The Gazette 1985

GAZETTE

JULY/AUGUST

1985

To ascertain the taxpayer's net corporation tax liability the Export Sales Relief so found, is deducted from the Corporation Tax which would have been payable, had the relief not been claimed. The taxpayer's chargeable gains are ignored. The Corporation Tax which would have been payable had export sales relief not been claimed was £200,055.60; that is 45% of the taxpayer's profits of £519.038 less the group relief of £74,470. The Income earned from the sale of exported goods was £444,446; that is 85.685% of £518,697. The dispute between the parties related only to the denominator in the above mentioned fraction. The taxpayer argued that the "total income brought into charge to corporation tax" was £444,568, that is its profits of £519,038 less the group relief of £74,470. The Inspector, on the other hand, contended that the taxpayer's "total income brought into charge to corporation tax" was its profits of £519,038 without any deduction being made for the group relief. On the taxpayer's argument its Export Sales Relief amounted to £200,000.70 leaving a net Corporation tax liability of £54.90, whereas on the Inspector's argument the taxpayer's Export Sales Relief amounted only to £171,305.20 leaving the taxpayer with a net corpora- tion tax liability of £28,750.40. The Court rejected the Inspector's argument. The words "total income" could not be interpreted according to their ordinary or literal meaning as contended by the Inspector. Those words must be read in conjunction with the qualifying word "brought into charge". Although the words "brought into charge" were not defined in the Corporation Tax Act 1976, they were to be found in Income Tax law and had been judicially interpreted. In A.G. -v- Metropolitan Water Board [1927] 1 K.B. 833 the expression "profits brought into charge to tax" had been interpreted as meaning the taxpayer's taxable profits and not its actual profits. Where a word or expression in an earlier statute has received a clear judicial interpretation, unless a contrary intention appears, there is a presumption that if such a word or expression is used in the same context in a later statute, it is to be interpreted according to the meaning previously ascribed to it. Accordingly the Court HELD that the expression "total income brought into charge to corporation tax" was to be interpreted as meaning the taxpayer's taxable income of £444,568, that is its profits less the group relief, and not its actual income of £519,038.

2. Rule 30(1 Kc) of the District Court Rules which empowers a District Court Clerk to issue Summonses "within the limits of the District Court Area or Areas for which he acts as Clerk" must be interpreted as being limited to a District Court Clerk who acts validly as Clerk of the Area in which the offence is alleged to have been committed or the Defendant resides. 3. The subsequent appearance by the Defendant on foot of the Summons issued in this case could not cure the initial defect because the defect in this case related to a substantive condition precedent to the issue of the Summons, namely, that it should have been received and processed by a person who had the appropriate authority to issue a Summons and therefore the defect here was not merely a want of form or lack of procedural correctness but a defect going to the root of the matter. DDP -v- Clein [1983] ILRM 76 explained and applied. D.P.P. -v- McQuaid - High Court (per Murphy J.). 26 October. 1984. Eugene F. O'Sullivan CORPORATION TAX "Total income brought into charge to corporation tax" in Section 58(3) of the Corporation Tax Act 1976, interpreted to mean the taxpayer's taxable income and not its actual income. The taxpayer claimed both Export Sales Relief under Part IV and Group Relief for Losses under Part XI of the Corporation Tax Act 1976 against profits of £519,038 (Case I Income £518,697 and Case IV Income of£341) made by it in the year ending 31 December 1978. 85.685% of the taxpayer's sales in that year were attributable to export sales. An associate company suffered a loss of £74,470, which it surrendered to the taxpayer, which group loss was deductible from the taxpayer's profits for Corporation Tax purposes. To determine the amount of Export Sales Relief allowable, it is necessary to apportion the Corporation Tax, which would have been payable had export sales relief not been claimed, between the income earned from the sale of exported goods and the "total income brought into charge to corporation tax". Export Sales Relief is thus equal to: Relevant Corporation Tax X Income Earned from Sale of Exported Goods

Recent Irish Cases

Edited by Gary Byrne, Solicitor

DISTRICE COURT Validity of Issue of Summons — Jurisdiction of District Court Clerk — Rule 91 and 30 District Court Rules — Section 48 Court Officers Act, 1926 — Whether Appearance of Defendant Cures Defect. The Consultative Case Stated from the District Court raised the question whether a Summons in respect of an offence alleged to have been committed within a particular District Court Area issued by a District Court Clerk who was never formally appointed as Clerk for that area but had acted in that capacity was a valid Summons. The District Court Clerk had been appointed on 15 May, 1962 to the Dublin Metropolitan District Area by the Minister for Justice under Section 48 of the Court Officers Act, 1926 but to no other District. However, the District Court Clerk actually worked in the Kilmainham, Rathfarnham and Dundrum Areas known as District Number 11 which was found to be outside the Dublin Metropolitan District, the Clerk having been so assigned by the Chief Clerk of the Dublin Metropolitan District on 10 July, 1978. HELD: 1. Rule 91 of the District Court Rules which gives the Principal Clerk of the particular Court Area the power to divide duties amongst his Junior Clerks in the area, is a power limited to the control of functions carried out by the Clerks in the area to which they have been assigned under Section 48 aforesaid. Therefore the assignment of the Clerk in question by the Chief Clerk on the 10 July, 1978 could not cure the defect that the Clerk in question had not been re-assigned to District Number 11 under Section 48 of the Court Officers Act by the Minister for Justice. Therefore the District Court Clerk in question had no power to act in that capacity in the District Court Area Number 11 when issuing the Summons.

The Court was reinforced in its view by the provisions of Sections 11(1) and 155(11) of the Corporation Tax Act which, inter alia, provided that words and expressions in that Act were to have the

Total Income brought into charge to Corporation Tax

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