The Gazette 1987

GAZETTE

MARCH 1987

TAX Pig Roaring carried on by partnarship in an agricultural aroa constitutes "Farm- ing" for tax purposes. The question of law for the opinion of the High Court in this case stated was whether upon the facts admitted and found by the Appeal Commissioners, there was evidence upon which they could properly arrive at their decision that the activity of pig rearing carried on by the partnership is not "farming" as defined in S13(1) of the Finance Act 1974, and whether, upon such facts, their decision was correct in law. S13 of the Finance Act 1974 reads as follows: — (1) In this Chapter "farming", "farm land" and "occupation" have the same meaning as in S18(1) of the Finance Act 1969. Any reference in this Chapter to farm land occupied by an individual in- cludes farm land deemed, by virtue of S.17 to be occupied by him. A reference in this Chapter . . . to the rateable valuation of farm land oc- cupied by an individual for a year of assessment or part of a year of assessment is reference to the total rateable valuation of all farm land oc- cupied by him and of all farm land deemed to be occupied by him for that year of assessment, or part of a year of assessment calculated in ac- cordance with the provisions of SI7(5), (6) and (7). Provided that, in calculating the rateable valuation of farm land for the purposes of this Chapter, the rateable valuation of any building on the land shall be excluded." S18 of the Finance Act 1969 reads as follows: (1) In this Section — (3) "farming" means farming farm land, that is, land in the State wholly or mainly occupied for the purposes of husbandry, the profits or gains from the occupation of which would, but for the repeal by this Act of Schedule B of the Income Tax Act 1967 be chargeable under that Schedule; "oc- cupation", in relation to any land, means having the use thereof; The holding in the instant case consisted of some nine acres of land in an agricultural area with a rateable valuation of £4.50. Some three acres were covered with sixteen pig houses purpose built by the Appellants for the purpose of their enterprise. Some one and a half to t wo acres were covered by slurry tanks and the remaining four to five acres provided spaces between the pig houses and open areas. Healthy pigs were not allowed outside the pig houses at all, but in summer months, sick pigs (between 2% and 3% of the total on hand at any one time) were put out into pens set up in the spaces between the pig houses. Fresh air was the main curative for these animals but they were also allowed to root and eat any her- bage in the pens. The question was whether the Appellants could properly be regarded as being engag- ed in " f a rm i n g ", as defined in S18 of the 1969 Act. (2)

purpose to seize, remove and dispose of the same as the goods and chattels of the deb- tor for the recovery or enforcement of any such duties and penalties. The defendant submitted that by virtue of Section 24 the Revenue Commissioners had a statutory lien; that the defendant as surety could not have enjoyed or enforced such lien, but that the Revenue Commissioners should have enforced It against such goods, realised the goods and applied the sum realised in lessening the excise duty payable. The defendant relied upon an extract on page 132 of Rowlatt on Principal and Sure- ty 4th edition (1982). "It is arguable that a surety has an equity . . . to stay a creditor attempting unfair- ly to place the whole burden of the debt upon the surety, at least in special cir- cumstances, e.g. where there is a sol- vent principal debtor, or solvent co-sureties who could easily be but are not joined in the action, or a security which could easily be realised to pay the whole debt . . . one situation in which the surety's equity has been held main- tainable against the creditor is where the creditor has an opportunity to recover the debt from the principal debtor which will not be available to the surety." HELD: " It is well settled that it is not necessary for the creditor, before proceeding against the surety, to request the principal debtor to pay, or to sue him, though solvent, unless this be expressly stipulated in the surety document. There is authority for the pro- position that the creditor does not have to resort to securities received by the creditor from the principal debtor — see Ranelaugh (EarlI -v- Hayes (1683) 1 Vern. 189; Wilks -v-Heeley (1832) 1 Cr. &M . 2 4 9; Re Howe ex parte Brett (1871) 6 Ch. App 838, 841, cases cited in Halsbury's Laws of England, Vol. 15, p.488/9." "Again, where parties, met upon equal terms, in the ordinary course of business enter into a written contract, the law does not look to or, indeed, permit terms to be added to such contract — it applies the rule of strict construction. In the absence of a mistake or some impropriety, neither of which is suggested here, the law will not in- fer an additional term to the contract nor call in aid some alleged equity which would delay, if not defeat, in whole or in part, the remedy expressly provided for in the con- tract." It was further held, in upholding the High Court Order in favour of the Plaintiff (McWilliam J, 14 May, 1984), that it was not necessary to determine whether or not the Revenue Commissioners had a statutory lien and the Court should not accept the defendant's plea to hold that the Revenue Commissioners accepted the Bond on the basis that, if default were made, the Com- missioners would engage upon the exercise contemplated by Section 24 with all its pro- blems of possible priorities, retention of ti- tle and possibly lessening other claims by the Revenue Commissioners in respect of different forms of taxation; the defendant failed to make any provision for such exer- cise in the terms of the Bond. A. G. -v- Sun Alliance and London Insurance Limited — Supreme Court (per McCarthy J.) 28 February 1985 - unreported. William Johnston

The fact that the proviso to SI 3(3) pro- vides that the rateable valuation of buildings on the land are to be excluded in calculating the rateable valuation of farmland for the purposes of the chapter would, contrary to the view expressed by the Appeal Commis- sioners, imply that the buildings would otherwise, subject to the provisions of the Valuation Acts, be included. Under the Valuation Acts one would look at this holding, including both lands and buildings, as one unit and in that context the buildings would properly be referred to as "farm buildings". The main debate in the hearing turned upon the meaning of the term "husbandry" in S18 of the Finance Act 1969. Hus- bandry has always been regarded as including the tilling of the soil. But it has a much wider connotation and includes those concerned w i th the management of resources. In the Scottish case of Keir -v- Gillespie 1 T.C. page 473 the Scottish Court of Session held that the term "husbandry" in S21 of the Finance Act 1918 was not restricted to tillage or cultivation of the soil, but included the use of lands for the purpose of grazing sheep. The tillage of the soil and the rearing and management of livestock for food would come within the primary meaning of the word "husbandry". A difficulty arises from the secondary connotation of the term. Certain activities are regarded as "husbandry" when carried on as part of the traditional activities of the farm but are not regarded as husbandry when carried on in isolation. Butter-making, jam-making or the cutting of turf or timber may be examples. In re Cavan Co- operative Society the Irish Kings Bench Division (Gibson Madden and Kenny J J.) held that a registered co-operative society carrying on the manufacture and sale of butter was not carrying on the bus- iness of husbandry within the meaning of Section 39 of the Finance (No. 2) Act 1915. In that case Kenny J. said (at page 608): " . . . The work of the Society in connection with the milk which it received from the Suppliers is not the wo rk of a producer but a mere mechanical operation that could not in its essence be regarded as husbandry. Husbandry presupposes a connection with land and production of crops or food in some shape." In the instant case the Appellants were using their holding for the specialised purpose of rearing and fattening pigs. This was not a case of mixed farming where one activity is regarded as husbandry because it is carried on in association with general farming activities. Either what the Appellants were doing on this holding fell in its own right, under the general definition of "husbandry" or it did not. In the U.K. and Scottish cases of Lean and Dickson -v- Ball (10 T.C. 345) and Jones - v- Nuttall (10 T.C. 349) the test to decide whether the business can properly be described as husbandry was whether the enterprise makes use to a material extent of the fruits of the soil and the land is not simply used as a space or stance for holding animals. However, in the Irish case of

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