.

Peter Whiteman. Q.C. and Marion Simmons for the Tax Payers.

Cur. adv. vult.

JUDGMENT

WARNER, J: --These are appeals by the Crown against five decisions of the General Commissioners for the City of London concerning liability for income-tax under Schedule E. The taxpayer in each case is a journalist employed by Associated Newspapers Ltd. Of the taxpayers, four worked for the "Daily Mail". They are Mr. P.J. Abbott, a news layout journalist; Mr. K.P. Holt, a staff photographer; Mr. B.S. Scovell, a sports reporter specialising in cricket and football, and Mr. T.R. Shuttleworth, who was at first a news sub?-editor and subsequently an assistant chief sub-editor. The fifth taxpayer is Mr. Gary Woodhouse, the picture editor of "The Mail on Sunday". Their appeals to the Commissioners were heard together on five days in June 1989, during which all five gave evidence as did Nr. G.P. Burden, the deputy managing editor of the "Daily Mail". The decisions of the Commissioners were given together on 1st December, 1989.

Except in the case of Mr. Woodhouse, the years of assessment under appeal are the years 1980-81 to 1985-86. In the case of Mr. Woodhouse, they are the years 1981-82 to 1985-86 because, I understand, he did not become employed by Associated Newspapers Ltd. until sometime in 1981-82. In each of those years each of the taxpayers received from Associated Newspapers Ltd. an allowance in reimbursement of the cost of newspapers and periodicals which he bought. In each year the amounts of the allowances received by the taxpayers were identical, except that Mr. Woodhouse received no allowance for 1980-81 and only part of the allowance for 1981-82.

The question for determination by the Commissioners was whether, in the case of each taxpayer, the amount of the allowance was deductible from his emoluments as an expense under section 189(1) of the Income and Corporation Taxes Act, 1970. It was agreed between the parties before the Commissioners and that agreement holds in this Court: (i) that the amount of the allowance was correctly included in that taxpayer's assessment under Schedule E as an assessable emolument and (ii) that he had spent on newspapers and periodicals an amount at least equal to the amount of the allowance.

Section 189(1) (which is a re-enactment of a provision which has existed in successive Income-tax Acts since the mid-19th century) provides:

"If the holder of an office or employment is necessarily obliged to incur and defray out of the emoluments thereof the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform the same, or otherwise to expend money wholly, exclusively and necessarily in the performance of the said duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."

It is notorious that that provision is rigid, narrow and to some extent unfair in its operation. In order to satisfy its requirements, an office-holder or employee has to show four things. First, he has to show that he has incurred the expenses in question "in the performance of the duties of the office or employment". That phrase is to be contrasted with the more generous phrase, if I may so express it, in section 130(a) of the same Act relating to expenditure deductible under Cases I and II of Schedule D. That expenditure needs only to be "for the purposes of the trade, profession or vocation". Second, an office-holder or employee has to show that the expenses he seeks to deduct are expenses that he has been "necessarily obliged" to incur and defray in the performance of the duties of the office or employment. Third, he has to show that those expenses have been "wholly" so incurred. The better view seems to be that that goes only to quantum. Last, he has to show that they have been "exclusively" so incurred.

Each of the cases stated for these appeals has annexed to it the decision of the Commissioners in the case of the taxpayers concerned. The five cases stated and decisions follow the same pattern and much of the wording is common to them all. The finding and conclusions of the Commissioners are expressed in paragraphs 7 and 8 of each decision. I will read first those paragraphs in the decision concerning Mr. Holt:

"7. We find the following facts. (a) [Mr. Holt] during the years of assessment was employed as a staff photographer for the `Daily Mail' located in the north of England. He worked at home, at the office or on assignment from Sunday to Friday, there being occasionally an assignment at weekends. He was in telephone contact with the London and Manchester picture desks from home in the morning at between 8 and 9 and in the evening at any time. This involved discussions about how assignments were proceeding or forthcoming assignments. He was on call effectively for 24 hours a day. (b) The duties of the employment were to provide ideas for photographs as well as taking them. He would telephone or be telephoned to discuss ideas gleaned from reading the newspapers and accept the assignment he was to pursue. He would go and do the work, return to the office to develop the film, print it and give the pictures to the picture editor. There was no set time for going home. (c) [Mr. Holt] needed to read newspapers to obtain ideas for stories and photographs and to check that any idea he had was not already dealt with by another newspaper, whether local or national. We were shown a number of examples in which such material had resulted in pictures taken by him. Furthermore, he needed to know the latest news so that he was always ready for discussion of matters raised by the picture editor (d)(i) With these objects in view, he purchased". --There follows a list of the newspapers, some national and some local, and of periodicals that he bought.-- "(ii) The newspapers were delivered to his house and he read them from between 7 and 8 a.m. for the three-quarters of an hour to an hour. He scanned them at first and then read the items that interested him in more detail. He made notes and also took cuttings for tiling and for future use. When he left home early he bought newspapers in the course of his journey. It was his practice to buy the local newspapers of the town in which he was carrying on an assignment and read them `before leaving the town to see whether there was anything of interest to the `Daily Mail'. He did not read newspapers when he was on holiday although he did so on his days off? (e) We accept the evidence of Mr. Burden and [Mr. Holt] that the reading of this material was a necessary part of the duties of a staff photographer as described above and was not merely required to qualify, or maintain the qualifications of [Mr. Holt] to do the work. (f) It was necessary for him to do this reading and provide his own reading material otherwise than when he was in the office or on an assignment because (i) he had equipped with the news and ideas as soon as he started discussions for assignments or the assignments themselves; (ii) his duties in the office or on assignment gave him no time for such reading; (iii) there were no adequate provisions at the local offices for such reading; (iv) newspaper reading was regarded by his employer and [Mr. Holt] as an essential part of his duties.

"8(a) We conclude that the reading of newspapers and periodicals was in? the performance of the duties of the employment and the money expended on them was in each case expended wholly, exclusively and necessarily in the performance of [Mr. Holt's] duties. (b) We find also that [Mr. Holt] spent not less than the sums referred to in paragraph 2 above [those were the amounts of the allowance] on newspapers and periodicals, that he purchased them with the sole object of reading the relative material in the performance of the duties of his employment and there was no private purpose in the purchase. (c) We hold that the sums expended on newspapers and periodicals by [Mr. Holt] as indicated in paragrpah 2 above were sums expended wholly, exclusively and necessarily in the performance of the duties of his employment and are therefore expenses admissible as deductions from his emoluments within section 189(1) Income and Corporation Taxes Act, 1970." ??

Paragraphs 7(a) and (b) of the decision in Mr. Scovell's case are different. They read:.

"7(a) [Mr. Scovell] during the years of assessment was a sports reporter for the `Daily Mail' specialising in cricket and football. He did not work set hours, working at home, in the office or on location. He used the telephone at home to call or be called from the `Daily Mail' offices to discuss his work or to make reports, and to ring people in sport. Occasionally, he worked outside the United Kingdom on tour with an English cricket or football team. (b) He reported football and cricket matches but most of his time was spent writing about events in the sports world rather than reporting what was happening in the field. He developed and explored the information which he acquired from reading other newspapers and followed up ideas obtained from ahem to provide stories to report for the `Daily Mail'.. He reported to the sports editor at 10 a.m. on an average morning and was expected to know what had been going on as reported in other newspapers."

Sub-paragraph (c) gives details of the newspapers and periodicals bought by Mr. Scovell and ends: "together with other periodicals and foreign newspapers which he considered to be relevant to his sports reporting." Sub-paragraph (d) corresponds with paragraph (e) of the decision in Mr. Holt's case. It reads:

"We accept the evidence of Mr. Burden and [Mr. Scovell] that the reading of this material was inherent in the process of fact and idea finding involved in sports reporting as described above and was not merely required to qualify, or maintain the qualifications of (Mr. Scovell) to do the work."

Sub-paragrpahs (e) and (f) read:

"(e)?????? During an average week (Mr. Scovell) spent from one to four hours a day reading newspapers and periodicals and on Sundays a maximum of four hours. On days he attended the office he read at home from 8 to 9 a.m. and then spent 30 minutes on the train continuing his reading. On Sundays, he read the sports pages of newspapers for one and a half hours from 8 a.m. When abroad, he bought the available English newspapers but continued to have them delivered at home to be skimmed by him on his return. (f) It was necessary for him to do this work outside the office because (i) he had to be equipped with the news as soon as he started consultations with the sports editor; (ii) his duties both inside and outside the office gave him no time to read the newspapers; (iii) the cuttings library at the `Daily Mail' offices was not equipped to provide these daily reading facilities; (iv) newspaper reading outside office hours was regarded by his employer and by [Mr. Scovell] as an essential part of his duties."

Paragraph 8 of the decision in Mr. Scovell's case is, save in one respect, in the same terms as paragrpah 8 of the decision in Mr. Holt's case. The difference is that in Mr. Scovell's case paragraph 8(a) reads:

"We conclude that the reading of the newspapers and periodicals outside the `Daily Mail' (offices) was in the performance of the duties of the employments, notwithstanding that this was done at home and outside the hours of attendance of those offices, and the money expended on them was in each case expended wholly, exclusively and necessarily in the performance of (Mr. Scovell's) duties."

There are variants of that formula in the other cases but in each subparagraphs 8(b) and (c) are in the same terms.

In paragrpah 7 of their decision in Mr. Shuttle worth's case the Commissioners say:

"We find the following facts. (a)(i) [Mr. Shuttleworth] during the years of assessment under appeal, was for 19801 to 1982-83 a news sub-?editor and for 1983-84 to 1985-86 an assistant chief sub-editor for the `Daily Mail'. The duties of these employments involved his attendance at the offices of the `Daily Mail' from 2 p.m. until 12.15 or 1 a.m. or even later if required for four days a week. (ii) As news sub-editor for particular pages of the newspapers he had to select and check the news reports, rewriting them as necessary, determine the headlines and the page layout, choose pictures, select the type and consider whether any legal problems arose. For this work, he was responsible to the chief sub-editor. (iii) As assistant chief sub-editor he was in charge of a number of sub-editors and had to check and correct as necessary their work (described in paragrpah (ii) above). The paper was published on six days but the staff worked on four so that he often stood in for the chief sub-editor when he was absent, in which case he would receive material from the `back bench' the section that directs and controls all the news coverage of the newspaper (comprising the night editor and his deputy and two assistants). He would then plan a page, select the appropriate sub-editor to deal with the particular story, giving him the necessary advice as well as checking and correcting the page. He would sometimes also stand in for others such as the `splash' sub-editor (responsible for the front page) or the assistant night editor, when he would have similar duties. (iv) The various functions of the editor and the editorial staff were explained to us with reference to a diagram showing the complete editorial hierarchy. (b) Properly to carry out his duties he needed to have an up to date knowledge of all aspects of the news. In order to select copy for the next edition of the `Daily Mail' he had to know what other newspapers were doing about a particular news item, what stage various issues in a story had reached, judge every story in relation to everything else going on, not repeat stories appearing in other newspapers the previous day and take the story forward (where it was a continuing event) from what had appeared in the previous day's newspapers, as well as in the `Daily Mail'."

Paragraph (c)(i) begins "To this end he purchased" and then gives details of the newspapers that Mr. Shuttleworth purchased. Sub?paragraph (c)(ii) gives details of periodicals he purchased "as and when he considered it necessary for the purpose of his duties." Sub-paragraphs (d) and (c) are in the following terms:

"(d) We accept the evidence of Mr. Burden and [Mr. Shuttleworth] that the reading of this material was a necessary part of the duties of sub-editing as described above and was not merely required to qualify, or maintain the qualifications of [Mr. Shuttleworth] to do the work. (e) The newspapers and periodicals were generally read by (Mr. Shuttleworth) at home in the morning before he left for the office. On the days of non-attendance at the office he still had to read the newspapers and periodicals as part of his normal duties but could spread his reading over the whole day. It was necessary for him to do this work outside the office because (i) he had to be equipped with the news before he started operations in the `Daily Mail' offices; (ii) his duties there gave him no time to read the newspapers or periodicals; he was always working against the clock; (iii) the cuttings library at the `Daily Mail' offices was not equipped to provide those daily reading facilities; (iv) newspapers reading outside office hours was regarded by his employer and by (Mr. Shuttlworth) as an essential part of his duties."

I do not find it possible fairly to summaries paragraph 7 of the decision in Mr. Woodhouse's case. Despite its length I will read it all:

"7. We find the following facts. (a) [Mr. Woodhouse] during the years of assessment was the picture editor of "The Mail on Sunday". His duties involved attendance at `The Mail on Sunday' offices from Tuesday to Saturday (inclusive), his day there 'being from 9.15 a.m. to approximately 7 p.m. at the beginning of the week and 10 to 11 p.m. at the end.

"(b) He was directly responsible to the editor for obtaining illustrations for every page in the newspapers and any supplements. The newspaper currently had 64 pages and the supplements 48 pages. He had an assistant picture editor, a sports picture editor and a secretary assistant immediately under him. He had to generate ideas for illustrations and arrange for obtaining them from in house and freelance photographers or from other sources. He participated in an early conference on Tuesdays with other editors when the overall look of the paper and its contents was considered, usually starting on the features page. There were seven conferences with the editor and specialist editors of sections of the paper during the week. At each of these (Mr. Woodhouse) was expected to produce a written paper listing his ideas for copy to be discussed. He was expected to suggest to the editors ways in which particular items of news and articles could be illustrated. He was primarily there to put up visual ideas to enhance the look of the paper. He also had mini conferences with his subordinates who were expected to provide their own ideas, which he, in turn, could discuss with the other editors concerned. These were usually held before the daily editorial conferences (usually held at about 11 a.m.) although on Tuesdays they were held afterwards. Once ideas were approved, [Mr. Woodhouse] decided who would do the job and delegated the organisation of the work.

"(c) To obtain the necessary ideas [Mr. Woodhouse] always spoke to editors, journalists and specialists in the building because they read publications which he did not read. He always read other publications, and to this end he purchased all the daily and Sunday newspapers, the `Evening Standard' and `Evening News'. The dailies were delivered to his home by the local newsagent, the Sunday papers he purchased himself from that newsagent. He purchased in London each day two or three editions of the evening newspapers. He also purchased each publication of the `British Journal of Photography,' `S.L.R., `Amateur Photogrpaher', `Paris Match', `Stern,' `Creative Camera,' `Epoca,' `Punch,' `Time,' `Sussex Courier,' `Life', `Express & Star', `Illustrated London News', `Tatler,' `Country Life', `Bunte', `Cosmopolitan and `Melbourne Newsweek'.

"(d) [Mr. Woodhouse] gave us many examples of the profitable use to which he put the reading of these newspapers and periodicals for the purpose of obtaining ideas for pictures and in some cases, to obtain copies of the pictures shown therein. We accept the evidence of Mr. Burden and [Mr. Woodhouse] that the reading of this material was inherent in the process of finding ideas for the illustrations which it was his duty to obtain and was not merely required to qualify, or maintain the qualifications of [Mr. Woodhouse] to do the work.

"(e) He read the newspapers delivered to his house on his railway journey to the office, lasting usually from 8.30 a.m. to 9.15 a.m. on a selective basis and continued this at the office for the first three-quarters of an hour. There was no time afterwards for reading newspapers or periodicals in the office. He also spent time scanning and buying from the railway station bookstall periodicals that would be useful for finding illustrations or ideas for them. He would buy others on the way home and would read them on the homeward journey and at home in the evenings. He spent three to four hours on Sunday morning reading the Sunday newspapers. On holidays he read every newspaper and periodical he could buy, since even then he was on call, and if a story broke where he was he was expected to file copy.

(f) If was necessary for him to so this reading and provided his own reading material because (a) he had to be equipped with ideas as soon as he started consultations with specialist editors and the editor of the Mail on Sunday? (b) his duties in the office except for the first three-quarters of an hour gave him no time for such reading (c) the cuttings library available to employees of The Mail on Sunday was not equipped to provide the necessary reading facilities (d) newspaper reading outside office hours was regarded by his employer and by (Mr. Woodhouse) as an essential part of his duties.

I have left the decision in Mr.? Abbott?s case until last because that differs from the others in that it content no statement of the kind that is to be found in paragraph 7 (c) of the decision in Mr. Holt?s case and paragraph 7 (d) of the decision in each of Mr. Scovell?s, Mr. Shuttleworth?s and MR. Woodhouse?s cases to the effect that the Commissioners had accepted the evidence of Mr. Burden and the taxpayer concerned about the reading of the material in the newspapers and periodicals bought by that taxpayer being a necessary part of the duties of his employment, or inherent in the process of performing those duties and not merely required to qualify him or maintain his qualifications to do the work. I will for the sake of brevity and convenience, later refer to those statements in those decisions as "the Burden findings.")

Paragraph 7 of the decision in Mr. Abbott's case reads:

"We find the following facts, (a) [Mr. Abbot] during the years of assessment was employed as news layout journalist for the `Daily Mail'. His duties involved attendance at the `Daily Mail' offices four days a week. If he was on early shift, he worked from 3 p.m. to 12 mid?night, if on late shift from 5.30 p.m. to 2.30 a.m. (b) His duties were to create a page or series of pages with news stories and pictures relative to one another and to the advertisements in such a way as to be attractive and to make people want to read it. He organised illustration with types, graphs or drawings. He had to work out measures for headlines for sub-editors to write, the lengths of stories and the sizes of pictures. The creation and preparation of page layouts were designed for the use of sub-editors in order to get the stories sorted out. Everything for a particular page had to be carefully measured for the space available, and [Mr. Abbott] was directly responsible to the night editor or his deputy and was responsible for the last production stage before the page was published. (c) [Mr. Abbott] needed to read newspapers and periodicals in order to keep himself informed of current news and how other papers were dealing with it so that he would know what pictures to place in relation to a story. He had to have this information so that when he went to the office he did not have to be primed. As a result, when he was given a series of pictures he would know from his reading which were appropriate to a given story. The relative information had to be known by him before he started work in the office. The pictures had to suit the stories and- it was no use printing pictures which had already appeared in other newspapers. With these objects in view he purchased all the daily and Sunday newspapers. In addition, he purchased the `New Statesman', 'Newsweek', `Time', `Campaign', 'U.K. Press Gazette', `Kent Messenger', `T.V. Times' and `Radio Times', (d) [Mr. Abbott] collected the newspapers from the local newsagent. He initially spent about an hour at home scanning them, mainly in relation to the news pages and features pages, with special reference to their graphic presentation. The periodicals were read at other times to serve as a source of news and viewpoints in relation to the news. His reading was especially directed to graphic designs and presentation in order to assist him with ideas for layout in the `Daily Mail'. On holidays, he read whatever newspapers were available.

"(e) It was necessary for him to do this reading and provide his own reading material otherwise than when he was performing his office duties because: (i) he had to be already equipped with the news and ideas as soon as he started his layout and checking work in the office; one, two or even three pages would be waiting for him on his arrival at the office; (ii) his duties in the office gave him no time for such reading after he arrived and the job involved his working throughout the shift period without a break; (iii) the cuttings library available at the `Daily Mail' offices was not equipped to provide those daily reading facilities; (iv) newspaper reading outside office hours was regarded by his employer and [Mr. Abbott] as an essential part of his duties:

It is common ground of course that I can reverse the decisions of the Commissioners only if they have erred in point of law. Mr. Moses on behalf of the Crown made three submissions in support of his contention that the Commissioners had so erred. His first and main submission was that expenses that the taxpayers claimed to be entitled to deduct had not been incurred and defrayed by them "in the performance of the duties of their respective employments but in preparation for the performance of those duties. It was crucial, he submitted, for' the purpose of applying section 189(1) of the Act of 1970 to identify the duties of the relevant employment. This the Commissioners had done in each of the present cases at the outset of paragraph 7 of their decision, in the' cases of Mr. Holt, Mr. Scovell, Mr. Woodhouse and Mr. Abbott in paragraph 7(b) of the decision, and in the case of Mr. Shuttleworth in paragraph 7(a)(ii) and (iii). As was indicated in each of the decisions, the purpose of the taxpayer's reading of newspapers and periodicals was to equip him to perform those duties before he actually started performing them. There was, said Mr. Moses, as a matter of law a distinction, which the Commissioners had, disregarded, between the process of making oneself ready and able to perform the duties of one's employment and the process of actually performing those duties. Expenditure incurred by an employee in making himself ready and able to perform the duties of his employment was incurred for the purpose of performing those duties but not in the performance of them. In support of that submission Mr. Moses relied mainly on Simpson v. Tate (1925) 2 K.B. 214 and Humbles v. Brooks (1962) 40 T.C. 500. ???????

In Simpson v. Tate (1925) 2 K.B. 214 Rowlatt, J. held that a county medical officer could not deduct from his emoluments his subscriptions to certain professional societies to which he belonged in order to keep abreast of developments and knowledge in his field. The reason was that he incurred the expenditure not in the performance of the duties of his office but in order to keep himself qualified to perform them. It is clear from his judgment that Rowlatt, J. intended thereby to lay down a principle applicable to "all subscriptions to professional societies and all taking in of professional literature and all that sort of expense." (1n fact Parliament has mitigated the severity of that principle by what in the Act of 1970 was section 192, but that is not the point here).

In Humbles v. Brooks, 40 T.C. 500 Ungoed-Thomas, J. held that the headmaster of a school who was required to teach history could not deduct from his emoluments the costs of attending a course in history at a college for adult education. One reason was that in attending the course he was not acting in the performance of his duties but qualifying himself to perform them.

Mr. Moses relied also on dicta in other cases, in particular on a sentence in the speech of Lord Salmon in Taylor v. Provan (1975) A.C. 194, 226-227:

"In my view, the decision in Ricketts v. Colquhoum (1926) A.C. 1 does no more than confirm the proposition that `in the performance of the duties' must be given a strict interpretation and does not mean in order to enable the duties to be performed."

What Lord Salmon had in mind there is shown by his next sentence: "Expenses incurred in travelling to work are not deductible." Mr. Moses submitted that a duty to equip oneself with the knowledge necessary to perform the duties of one's employment was analogous to the duty to get to work on time.

Mr. Whiteman for the taxpayers accepted that in order to determine whether expenditure was incurred in the performance of the duties of the relevant employment it was necessary first to identify what those duties were. He submitted however that what they were was a question of fact for the Commissioners and that it was not for the Court to reverse their findings. The Court could interfere only if, in the words of Lord Radcliff in Edwards v. Barostow (1956) A.C. 14, 36, the true and only reasonable conclusion from their findings contradicted their determination. The findings of the Commissioners at the outset of paragraph 7 of each of their decisions about the duties of the employment were not, said Mr. Whiteman, intended to be exhaustive, for the Commissioners had gone on to find that the reading of newspapers and periodicals was an essential part of those duties.

Mr. Whiteman went as far as to submit that the findings of the Commissioners amounted to findings that, in the case of each of the taxpayers, the duty to read newspapers and periodicals was part of the terms of his employment and that the terms of a man's employment were normally conclusive as to what his duties were. For the latter proposition, Mr. Whiteman relied on a passage in the speech of Lord Salmon in Taylor v. Provan (1975) A.C. 194, 227:

"When you are considering where the duties of a man's employment require him to work, you look first at the terms of his employment. These normally are conclusive. A term which may appear to be rather more for the man's benefit that for the benefit of his employers is still a term of the employment. The fact that you may suspect that the employers might waive it is, in my view, irrelevant. I am not suggesting that the terms of employment are conclusive in every case. It is easy to imagine a case in which, for instance, an English resident employed by an English company as a director to do work unconnected with France has a term inserted in his contract which provides that he shall do part of his work in an hotel on the French Riviera and that his employers shall pay all the expenses involved, including travelling expenses. This would obviously be colour able a mere device to satisfy his wish to spend some time in the sun with his expenses paid tax free. The term could be of no benefit to the company which he serves, and the job could, no doubt, be filled by persons of no less competence but less greed."

However, Lord Salmon was there dealing with the relevance of a man's terms of employment in considering where his duties required him to work. I do not think that Lord Salmon can have meant to say that the terms of his employment were normally conclusive of the scope of the duties of his employment within the meaning of the statutory phrase. I was referred to a number of authorities which show that the terms of a man's employment may impose on him an obligation, or a virtual obligation, compliance with which requires expenditure on his part, without that expenditure being incurred by him in the performance of the duties of the employment: Blackwell v. Mills (1945) 26 T.C. 468; Lomax v. Newton (1953) 1 W.L.R. 1123 and Brown v. Bullock (1961) 1 W.L.R. 1095. 1 do not think that, as was suggested by Mr. Whitman, the present cases can be distinguished from Simpson v. Tate (1925) 2 K.B. 214 and Humbles v. Brooks, 40 T.C. 500 on the ground that the expenditure in question in those cases had been incurred voluntarily. The decisions in Simpson v. Tate and Humbles v. Brooks did not turn on that fact.

There is in my judgment no doubt that expenditure incurred by the holder of an office or employment in qualifying himself, or keeping himself qualified, to perform the duties of it such as expenditure by a professional man in keeping himself informed of developments in his professional field, or expenditure by a teacher in acquiring the knowledge of a subject that he needs in order to teach it -- is not incurred by him in the performance of the duties of the office or employment in the statutory sense. On the other hand, it is not in my judgment the law that no reading that is preparatory to the performance of A duties of an office or employment can ever itself be part of the performance of the duties of that office or employment. There are manifestly cases where preparatory reading is part of the duties of an office or employment. An example that springs to my mind is that of an employed solicitor reading in preparation for giving advice to a client the papers in that client's case and the statutory provisions or other authorities relevant to it. That reading is just as much in the performance of the duties of his employment as is the giving of the advice itself. What is true is that, where preparatory reading is part of the performance of the duties of an office or employment, it will probably be rare for the undertaking of it to put the holder of the office or employment to expense, but that is not in itself to the point.

That the Commissioners were aware of the distinction between reading to qualify oneself, or keeping oneself qualified, to perform the duties of an employment and reading in the performance of those duties is apparent from what I have labeled the Burden findings. There was some argument before me about what the Commissioners had meant by their reference in each of those findings to the taxpayer's reading being "not merely" required to qualify him, or maintain his qualifications, to do the work. It seems to me that what the Commissioners were doing was adverting to the distinction in question. It is clear from their recital of the arguments of the parties and of the authorities cited to them that they had been made well aware of it. I think that the Commissioners were giving expression to a finding of fact that at all events in the cases of the taxpayers other than Mr. Abbott the reading of newspapers and periodicals was part of or inherent in the performance of the duties of the employment.

The Mr. Moses suggested that the Commissioners use of the words "not merely" showed that in part at least the reading had been undertaken to qualify the reader, or maintain his qualifications, for the employment, in which case the reading had not been undertaken "exclusively" in the performance of the duties of the employment. I think that, in that respect, the Burden findings are at most ambiguous and that, if they are ambiguous, the ambiguity is cured by the unambiguous findings in paragraph 8(a) of each decision.

In Edwards v. Bairstow (1956) A.C.14, 33, Lord Radcliff said;

"My Lords, I think that it is a question of law what meaning is to be given to the words of the' Income Tax Act `trade manufacture' adventure or concern in the nature of trade, and for that matter what constitute `profits or gains' arising from it. Here we have a statutory phrase involving a charge of tax, and it is for the Courts to interpret its meaning having regard to the context in which it occurs and to the principles which they bring to bear upon the meaning of income. But, that being said the law does not supply a precise definition of the word `trade;' much less does it prescribe a detailed or exhaustive set of rules for application to any particular set of circumstances. In effect it lays down the limits within which it would be permissible to say that a `trade' as interpreted by section 237 of the Act does or does not exist. But the field so marked out is a wide one and there are many combinations of circumstances in which it could not be said to be wrong to arrive at a conclusion one way or the other. If the facts of any particular case are fairly capable of being so described, it seems to me that it necessarily follows that the determination of the Commissioners, Special or General, to the effect that a trade does or does not exist is not `erroneous in point of law'; and if a determination cannot be shown to be erroneous in point of law, the statute does not admit of its being upset by the Court on appeal. I except the occasions when the Commissioners, although dealing with a set of facts which would warrant a decision either way, show by some reason they give or statement they make in the body of the case that they have misunderstood the law in some relevant particular. All these cases in which the facts warrant a determination either way can be described as questions of degree and therefore as questions of fact."

It seems to me that the same applies to the phrase "in the performance of the duties of the office or employment" in section 189(1), so that the question for me is whether the facts found by the Commissioners are fairly capable of leading to the conclusion at which they arrived.

I think that the answer to that question is "Yes" in the cases of the taxpayer other than Mr. Abbott. I do not think that in those cases the findings at the beginning of each decision paragraph 7(a)(ii) and (iii) in Mr. Shuttleworth's case and paragraph 7(b) in the other cases were intended by the Commissioners to be exhaustive statements of the work to be done by each taxpayer in the performance of the duties of his employment. Otherwise, the Burden findings make no sense. Moreover, I think that on a fair view of the Commissioners' other findings in those cases there was a sufficient nexus between the daily reading undertaken by each taxpayer and the nature of the duties for which they were a preparation to make the Burden findings intelligible and consistent with the law. I therefore think that in the cases of the taxpayers other than Mr. Abbott, Mr. Moses's first submission fails.

Still dealing only with the cases of the taxpayers other than Mr. Abbott, I turn to Mr. Moses's second and third submissions. His second submission was that the findings of the Commissioners were insufficient to justify their conclusion that the expenditure that the taxpayers sought to deduct had been "necessarily" incurred by them in the performance of the duties of their respective employments. In particular, there was no express finding that objectively considered the duties of the employment in each case could not be performed without such expenditure. Mr. Moses relied in that connection on the familiar proposition that (except perhaps where an office has been specially created for a person as in Taylor v. Provan) expenditure is not deductible unless it is of a kind' that any and every holder of the office or employment would be obliged to incur; per Lord Blanesburgh in Ricketts v. Colquhoun (1926) A.C. 1, 7; see also per Donovan L.J. in Brown v. Bullock (1961) 1 W.L.R. 1095, 1102. Mr. Moses also referred in this connection (as he had done in support of his first submission) to the observations of Vaisey, J. in Lomax v. Newton (1953) 1 W.L.R. 1123, 1126, 1227 and of Lord Morris of Borth-y-Gest in Taylor v. Provan (1975) A.C. 194, 210-211, about the need for clear findings of fact by the Commissioners.

I do not think, however, that a taxpayer's case is bound to fail unless the commissioners expressly record a finding that the duties of the office or employment could not be performed without the holder of it incurring the expenditure in question. Here again, the Burden findings are to my mind important. In Mr. Holt's case they include a finding that the reading of the material in question "was a necessary part of the duties of a staff photographer" and in Mr. Shuttleworth's case a finding that it was "a necessary part of the duties of sub-editing." Those findings, the wording of which shows that the commissioners had in mind the objective test to which Mr. Moses referred, seem to me sufficient read in the light of the other findings, to support the conclusion of the Commissioners that the expenditure was necessary in the statutory sense. They import a finding that any and every holder of the employment would have had to incur it. In the cases of Mr. Scovell and Mr. Woodhouse the Commissioners used the phrase "inherent in the process" rather than the phrase "a necessary part." Quite what the difference in language connotes I am not sure. The Commissioners may have thought that "inherent in" was stronger. Be that as it may, I cannot differentiate between the cases on the basis of it.

Mr. Moses's third submission was that the expenditure here in question was on any view not incurred by the taxpayers "wholly and exclusively" in the performance of their duties, because it was in part at least incurred in order to, qualify them or keep them qualified to perform those duties. I have already mentioned and rejected the argument of Mr. Moses based on the use of the Commissioners of the word "merely" in the Burden findings. Otherwise that submission of Mr. Moses was based largely on the judgment of Ungoed Thomas J. in Humbles v. Brooks, 40 T.C. 500, 503-504 where he drew a distinction between, on the one hand, the preparation by the taxpayer in that case of his own lectures, which was in the performance of the duties of his employment, and, on the other hand that taxpayer qualifying himself to teach, getting background material and "even getting information and material which he reproduced in his own lectures" which was not in the performance of those duties. He went on to hold that the expenditure incurred by the taxpayer on his course at the college of further education had not been incurred "exclusively" in the preparation of his own lectures a holding which, if I may say so was manifestly right.

Mr. Moses pointed to specific findings in the decisions of the Commissioners in the present cases which showed, he said, that in part at least the taxpayers reading of newspapers and periodicals had been undertaken in order to obtain background information and generally keep up to date, for instance the finding in paragraph 7(d)(ii) of the decision in Mr. Holt's case that "he made notes and also took cuttings for filing and for future use." It seems to me, however, that once it is found that preparatory reading of the kind here in question is undertaken in the performance of the duties of the employment the fact that it may yield benefits of lasting usefulness to the employee concerned in performing the duties of that or any like employment is neither here nor there. It is common for knowledge acquired by an employee in performing the duties of his employment to be of lasting usefulness to him,. The employed solicitor whom I instanced earlier may well find that his reading in one case has equipped him more promptly and competently to deal with another. That does not mean that his reading in the first case was not undertaken by him exclusively in the performance of the duties of his employment.

For those reasons, I dismiss the appeals of the Crown in the cases of the four taxpayers other than Mr. Abbott.

I turn to the case of Mr. Abbott. What I have said so far shows the importance that seems to me to attach to the Burden findings in the other cases. The view is tenable that, since the cases of the five taxpayers were heard together by the Commissioners, the absence of such a finding in Mr. Abbott's case is fatal to his claim. However, I think that Mr. Abbott is entitled to have his case considered on the basis of the contents of the cases stated and decision in his own case without inferences being drawn against him from the contents of the corresponding documents in other cases.

Mr. Whiteman naturally pointed to the finding in paragraph 7(e)(iv) of the decision in Mr. Abbott's case. That is however at best a finding that Associated Newspapers Ltd. and Mr. Abbott himself regarded his newspaper reading as an essential, part of his duties. It is not a finding by the Commissioners themselves that it did. Nor is it an express finding that any and every holder of Mr. Abbott's employment would have had to incur expenditure of the same kind.

Mr. Whiteman also submitted that the absence of such findings was cured by paragraph 8(a) of the decision. That paragraph reads:

"We conclude that the reading of the newspapers and periodicals outside the `Daily Mail' offices was in the performance of the duties of the employment, notwithstanding that this was done at home and outside the hours of attendance at the `Daily Mail' offices, and the money expended to them was in each case expended wholly exclusively and necessarily in the performance of (Mr. Abbot's) duties."

At first sight, that paragraph appears to do no more than express a conclusion drawn from what has gone before. But, as Mr. Whiteman pointed out, it is sandwiched between paragraph 7 which contains findings of fact and paragraph 8(b) which contains further such findings. It may therefore itself be taken to contain findings of fact, the Commissioners conclusion being that expressed in paragraph 8(c). Paragrpah 8(a) is, in part at least, concerned with negativing the contention of the Crown that the duties of Mr. Abbott did not begin until he reached the "Daily Mail" offices. What, however, is lacking from paragraph 8(a) is any finding to negative the contention of the Crown that in part at least Mr. Abbott's reading was undertaken in order to keep him qualified to perform the duties of his employment. That would not, I think, matter were it not for the finding in paragraph 7(d) of the decision that "His reading was especially directed to graphic designs and presentation in order to assist him with ideas for layout in the `Daily Mail'." That conveys to my mind the impression that his reading was directed more to keeping up generally with the techniques and methods being used by other journalists doing the same kind of work than to the handling from day to day of the news then current, in other words directed in the main to keeping himself qualified, or better qualified, to perform his duties. There is nothing elsewhere in the case stated or in the decision in Mr. Abbott's case to dispel that impression. The findings in paragraph 7(c) of the decision merely convey that to some extent Mr. Abbott needed to read newspapers and periodicals in order to be able to handle current news.

The question in the end is whether the findings of fact of the Commissioners are fairly capable of leading to the conclusion at which they arrived or whether on the contrary, the true and only reasonable conclusion from their findings contradicts their determination. I have, after considerable, hesitation, come to the conclusion, for the reasons I have indicated, that in Mr. Abbott's case the findings of fact of the Commissioners do not justify their determination. Whilst it is to my mind permissible to look at paragraph 8(a) of each of the five decisions to resolve an ambiguity in paragraph 7, it is not permissible to invoke it to supply a finding that is made nowhere at all.

I accordingly allow the Crown's appeal in Mr. Abbott's case.

Appeals in cases of Holt. Scovell, Shuttleworth and Woodhouse dismissed.

Appeal in case of Abbott allowed. Crown to pay four-fifths of taxpayers global costs.

Abbott to pay one-fifth of Crown's global costs.

Solicitors: Solicitor of Inland Revenue; Berwin Leighton.

M.BA./1597/T???????????????????????????????????????????????????????????????????????????????????? Order accordingly.