All England Law Reports, All ER 1979 Volume 3, Vestey v Inland Revenue Commissioners (Nos 1 and 2)
[1979] 3 All ER 976
Vestey v Inland Revenue Commissioners (Nos 1 and 2)
TAXATION; Income Tax
HOUSE OF LORDS
LORD WILBERFORCE, VISCOUNT DILHORNE, LORD SALMON, LORD EDMUND-DAVIES AND LORD KEITH OF KINKEL
23, 24, 25, 26, 30 JULY, 22 NOVEMBER 1979
Income tax - Avoidance - Transfer of assets abroad - Persons liable to tax - Individuals ordinarily resident in United Kingdom - Discretionary trust - Beneficiaries - Power to enjoy income of person resident or domiciled overseas - Receipt by United Kingdom resident of capital sum payment of which connected with transfer of assets abroad - Transfer of assets to trustees abroad - Trustees holding assets on discretionary trusts - Trustees accumulating income and paying sums to selected appointees from class of beneficiaries - Beneficiaries 'ordinarily resident in United Kingdom' - Whether liability to tax attaching to any appointee ordinarily resident in United Kingdom - Whether liability limited to person ordinarily resident in United Kingdom who transferred assets - Whether appointees liable to tax - Income Tax Act 1952, s 412.
By a settlement dated 25 March 1942 and governed by the law of Northern Ireland, the settlors, Sir Edmund Vestey ('Edmund') and Lord Vestey ('Samuel'), transferred certain overseas property to trustees outside the United Kingdom to hold on discretionary trusts for the benefit of Edmund's and Samuel's descendants. The settlement provided that the trustees were to invest the income received from the trust property so as to form a capital fund. The income of the capital fund was to be divided by the trustees into two halves, ie Edmund's fund and Samuel's fund, which were to be held on trust for Edmund's and Samuel's descendants respectively. Both funds were to be invested by the trustees, who were, on the direction of persons designated as 'Edmund's manager' and 'Samuel's manager', to accumulate the income and invest it, and the resulting income and accumulation of income were to form part of the capital of Edmund's fund and of Samuel's fund respectively. Each manager had power under the settlement to direct the trustees to appropriate or realise or raise any part of the capital of his fund and to pay or apply it in such manner as he 'shall think proper' for the benefit of descendants connected with his fund and, with the consent of the manager of the other fund, for his own benefit. On 26 March 1942 the trustees leased the trust property to a company and the rent received was accumulated and invested by the trustees so as to form a capital fund. The income produced from the capital fund was then divided equally between Edmund's fund and Samuel's fund, and in turn the income of the two funds was accumulated by the direction of Edmund's and Samuel's managers. Between 1962 and 1966, under the powers contained in the settlement, appointments from capital were made in favour of beneficiaries each year so that by 1966 six out of the 29 potential beneficiaries alive in 1963 had received payments of varying amounts from the funds. The class of potential beneficiaries was liable to increase in any given year and in fact did so at various times after 1963. In 1970 the Crown assessed the six appointees to tax for the years 1963-64 to 1968-69 by assessing each appointee, for the years he or she was resident in the United Kingdom, in respect of a proportion of the total income of the trustees in each year in which any appointment was made regardless of whether the appointee in fact received any payment that year or in any year before or after that year. The proportion of the trustees' income decided on by the Crown for assessment was that proportion which the capital sum received by the appointee bore to the total income for each year, and not merely to the income of the trustees in the year of payment. This method of assessment had the result in one case that a beneficiary who received a single capital payment, of £100,000 in 1966, was assessed to income tax and surtax on a total of £274,121 over the six years. On the Crown's method of assessment each appointee could have been liable976 to assessment on the whole of the trustees' income, but the Crown voluntarily restricted the assessments so that the total amount of the trustees' income was apportioned between the appointees. In two separate appeals by the beneficiaries the Crown justified these assessments under s 412a of the Income Tax Act 1952 on the basis that each beneficiary, being an 'individual ordinarily resident in the United Kingdom', had avoided tax as a result of a transfer of assets abroad resulting in the transfer of income to a person abroad, and was thus liable to tax because as 'such an individual' either (i) he had received a capital sum the payment of which was connected with the transfer of assets and accordingly had become liable to tax on the trustees' income by the operation of s 412(2), or (ii) he had rights by which he had power to enjoy the trustees' income and accordingly was liable to tax on that income by the operation of s 412(1). The Special Commissioners upheld the assessments in both appeals. Walton J ([1977] 3 All ER 1073, [1977] STC 414; [1979] 2 All ER 225, [1978] STC 567) allowed the beneficiaries' appeals in both cases, although he rejected their overriding contention that, because the words 'such an individual' in s 412(1) and (2) were restricted to the person originally transferring the assets, s 412 did not apply at all, holding on authorityb that those words referred only to an individual ordinarily resident in the United Kingdom. The Crown appealed against Walton J's decisions to the House of Lords.
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a    Section 412, so far as material, is set out at p 991 b to f, post.
b    Congreve v Inland Revenue Comrs [1948] 1 All ER 948, HL, Bambridge v Inland Revenue Comrs [1955] 3 All ER 812, HL
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Held - The appeals would be dismissed for the following reasons -
   (i) Having regard to the arbitrary, unconstitutional and potentially unjust results which could follow if s 412 of the 1952 Act were given an extended meaning which embraced all persons, born or unborn, who in any way might benefit from assets transferred abroad by others, s 412 was to be construed, as the natural meaning of the words used in the section in fact permitted and notwithstanding previous House of Lords authority to the contrary, on the basis that Parliament in enacting the section intended it to have the limited effect of penalising only those persons who transferred assets abroad to avoid tax and did not intend it to refer to beneficiaries under a discretionary trust resulting from such a transfer. Accordingly, on the natural and intended meaning of s 412 'such an individual' who was liable to tax under s 412(1) in respect of a power to enjoy any income of a person resident or domiciled abroad or under s 412(2) in respect of the receipt of a capital sum connected with the transfer of assets abroad referred only to an indivudal ordinarily resident in the United Kingdom who sought to avoid his own or his spouse's liability to tax by the transfer of assets abroad while continuing to reside in the United Kingdom (see p 986 h to p 987 a e and g to p 988 a, p 989 a b f to h, p 993 h to p 994 c, p 996 e, p 998 e, p 1003 h to p 1004 c and f to h and p 1005 a b, post); Congreve v Inland Revenue Comrs [1948] 1 All ER 948 overruled.
   (ii) In any event, the Revenue's levying of tax on, and apportioning of liability among, the appointees who had received payments from the funds by the exercise of a selfasserted administrative discretion in the absence of any statutory basis on which the tax could be assessed or levied was unconstitutional since it offended the principle that a citizen could not be taxed unless he was designated in clear terms by a taxing Act as a taxpayer and the amount of his liability was clearly defined. The assessments therefore failed in the case of discretionary beneficiaries (see p 984 h to p 985 e, p 986 a, p 989 g h, p 994 f to h, p 998 e, p 1003 h, p 1004 b and p 1005 b, post).
   Decisions of Walton J [1977] 3 All ER 1073 and [1979] 2 All ER 225 affirmed on other grounds.
Notes
For avoidance of tax by means of the transfer of assets abroad by individuals, see 23 Halsbury's Laws (4th Edn) paras 1479-1487, and for cases on the subject, see 28(1) Digest (Reissue) 439-445, 1579-1592.977
   For the Income Tax Act 1952, s 412, see 31 Halsbury's Statutes (2nd Edn) 390.
   For the Finance Act 1969, s 33, see 49 ibid 764.
   For 1970-71 and subsequent years of assessment, s 412 of the 1952 Act has been replaced by the Income and Corporation Taxes Act 1970, s 478.
Cases referred to in opinions
Absalom v Talbot (Inspector of Taxes) [1943] 1 All ER 589, 26 Tax Cas 166, CA; rvsd [1944] 1 All ER 642, [1944] AC 204, 26 Tax Cas 166, 113 LJ Ch 369, 171 LT 53, HL, 28(1) Digest (Reissue) 86, 258.
Bambridge v Inland Revenue Comrs [1955] 3 All ER 812, [1955] 1 WLR 1329, 36 Tax Cas 313, [1955] TR 295, 48 R & IT 814, 34 ATC 181, HL; affg [1954] 3 All ER 682, [1954] 1 WLR 1460, 36 Tax Cas 313, CA, [1954] TR 375, 48 R & IT 63, 33 ATC 393, CA; rvsg in part [1954] 3 All ER 86, [1954] 1 WLR 1265, 36 Tax Cas 313, [1954] TR 255, 47 R & IT 466, 33 ATC 267, 28(1) Digest (Reissue) 440, 1582.
Bates v Inland Revenue Comrs [1967] 1 All ER 84, [1968] AC 483, [1967] 2 WLR 60, 44 Tax Cas 225, [1966] TR 369, HL; affg [1965] 3 All ER 64, [1965] 1 WLR 1133, [1965] TR 189, 44 Tax Cas 225, CA, 28(1) Digest (Reissue) 429, 1552.
Chetwode (Lord) v Inland Revenue Comrs [1977] 1 All ER 638, [1977] 1 WLR 248, [1977] STC 64, [1977] TR 11, HL; rvsg [1976] 1 All ER 641, [1976] 1 WLR 310, CA.
Cleary v Inland Revenue Comrs [1967] 2 All ER 48, [1968] AC 766, [1967] WLR 1271, [1967] TR 57, 46 ATC 51, 44 Tax Cas 399, HL, 28(1) Digest (Reissue) 489, 1753.
Congreve v Inland Revenue Comrs [1948] 1 All ER 948, 30 Tax Cas 163, [1948] LJR 1229, 27 ATC 102, 41 R & IT 319, HL; affg [1947] 1 All ER 168, 30 Tax Cas 163, CA; rvsg [1946] 2 All ER 170, 30 Tax Cas 163, 28(1) Digest (Reissue) 443, 1590.
Corbett's Executrices v Inland Revenue Comrs [1943] 2 All ER 218, 25 Tax Cas 305, 169 LT 166, CA, 28(1) Digest (Reissue) 443, 1589.
Drummond v Collins (Inspector of Taxes) [1915] AC 1011, 6 Tax Cas 525, 84 LJKB 1690, 113 LT 665, HL, 28(1) Digest (Repl) 302, 1039.
FS Securities v Inland Revenue Comrs [1963] 3 All ER 229, [1963] 1 WLR 1223, 41 Tax Cas 666, CA; rvsd [1964] 2 All ER 691, [1965] AC 631, [1964] 1 WLR 742, 41 Tax Cas 666, [1964] TR 171, 43 ATC 156, HL, 28(1) Digest (Reissue) 400, 1468.
Gartside v Inland Revenue Comrs [1968] 1 All ER 121, [1968] AC 553, [1968] 2 WLR 277, [1967] TR 309, 46 ATC 323, HL, Digest (Cont Vol C) 326, 74a.
Herbert (Lord) v Inland Revenue Comrs [1943] 1 All ER 336, [1943] 1 KB 288, 25 Tax Cas 93, 112 LJKB 369, 108 LT 379, 28(1) Digest (Reissue) 428, 1547.
Howard de Walden (Lord) v Inland Revenue Comrs [1942] 1 All ER 287, [1942] 1 KB 389, 25 Tax Cas 121, 111 LJKB 273, CA, 28(1) Digest (Reissue) 442, 1586.
Inland Revenue Comrs v Frere [1964] 3 All ER 796, [1965] AC 402, [1964] 3 WLR 1193, 42 Tax Cas 125, [1964] TR 333, 43 ATC 308, HL, 28(1) Digest (Reissue) 521, 1902.
Inland Revenue Comrs v Hinchy [1960] 1 All ER 505, [1960] AC 748, [1960] 2 WLR 448, 38 Tax Cas 625, [1960] TR 33, 39 ATC 13, 53 R & IT 188, HL, 28(1) Digest (Reissue) 579, 2159.
Inland Revenue Comrs v Korner [1969] 1 All ER 679, [1969] 1 WLR 554, 45 Tax Cas 287, [1969] TR 33, 48 ATC 29, HL, 28(1) Digest (Reissue) 235, 726.
Jones v Secretary of State for Social Services [1972] 1 All ER 145, [1972] AC 944, [1972] 2 WLR 210, HL, Digest (Cont Vol D) 683, 4585b.
Latilla v Inland Revenue Comrs [1943] 1 All ER 265, [1943] AC 377, 112 LJKB 158, 168 LT 411, 25 Tax Cas 107, HL; affg [1942] 1 All ER 214, [1942] 1 KB 299, 25 Tax Cas 107, CA, 28(1) Digest (Reissue) 442, 1587.
Minister of Social Security v Amalgamated Engineering Union [1967] 1 All ER 210, [1967] 1 AC 725, [1967] 2 WLR 516, Digest (Cont Vol C) 704, 4585a.
Philippi v Inland Revenue Comrs [1971] 3 All ER 61, [1971] 1 WLR 1272, 47 Tax Cas 75, [1971] TR 167, 50 ATC 37, CA, Digest (Cont Vol D) 487, 1579b.
Vestey's (Lord) Executors v Inland Revenue Comrs [1949] 1 All ER 1108, 31 Tax Cas 1, [1949] TR 149, 42 R & IT 314, 325, HL, 28(1) Digest (Reissue) 443, 1591.
978
Cases also cited
Canadian Eagle Oil Co Ltd v R [1945] 2 All ER 499, [1946] AC 119, 27 Tax Cas 205, HL.
Dickinson (Inspector of Taxes) v Abel [1969] 1 All ER 484, [1969] 1 WLR 295, 45 Tax Cas 353.
Luke v Inland Revenue Comrs [1963] 1 All ER 655, [1963] AC 557, 40 Tax Cas 630, HL.
Ramsden v Inland Revenue Comrs (1957) 37 Tax Cas 619.
Sassoon v Inland Revenue Comrs (1943) 25 Tax Cas 154, CA.
Stanley v Inland Revenue Comrs [1944] 1 All ER 230, [1944] 1 KB 255, 26 Tax Cas 12, CA.
Appeals and cross-appeals
These were appeals by the Crown direct to the House of Lords under Part II of the Administration of Justice Act 1969 against two decision of Walton J in respect of assessments to tax made between the years 1962-63 to 1967-68 on the respondents, Ronald Arthur Vestey, Edmund Hoyle Vestey, James Gladstone Payne, John Richard Baddeley, Lord Vestey, and Mark William Vestey ('the taxpayers'), who were beneficiaries under discretionary trusts settled by Baron Vestey deceased and Sir Edmund Vestey Bt. In the first decision ([1977] 3 All ER 1073, [1979] Ch 177, [1977] STC 414) Walton J allowed the taxpayers' appeals by way of case statedc against the decision of the Special Commissioners given on 20 March 1974 dismissing their appeals against their assessment to tax, under s 412(2) of the Income Tax Act 1952, on sums received by them from the trustees of the discretionary trusts. Walton J referred the case back to the Special Commissioners to consider and decide on the Crown's alternative contention that the assessments could be supported under s 412(1) of the 1952 Act. On 11 January 1978 the Special Commissioners upheld that contention and dismissed the taxpayers' appeals. The taxpayers appealed by way of case statedd to Walton J who in the second decision ([1979] 2 All ER 225, [1979] Ch 198, [1978] STC 567) allowed their appeal in respect of the Crown's alternative contention but decided that the assessments should stand to the extent that the taxpayers fell to be assessed in the year in which sums from the trusts were received. The taxpayers cross-appealed against this latter finding. The facts are summarised in the opinion of Lord Wilberforce.
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c    The case stated is set out at [1977] 3 All ER 1075-1084
d    The case stated is set out at [1979] 2 All ER 227-232
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D C Potter QC, James Holroyd Pearce QC and Alastair G Wilson for the taxpayers.
Michael Nolan QC, Peter Gibson and Brian Davenport for the Crown.
Their Lordships took time for consideration
22 November 1979. The following opinions were delivered.
LORD WILBERFORCE. My Lords, these are six appeals and cross-appeals from two decisions of Walton J. They come direct to this House under Part II of the Administration of Justice Act 1969. They are concerned with assessments for income tax and surtax made on the six respondents for the years 1963-64, 1964-65, 1965-66, 1966-67 and 1968-69 (except that no assessments were made on Lord Vestey for 1964-65 and 1965-66 and no assessment was made on M W Vestey for 1966-67). The assessments were made under s 412 of the Income Tax Act 1952 (now incorporated in s 478 of the Income and Corporation Taxes Act 1970) which is concerned with the transfer of assets abroad. The original sources of these sections were the Finance Act 1936, s 18, and the Finance Act 1938, s 28. The Assessments for 1968-69 are additionally made under the Finance Act 1969, s 33. The sums involved are very large, and important and difficult questions arise for decision.
   The origin of the matter is a settlement made on 25 March 1942 by the second Baron Vestey and his uncle, Sir Edmund Hoyle Vestey Bt, as settlors. These persons were979 the heads of two Vestey families, to one or other of which the taxpayers belong. The taxpayers transferred no assets and had no hand in the settlement; they, together with a number of other persons, are potential beneficiaries under it.
   By the settlement the settlors conveyed certain very valuable properties outside the United Kingdom to trustees resident outside the United Kingdom to hold on the trusts of the settlement.
   There is no doubt that this was a transfer of assets by virtue of which income became payable to persons resident out of the United Kingdom (viz the trustees) so as potentially to bring s 412 into operation. However, it is important to notice that neither of the settlors had any rights, nor at any time received any sum, so as to make themselves liable to be charged with tax under either s 412(1) or s 412(2). The claim is, and is only, against beneficiaries under the settlement.
   The trusts of the settlement are elaborate and are fully set out in the case stated See ([1979] 3 All ER 1073, at 1090-1093, [1977] STC 414 at 431-434). I think that the following summary is sufficient to enable the contentions of the Crown to be understood.
   1 The trustees were obliged during a period called 'the prescribed term', which, unless extended will expire in 1984, to accumulate the income of the trust property by investment so as to form a capital fund, called the 'rental fund'. Advantage was taken, in this connection, of the law of Northern Ireland, under which the settlement was made, which does not include the Thellusson Acte, which would have limited the period of accumulation. After the end of the prescribed term the rental fund was to be divided into two equal parts, Edmund's fund and Samuel's fund, and held on the trusts declared concerning these funds. During the prescribed term the income of the rental fund was to be divided into two equal parts which were to be held on the trusts which would be applicable to Edmund's fund and Samuel's fund if already in possession.
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e    Accumulations Act 1800
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   2 Subject to the above provisions the trust property was to be held for the son of Sir Edmund, the respondent Ronald Arthur Vestey, and the son of the second Lord Vestey, W H Vestey in equal shares.
   3 During a period defined by reference to the law against perpetuities, designed to last until AD 2030, and called 'the specified period', a person designated as Edmund's manager (who in fact was at all material times the respondent Ronald Arthur Vestey) had power to direct the accumulation of the income of Edmund's fund. Edmund's manager did in fact so direct.
   4 Subject as aforesaid Edmund's manager had power during the specified period to appoint the income of Edmund's fund between a class including Ronald Arthur Vestey and his issue and other persons. Subject thereto the income was to be held on protective trusts for (inter alia) the issue of Ronald Arthur Vestey per stirpes.
   5 Trusts were declared of Edmund's fund to take effect after the end of the specified period.
   6 (This is the material provision as regards these appeals.) Edmund's manager had power during the specified period to direct the trustees to pay or apply capital of Edmund's fund to or for the benefit of Ronald Arthur Vestey or his issue, or failing this, the issue of Sir Edmund, but Edmund's manager could only exercise this power in favour of himself jointly with Samuel's manager or the trustees.
   7 Similar trusts mutatis mutandis to those referred to under paras 4 to 6 above were declared as regards Samuel's fund, there being designated a person to act as Samuel's manager. He also directed accumulation.
   8 There were cross-remainders applicable to Edmund's fund and Samuel's fund in the event of failure of the trusts applicable to them respectively.
   9 Finally there was (cl 14) a wide power given to Edmund's manager and Samuel's manager during the specified period to revoke the trusts, powers or provisions of the980 settlement and to reconstitute the same, but not so as to confer any interest on either of the settlors.
   Thus, in the most summary form, the income from the transferred properties was to be accumulated in three stages. First it was to be accumulated so as to form the rental fund. Secondly the income of the rental fund was to be accumulated so as to form (i) Edmund's fund and (ii) Samuel's fund. Thirdly the income of (i) Edmund's fund and (ii) Samuel's fund was to be accumulated, and it was out of these accumulations that the relevant capital payments were made.
   It is next necessary to ascertain who were (i) the potential and (ii) the actual beneficiaries who either had rights by virtue of which they had power to enjoy income of the settlement (s 412(1)) or might receive capital payments under paras 6 and 7 above (s 412(2)).
   The potential beneficiaries in 1963-64 were (a) 16 members of the Vestey family on Sir Edmund Vestey's side, (b) 12 members of the Vestey family on Samuel Vestey's side. In 1963-64 two more persons became members of class (a) making 18; and one of class (b), making 13, and these remained the relevant numbers through 1966-67. Each class was, of course, susceptible of increase in any subsequent year, and has in fact been so increased.
   The actual beneficiaries were the taxpayers to whom capital payments were made. I shall set these out not only against the individual recipients but also under each relevant year of assessment; I do this because, as I think it important to emphasise, it is each assessment on each separate beneficiary in each separate year that has to be justified (or attacked). The combination in this case of a number of years of assessment on a number of beneficiaries, however convenient for the Crown, or for argument, is liable to confuse the legal issues. The dates mentioned are the dates when the sums were appointed: it does not appear whether they were paid on the same dates or later.
   The payments were:
Beneficiary  
Date(s)
 
Amount
 
 
Edmund's Fund
 
 
R A Vestey  
29th October 1962
 
£215,000
 
 
18th November 1964
 
£150,000
 
E H Vestey  
1st January 1963
 
£700,000
 
 
18th November 1966
 
£220,000
 
Mrs Payne  
   2nd May 1966
 
£100,000
 
Mrs Baddeley  
   2nd May 1966
 
£100,000
 
 
Samuel's Fund
 
 
Baron Vestey  
9th July 1962
 
£123,000
 
 
1st January 1963
 
£800,000
 
M W Vestey (through his mother)  
1st January 1963
 
£200,000
 
   
   and, arranged according to date:
 
 
 
 
Tax year  
Dates
 
Beneficiary
 
Amount
 
1962-63  
9th July 1962
 
Baron Vestey
 
£123,000
 
 
29th October 1962
 
R A Vestey
 
215,000
 
 
1st January 1963
 
E H Vestey
 
£700,000
 
 
1st January 1963
 
Baron Vestey
 
£800,000
 
 
1st January 1963
 
M W Vestey
 
£200,000
 
1963-64  
--
 
--
 
--
 
1964-65  
18th November 1964
 
R A Vestey
 
£150,000
 
1965-66  
--
 
--
 
--
 
1966-67  
2nd May 1966
 
Mrs Payne
 
£100,000
 
 
2nd May 1966
 
Mrs Baddeley
 
£100,000
 
1967-68  
[No evidence of any payments]
 
 
   
981
   
   On these figures, the Commissioners of Inland Revenue have made the assessments now in question. The assessments were first made in 1970, ie subsequent to all the payments of capital sums in issue in these appeals. The commissioners then appear to have looked back at six years of assessment, and to have assessed each beneficiary in respect of a proportion of the total income of the trustees in each year (allowance being made for periods when he was resident outside the United Kingdom), irrespective of whether that beneficiary received any payment in that year, or in any year prior to or subsequent to that year. The proportion decided on was that which the capital (sums) received by each beneficiary bore to the total income of the trustees for each year, ie not to th
   e income of the trustees in the year of payment. The resultant figures for 1963-64 to 1966-67 are set out in the case for the respondents; for convenience I reproduce them in an appendix (See pp 1006-1007, post).
   There are many remarkable features about these figures. I shall comment on some later. They can be highlighted by reference to the cases of Mrs Payne and Mrs Baddeley. Though these beneficiaries received nothing until 1966-67, in which year each received £100,000, they (in fact their husbands) have been assessed for a proportion of the trustees' income in each relevant year, starting with 1963-64, totalling (in each case) £274,121‡97. It is the Crown's claim that they could have been assessed for many times that amount.
   The Crown's claim, on these figures, was based first on s 412(2)of the 1952 Act, on the grounds that each beneficiary received a capital sum of the character described, and secondly on s 412(1), on the ground that each beneficiary had rights by virtue of which he had power to enjoy income of the trustees. Whichever subsection applied, the Crown claimed to be entitled to tax each beneficiary on the whole of the trustees' income, but they limited their actual claim to a proportion fixed as described above. The taxpayers dispute each of these claims, and additionally, as an overriding contention, submit that s 412 does not apply at all to a case where (as here) the transfer of assets was not made by any of them, but by other persons (viz the original settlors).
   The learned judge (Walton J) considered that the he was precluded from accepting the overriding contention by the decision of this House in Congreve v Inland Revenue Comrs and by that of the Court of Appeal in Bambridge v Inland Revenue Comrs. On the Particular arguments, he rejected the Crown's claim under s 412(2), holding that each taxpayer's liability was limited to tax in respect of the actual sum(s) received by him in any particular year of assessment. As to s 412(1), he held that, before the subsection was amended by the Finance Act 1969, s 33, the Crown's claim failed because no beneficiary had any rights by virtue of which he had power to enjoy income; as to the last year, to which the amended subsection applied (deleting any reference to 'rights'), the claim failed because what the beneficiaries had power to enjoy was not income but capital, viz accumulations of income which had been capitalised.
   All of these contentions (and others involving subsidiary but important points) are in issue in these appeals, and the House is invited if necessary to depart from its previous decision in Congreve and to overrule the Court of Appeal's decision in Bambridge. Since, if it were to do so, that would dispose of all the appeals in the taxpayers' favour, it would appear to be logical and economical to consider this question first.
   I find myself unable immediately to take this course. A decision whether Congreve should be followed cannot be made until it is seen what the consequences of following the case would be, and this involves consideration of the meaning of the two subsections of s 412 and of the judge's decisions with regard to them. These, on the view which I take, need not be lengthy. I make it clear that the following analysis only applies on the assumption that Congreve is correct.
   I take first s 412(2). If this subsection could be limited in the way suggested by the982 judge, a result would be produced that would be intelligible, workable, certain and, from some points of view, not unjust. The taxpayer receiving a capital sum, assuming that the trustees had income in that year, would pay tax on it as income; assessment on this basis would be clear and mandatory, and lacking in any element of arbitrariness or discretion. I have sympathy with the judge's efforts to achieve this result.
   However, I regret that I am unable to accept the suggested limitation. The judge achieved it by means of what he (justly) described as a bold emendation through the insertion of words. I transcribe the subsection as emended, the inserted words being italicised:

   'Where, whether before or after any such transfer, such an individual receives or is entitled to receive any capital sum the payment whereof is in any way connected with the transfer or any associated operation, to the extent to which it comprises any income which, by virtue or in consequence of the transfer, either alone or in conjunction with associated operations, has become the income of a person resident or domiciled out of the United Kingdom it shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be the income of that individual for all the purposes of this Act.'
   My Lords, it is not necessary to enter on objections of a detailed character to this emendation though some are formidable. For inspection of it unanswerably shows that the process involved is not one of construction, even one of strained construction, but is one of rewriting the enactment. The subsection says in the clearest terms that 'any income' of the foreign resident etc is to be deemed the income of the recipient of the capital sum. To say that what is to be deemed the recipient's income is not 'any income' but a portion of that income equal to the capital sum received, would be a totally different fiscal approach, one which Parliament might certainly have taken, but which it has manifestly avoided in this instance.
   Certain other suggestions were made by leading counsel for the taxpayers as to the manner in which the subsection might be cut down. These had the merit of being less radical than the judge's emendation, but the defect of being ineffective. I do not pursue them for the reason, which I find overwhelming, that the subsection is clear beyond doubt in its terms. It is 'any income' of the foreign transferees which is deemed to be the income of the recipient of a capital sum, indeed of each and every recipient of any capital sum, small or large, whenever received. From these words there is no escape.
   I pass to sub-s (1), still on the assumption that Congreve is correct. It is the Crown's contention that each and every one of the potential beneficiaries (viz 13-14 as to one fund and 16-18 as to the other, making 29-32 in all) had rights by virtue of which they had power to enjoy income etc. They accept, and indeed maintain, that at least each actual recipient, having such rights, can be assessed in respect of any income of the foreign transferees; inferentially they must accept, for there is no basis for any distinction, that each potential recipient (each of the 29-32 persons) can be so assessed, and this in respect of each year in which he has the rights etc. They submit that the subsection, coupled with Congreve, compels this.
   My Lords, I do not agree, in this particular case, that any of the taxpayers had 'rights by virtue of which they had power to enjoy'. On this point, in my opinion, the judge was clearly right: they were simply members of a discretionary class to which income, or capital, might in the discretion of other persons become available. To hold that as such they had any rights of the character described would be inconsistent with much authority and with principle (see, inter alia, Gartside v Inland Revenue Comrs ([1968] 1 All ER 121 at 127, [1968] AC 553 at 606) per Lord Reid and Vestey's Executors v Inland Revenue Comrs).983
   However (and this is what is relevant when it becomes necessary to consider Congreve) there might well be situations in which numerous persons, beneficiaries under a trust, might justly be considered to have 'rights etc'; and moreover, since the deletion of the reference to 'rights etc' by the Finance Act 1969, s 33, all actual and potential beneficiaries (viz all 29-32) under this settlement may have 'power to enjoy' within one or more of the definitions of that expression contained in sub-s (5). More generally, and apart from the provisions of this particular settlement, there may be cases in which some beneficiaries have 'power to enjoy' within one paragraph of sub-s (5) and other beneficiaries have 'power to enjoy' within other paragraphs. The total of the cases may be very large. On the Crown's contention each and every one of such beneficiaries if resident in the United Kingdom is liable to income and surtax in respect of the whole income of the trustees.
   On this broad analysis of the two subsections how then is an assessment to income/surtax to be made? The subsections give no indication than that 'that income' (sub-s (1)) or 'any income' (sub-s (2)), ie any income of the foreign trustees, is to be deemed the income of an individual; they give no guidance or indication whatever as to what is to be done if there is more than one individual to whom either subsection may apply.
   The contention of the Crown is that in such cases they have a discretion which enables them to assess one or more or all of the individuals in such sums as they think fit; the only limitation on this discretion is, they say, that the total income (of the foreign trustees) may not be assessed more than once. This is a remarkable contention. Let us consider first some of the practical consequences, if it is correct.
   (1) It is open to the Revenue to select one or more of the beneficiaries to tax and to pass over the others. (2) It is open to the Revenue to apportion the tax between several beneficiaries according to any method they think fit, and this without any possibility of appeal, none being provided for. (3) The liability of individual beneficiaries may depend on when the Revenue chooses to make its assessment. Thus, if assessments had been made in 1962-63, or in 1963-64, the income of those years would have been apportioned between selected beneficiaries. On the Revenue's method, these would have been the recipients of capital sums in 1962-63. This having been done, the income of those years could not subsequently have been apportioned to other beneficiaries. But by deferring assessments until after 1966-67, the Revenue has been able to impose liability in respect of the income of 1963-64 on fresh entrants, viz Mrs Payne and Mrs Baddeley, who received capital sums in 1966. How does this square with the principle that income tax is an annual tax, that a taxpayer is entitled to know what tax is claimed against him? In principle a taxpayer who has made a completely correct return is entitled to be taxed on the basis of it and not to have his liability determined by the choice of the Revenue when to make its assessment. I repeat what I have already said, that the question is not as to the correctness of the overall assessments on all the respondents in all the selected years, but as to the correctness of, eg, the assessment on Mrs Payne in respect of 1963-64. (4) The Revenue is entitled to continue the process of discretionary assessment so long as the settlement endures. It may adhere to its present system, or change it; it may take into account changes in facts (eg the appearance of new entrants into the class, or new recipients) or it may not. No beneficiary has any means of challenging its decisions.
   These are some of the consequences, in this case, and applied to these beneficiaries, of the Crown's contention; they are frightening enough. But there are more fundamental objections, in principle, to the whole proposition.
   Taxes are imposed on subjects by Parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer, and the amount of his liability is clearly defined.
   A proposition that whether a subject is to be taxed or not, or that, if he is, the amount of his liability is to be decided (even though within a limit) by an administrative body, represents a radical departure from constitutional principle. It may be that the Revenue984 could persuade Parliament to enact such a proposition in such terms that the courts would have to give effect to it; but unless it has done so, the courts, acting on constitutional principles, not only should not, but cannot validate it.
   The Crown's contentions to the contrary, however moderate and persuasive their presentation by leading counsel, fail to support the proposition.
   The Crown says that the income tax legislation gives the commissioners a general administrative discretion as to the execution of the Acts, and it refers to particular instances, of which one is s 115(2) of the Income and Corporation Taxes Act 1970 (power to decide period of assessment). The judge described the comparison of such limited discretions with that now contended for as 'laughable'. Less genially I agree. More generally, they say that s 412 imposes a liability on each and every beneficiary for tax in respect of the whole income of the foreign transferees; that there is no duty on the commissioners to collect the whole of this from any one beneficiary, that they are entitled, so long as they do not exceed the total, to collect from selected beneficiaries an amount decided on by themselves.
   My Lords, I must reject this proposition. When Parliament imposes a tax, it is the duty of the commissioners to assess and levy it on and from those who are liable by law. Of course they may, indeed should, act with administrative common sense. To expend a large amount of taxpayers' money in collecting, or attempting to collect, small sums would be an exercise in futility; and no one is going to complain if they bring humanity to bear in hard cases. I accept also that they cannot, in the absence of clear power, tax any given income more than once. But all of this falls far short of saying that so long as they do not exceed a maximum they can decide that beneficiary A is to bear so much tax and no more, or that beneficiary B is to bear no tax.
   This would be taxation by self asserted administrative discretion and not by law. As the judge well said )[1977] 3 All ER 1073 at 1098, [1979] Ch 177 at 197, [1977] STC 414 at 439), 'One should be taxed by law, and not be untaxed by concession.' The fact in the present case is that Parliament has laid down no basis on which tax can be apportioned where there are numerous discretionary beneficiaries.
   This was clearly seen by the Special Commissioners. They say in the supplemental case stated on 27 January 1978 ([1979] 2 All ER 225 at 230, [1978] STC 567 at 572):

   'Apportionment of the "deemed" income according to the quantum of the respective beneficial interests has much to commend it, but (as we noticed in paragraph 12 of our original decision) section 412 does not so provide. We recognise that apportionment may be impossible in the case of some of the discretionary beneficiaries whose expectancy may be insignificant. Various methods of apportionment were canvassed before us, the merits of each differing according to the circumstances. In our view, in default of a method prescribed by the section, and we can find none, it is for the Board in exercise of their powers in the execution of the Acts to decide on the appropriate apportionment.'
   It is interesting to compare this passage, and what Parliament has not done in the present context, with what it has done in another. There is power, as is well known, to apportion for purposes of surtax (or higher rates of income tax) income of 'close companies' to shareholders, or 'participators', including in some cases persons entitled to secure that income or assets will be applied for their benefit. But, here, Parliament has expressly conferred the power to apportion, has laid down principles according to which the apportionment is to be made, has defined the period for which assessments are to be made, and has allowed for appeals; all this in a detailed and precise manner (see Income and Corporation Taxes Act 1970, s 296ff, derived from the Finance Act 1965 and the Finance Act 1972, Sch 16). The contrast between this legislation and the present is striking.
   The commissioners have, I gladly accept, done their best to devise a system which is985 workable and reasonably fair. But whatever system they might devise lacks any legal basis. I must regard this case therefore as one in which Parliament has attempted to impose a tax, but in which it has failed, in the case of discretionary beneficiaries, to lay down any basis on which it can be assessed or levied. In the absence of any such basis the tax must fail. That this must be the result was correctly perceived by Macnaghten J in Lord Herbert v Inland Revenue Comrs ([1943] 1 All ER 336 at 338, [1943] 1 KB 288 at 291, 25 Tax Cas 93 at 99) a decision based on the Finance Act 1938, s 38. The learned judge there used these words:

   'It seems to me fantastic to suppose that Parliament has conferred upon inspectors of taxes, or even upon the Special Commissioners, the right to decide at their own will and pleasure which of several persons should be liable to income tax or surtax as the case might be.'
   My Lords, this brings me to Congreve itself. Can a decision which involves the consequences which I have described be acceptable? I must say at once that I cannot accept leading counsel for the taxpayers' argument that the proposition, that s 412 applies to cases where the person sought to be taxed was not himself or herself a transferor, was not a ratio decidendi of that case. He certainly gets some support for the proposition that the case was decided on a different ground from the headnote to the report in the All England Law Reports ([1948] 1 All ER 948):

   'An individual can, within the meaning of s. 18 of the Finance Act, 1936, be said to acquire rights "by means of" a transfer of assets though the transfer is effected neither by the individual nor by his agent, but by a company, the whole or greater part of the share capital of which is held by or on behalf of that individual.'
   However, that is the limit of his comfort for the headnote is certainly incomplete. It is clear, on consideration of the facts, elaborate it is true but susceptible of analysis, and from the judgments, that it was argued that Mrs Congreve could not be taxed in respect of assets transferred by her father. The judgments in the Court of Appeal ([1947] 1 All ER 168, 30 Tax Cas 163and in this House unambiguously reject this contention and the fact that they accepted an alternative argument to the effect that in any case Mrs Congreve had organised or engineered transfers by her father does not prevent their rejection of the contention from being a ratio decidendi. Indeed not only was it a ratio, it was the main ratio. It was followed, as such, in the subsequent cases of Bambridge and Philippi v Inland Revenue Comrs. So the issue cannot be avoided whether this ratio is correct.
   The result of the preceding argument is that, if Congreve is correct in this respect, a result is produced, in the case of discretionary trusts, which is arbitrary, unjust, and in my opinion unconstitutional. That must cast doubt on the decision. For it is a well accepted principle that if one interpretation of an Act of Parliament produces such a result, but another avoids it, the latter is to be preferred.
   There are undoubtedly two possible interpretations of s 412 of the 1952 Act, particularly having regard to the preamble. The first is to regard it as having a limited effect; to be directed against persons who transfer assets abroad; who by means of such transfers avoid tax, and who yet manage when resident in the United Kingdom to obtain or to be in a position to obtain benefits from those assets. For myself I regard this as being the natural meaning of the section. This avoids all the difficulties discussed above. No difficulty arises from cases of multiple transferors. The second is to give the986 whole section an extended meaning, so as to embrace all persons, born or unborn, who in any way may benefit from assets transferred abroad by others. This is or follows from the Congreve interpretation. This I regard as a possible but less natural meaning of the section.
   Apart from linguistic considerations there are other arguments. I mention two. 1. One much used by the Crown is that the section is a penal section. But this cuts both ways. In a case such as Lord Howard de Walden v Inland Revenue Comrs this argument has much force. The transferor in that case, who derived a comparatively small benefit from the tranferred assets, was taxed in respect of the whole income. It was an entirely valid argument, lucidly explained by Lord Greene MR, in support of so severe a liability, to say that the section was penal and meant to deter transfers abroad. In such a context his metaphor of burnt fingers is completely apposite. But the argument turns the other way when so Draconian a tax ('astonishingly severe' were leading counsel for the Crown's words) is sought to be imposed on persons who had no hand in the transfer, who may never benefit from it, who cannot escape from it, who remain under liability so long as they live or the settlement lasts. In relation to such persons equity and principle suggest that Parliament intended no such thing, or at least cannot be assumed from the veiled language used to have intended any such thing. To penalise is one thing, to visit the sins of the transferor on future generations is quite another. 2. There is the reference to avoiding tax; prevention of avoidance is the stated objective. But there may be many cases, of which this is one, in which no tax is avoided by the person sought to be charged. If this settlement had been made in England with English trustees, not a penny of tax could, at the relevant time, have been levied on any of the beneficiaries. The settlement would be a classic accumulating settlement with power to pay capital sums, accepted at the time as not attracting any tax. This seems to show that the mischief at which the section was directed was a more limited one.
   My Lords, these and other arguments, together with the linguistic, persuade me that the better interpretation of the section is not that accepted in Congreve but is one limiting its operation and charging effect to the transferors of assets.
   We now have to face the fact that this House decided otherwise, unanimously, and affirming the Court of Appeal ([1947] 1 All ER 168, 30 Tax Cas 163). That was 30 years ago; the decision has been followed in reported cases (Bambridge and Philippi) and no doubt many persons have been taxed on the basis of it, without resistance. I have reflected with anxiety whether this House ought, within the principles which should guide the exercise of the power taken in 1966, to depart from it. I bear in mind that the decision was one of interpretation of a taxing Act; that the interpretation accepted was, I say with all respect, a tenable one; that this House ought not to sanction attempts to obtain reversals of decisions deliberately reached however attractive to their successors another view may appear to be.
   But on the other side, and this must be a rare situation, it can now be seen, as it certainly was not seen in 1949, that the consequences of the interpretation then accepted must lead, in relation to a large class of settlements and in particular where sub-s (2) might be invoked (it was not considered in Congreve to a situation involving results which are arbitrary, potentially unjust, and fundamentally unconstitutional. If these had been seen in 1949 (within the ambit of proper argument they could not reasonably have been seen) I cannot believe that the eminent Lords who decided the case would have been willing to ascribe to Parliament an intention to produce such results. The alternative which is supported by the language is to suppose that the section was intended by Parliament as a limited section, attacking, with penal consequences, those who987 removed assets abroad so as to gain tax advantages while residing in the United Kingdom and not a section representing such a departure from principle, yet without any prescribed mechanism to operate it, as the alternative can now be seen to involve.
   It may be said, and I believe that some of your Lordships share this opinion, that to limit the section so as to relate only to transferors of assets is to emasculate it, or to open up a wide gap in its application. But is this so? Let us consider some of the earlier pronouncements as to its purpose. In Inland Revenue Comrs v Barclays Bank Ltd ([1942] 1 All ER 214 at 216, [1942] 1 KB 299 at 303, 25 Tax Cas 107 at 115) Lord Greene MR after quoting the preamble said:

   'It is notorious that before the passing of this legislation [ie the Finance Act 1936, s 18] individuals who were minded to enjoy their income without bearing any appropriate burden of British taxation were able to do so by transferring assets productive of income to a non-resident person or company by whom the income was retained abroad, so as not to incur taxation in England. The money representing the income was then by means of one or other of several well-known expedients, transferred to England as capital.'
   He affirmed this statement of the purpose of the section in Lord Howard de Walden v Inland Revenue Comrs. Macnaghten J ((1941) 25 Tax Cas 121 at 128-129) at first instance had given his analysis of the section which brings out very clearly that it must be the transferor who acquires rights (cf also Kanga and Palkhivala on Income Taxf on the corresponding Indian section).
________________________________________
f    7th Edn (1976) p 725
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   The pronouncements of Lord Greene MR were made in December 1941, ie just before the settlement was executed.
   When Latilla v Inland Revenue Comrs ([1943] 1 All ER 265 at 266, [1943] AC 377 at 381, 25 Tax Cas 107 at 117) came before this House Viscount Simon LC opened his speech with these words:

   'My Lords, of recent years much ingenuity has been expended in certain quarters in attempting to devise methods of disposition of income by which those who were prepared to adopt them might enjoy the benefits of residence in this country while receiving the equivalent of such income without sharing in the appropriate burden of British taxation. Judicial dicta may be cited which point out that, however elaborate and artificial such methods may be, those who adopt them are "entitled" to do so. There is, of course, no doubt that they are within their legal rights, but that is no reason why their efforts, or those of the professional gentlemen who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as a discharge of the duties of good citizenship. On the contrary, one result of such methods, if they succeed, is, of course, to increase pro tanto the load of tax on the shoulders of the great body of good citizens who do not desire, or do not know how, to adopt these manoeuvres. Another consequence is that the legislature has made amendments to our income tax code which aim at nullifying the effectiveness of such schemes.'
   So we have a clear, identifiable and substantial mischief against which the section, as I would now construe it, was certainly directed. Then are we to suppose that the section must also have been directed against cases where a person transfers assets abroad for the benefit of a child or grandchild; and is it incredible that Parliament should not have covered that case?
   My Lords, to extend so penal a section so as to catch future generations is not merely something which logically follows from penalising transferors themselves, but is something which appears to me to introduce a new dimension, indeed an innovation, in our tax law. Are we to deduce from an evident intention to tax (and penalise) transferors988 of assets one is to visit their offence on their children, or their grandchildren? Surely such an extension, which would certainly have attracted debate, if not criticism, in Parliament, would have been spelled out and not left to be deduced from such cryptic words as have been used. I find in the section, if directed at transferors, and benefits taken by them, an ample and powerful anti-avoidance instrument and I feel not only no need, but a great reluctance, in view of the wording used, to extend it against any beneficiary, child or grandchild, or descendant.
   I recognise that there is always the possibility of 'overkill'. Parliament itself may not have consciously intended to go beyond the transferor, yet words may have been used which are so wide as to do so. Such cases exist in modern fiscal legislation (cf Cleary v Inland Revenue Comrs). But then I think that the courts, if they are satisfied that the words used, on one interpretation, go so far as to create extreme injustices and departure from fiscal propriety, are well entitled to take another interpretation which does not do this. And in this case, the other interpretation can be found without straining words or writing anything in.
   My Lords, the discretion conferred by the practice direction of 1966 (Note [1966] 3 All ER 77, [1966] 1 WLR 1234) is a general one. We should exercise it sparingly and try to keep it governed by stated principles. But the fact that the circumstances of one particular case cannot be brought precisely within the formulae used in others of a different character should not be fatal to its exercise, or the discretion would become ossified. I regard this case as one where a previous decision has been given on facts of a particular type without consideration being given (and there is no shred of criticism in saying this) to the possible consequences in a wider type of situation. Of course it is generally true that when a decision of principle is given, the fact that those who gave it did not have every possible situation in mind does not prevent the decision being applied to new and unforeseen facts. The doctrine of precedent and the interest of certainty require that it should be. But if, as I believe to be the case here, extension of a limited decision to totally different situations involves a new dimension which itself embraces administrative and constitutional difficulties of a high degree, I think that this House ought to use its discretion to refuse the extension. The only choice is then between overruling the previous decision so far as the principal ratio is concerned or confining it to its, or similar, facts.
   My Lords, we have not, I hope, in recent years become so habituated to fiscal severities or to 'overkill' sections as to be insensitive to those proprieties which were so eloquently stressed by Walton J in his judgments. It is respect for these and for the fabric of our fiscal law which persuade me that Congreve [1948] 1 All ER 948, 30 Tax Cas 163, as to its principal ratio and the following cases, should be departed from or overruled and the section interpreted as applying only where the person sought to be charged made, or, maybe, was associated with, the transfer. If your Lordships do not follow me so far, then, in view of the consequences which would result from the extension of Congreve into a case where there are discretionary beneficiaries, I would hold that it cannot be applied to such a case, that no method for levying the tax in such cases has been prescribed by Parliament, that this gap cannot be filled by administrative decision and that the tax and the assessments of it fail.
   I would dismiss the appeals and allow the cross-appeals.
VISCOUNT DILHORNE. My Lords, in these consolidated appeals the taxpayer Ronald Arthur Vestey is the son of Sir Edmund Vestey Bt. The taxpayer Edmund Hoyle Vestey is Ronald's son and the taxpayers J R Baddeley and James C Payne are Ronald's sons-in-law. The taxpayers Lord Vestey and Mark William Vestey are great grandsons of the first Lord Vestey. By a settlement dated 25 March 1942 Sir Edmund Vestey and the first Lord Vestey conveyed a large number of properties outside the United Kingdom to trustees and on 26 March 1942 the trustees leased the trust property to Union Cold989 Storage Ltd for 21 years at an annual rent of £960,000. By a further lease dated 10 April 1963 the trust property was again leased to that company at that rent. The trustees of the settlement, who have at all times been resident out of the United Kingdom, also held all the shares in three companies, in two as subscribers for their shares and in the third, the Commercial Insurance Corpn Ltd, by purchasing the shares.
   Under the settlement the trustees were to receive the income of the properties conveyed to them and of property representing the same during a prescribed period and to invest it so as to form a capital fund, called the rental fund. During the prescribed term the income of the rental fund was to be divided into two moieties and held on the trusts applicable to what were called Edmund's fund and Samuel's fund. From and after the end of the prescribed term the trustees were able to divide the rental fund into two moieties, Edmund's fund and Samuel's fund, and hold them on the trusts declared with regard thereto.
   The settlement provided that the trustees might be directed by 'Edmund's manager' who was the respondent, Ronald Arthur Vestey, to accumulate for such period or periods, within the period specified in the deed, the whole or any part of the income of Edmund's fund and that, subject to the power of accumulation and to other provisions of the deed, the trustees should hold the income on trust for Ronald Arthur Vestey and his issue or, if no issue of his should be living, for the issue of Sir Edmund Vestey in such amounts or shares as Edmund's manager might direct. Similar provisions were made with regard to Samuel's fund and Samuel's manager was, until his death in 1944, William Howarth Vestey, the grandson of the first Lord Vestey. He was followed as Samuel's manager by Mr Brown and then in 1966 the third Lord Vestey was appointed to that office. On 30 August 1942 Samuel's manager directed the trustees to accumulate the whole of the income of Samuel's fund by investing it. On 14 September 1942 a similar direction was given by Edmund's manager in relation to the income of Edmund's fund.
   The settlement gave Edmund's manager power within the specified period to direct the trustees to appropriate and realise capital and to pay it to Ronald Arthur Vestey and his issue and in default to the issue of Sir Edmund Vestey in such shares and in such manner as Edmund's manager might direct. A similar power to direct the trustees to distribute capital as he might direct among the issue of the first Lord Vestey was given to Samuel's manager.
   In the exercise of these powers the trustees were directed to distribute and did distribute between the taxpayers Ronald Arthur Vestey, Edmund Hoyle Vestey, Lord Vestey and Mark Vestey and also Mrs Payne and Mrs Baddeley, daughters of Ronald Arthur Vestey, the sum of £2,608,000 on various dates between October 1962 and November 1966.
   The Revenue then raised assessments on the six respondents. It is not necessary to state in detail the amount of each assessment. Two examples will suffice. Ronald Arthur Vestey received a total of £365,000 from the trustees, £215,000 on 29 October 1962 and £150,000 on 18 November 1964. He was consequently assessed to income tax and surtax for the years 1963-64, 1964-65, 1965-66 and 1966-67 amounting to £888,500. Mr Baddeley, as the husband of Mrs Baddeley who received £100,000 on 2 May 1966, was in consequence of that assessed to tax for 1963-64 in the sum of £62,088‡71, for 1964-65 in the sum of £64,818‡14, in 1965-66 in the sum of £84,667‡75. In none of those years had Mrs Baddeley received anything from the trustees. For 1966-67 Mr Baddeley was assessed in the sum of £62,547‡35. So in consequence of the receipt by his wife of £100,000 in 1966, he was assessed to tax in the sum of £274,121‡95.
   The taxpayers appealed from these assessments to the Special Commissioners without success. They then appealed to the High Court ([1977] 3 All ER 1073, [1979] Ch 177, [1977] STC 414) and Walton J allowed their appeals and remitted the cases to the Special Commissioners for them to consider whether the assessments were justified under s 412(1) of the Income Tax Act 1952. They had been990 made under s 412(2). The Special Commissioners concluded that the assessments were justified under s 412(1) and the taxpayers' appeal from that decision was heard by Walton J ([1979] 2 All ER 225, [1979] Ch 198, [1978] STC 567) who allowed their appeals. The Crown now appeal direct to this House from Walton J's decision by virtue of s 12 of the Administration of Justice Act 1969.
   Section 412 commences with what has been called a preamble. That and what is contained in sub-s (1) of that section was first enacted by the Finance Act 1936, s 18. Subsection (2) was added by the Finance Act 1938, s 28. These parts of s 412 read as follows:

   'For the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income tax by means of transfers of assets by virtue or in consequence whereof, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled out of the United Kingdom, it is hereby enacted as follows:
   '(1) Where such an individual has by means of any such transfer, either alone or in conjunction with associated operations, acquired any rights by virtue of which he has, within the meaning of this section, power to enjoy, whether forthwith or in the future, any income of a person resident or domiciled out of the United Kingdom which, if it were income of that individual received by him in the United Kingdom, would be chargeable to income tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be income of that individual for all the purposes of this Act.
   '(2) Where, whether before or after any such transfer, such an individual receives or is entitled to receive any capital sum the payment whereof is in any way connected with the transfer or any associated operation, any income which, by virtue or in consequence of the transfer, either alone or in conjunction with associated operations, has become the income of a person resident or domiciled out of the United Kingdom shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be the income of that individual for all the purposes of this Act.'
   The taxpayers contended that these provisions only applied where the taxpayer assessed had made the transfer of assets by virtue or in consequence of which income became payable to a person resident or domiciled out of the United Kingdom or where he had caused such a transfer to be made. This argument was put forward without success in Congreve v Inland Revenue Comrs. The respondents now contend that that decision of this House should be distinguished and, alternatively, if it cannot be distinguished, should now be reviewed and not followed.
   The facts of that case were very complicated. It will suffice to say that Mr Glasgow, Mrs Congreve's father, had prior to the enactment of the Finance Act 1936 transferred assets to a foreign company. Mrs Congreve had done so too and it was not disputed that she had acquired rights by virtue of which she had power to enjoy income payable to a number of foreign companies. Lord Simonds in his speech with which the other members of the House agreed, posed the question ([1948] 1 All ER 948 at 951-952, 30 Tax Cas 163 at 203)-

   'whether the transfer of assets, on which either alone or in conjunction with associated operations the liability is founded, must be (as the taxpayers contend) a transfer effected by Mrs Congreve or her agent or may be (as the Crown contends) effected by anyone, father, friend or company in which she has an interest great or small, so long as the result is reached that she has power to enjoy the relevant income.'
991
   Lord Simonds said ([1948] 1 All ER 948 at 952, 30 Tax Cas 163 at 204) that he did not know what better words could have been used in the section if the legislature intended to define its purpose as covering a transfer of assets by A by means of which B avoided liability to tax. He regarded the language of the section as plain and said ([1948] 1 All ER 948 at 953, 30 Tax Cas 163 at 205):

   'If there has been such a transfer as is mentioned in the introductory words, and if an individual has by means of such transfer (either alone or in conjunction with associated operations) acquired the rights referred to in the section, then the prescribed consequences follow.'
   This was, in my view, clearly the ratio decidendi of the House in this case. It was also the ratio decidendi of the Court of Appeal where the judgment of the court was given by Cohen LJ ([1947] 1 All ER 168, 30 Tax Cas 163. Both this House and the Court of Appeal clearly rejected the contention that the section only applied to the individual who had by himself or through an agent made such a transfer.
   I can see no ground for distinguishing that case from this, so unless the House is prepared to hold that that case was wrongly decided, the Crown must in my opinion succeed on this issue.
   Cohen LJ, with whose judgment Lord Simonds agreed on all points, treated the words 'such an individual' in sub-ss (1) and (2) as meaning an individual ordinarily resident in the United Kingdom. Their meaning does not appear to have been debated in the House. A possible meaning appears to me an individual ordinarily resident who has sought to avoid liability to income tax by means of a transfer of assets abroad. If that was their meaning, then the scope of s 412 is limited. If on the other hand, the words just mean an individual ordinarily resident in the United Kingdom, the decision of this House in Congreve was I think right.
   Lord Simonds in the course of his speech did not refer to sub-s (8) of s 412. It states, inter alia: 'For the purposes of this section-(a) a reference to an individual shall be deemed to include the wife or husband of the individual ... "
   These words have considerable significance and importance if 'such an individual' means an individual ordinarily resident in the United Kingdom who has sought to avoid income tax by the transfer of assets abroad. If the decision in Congreve is right, it is not easy to attach significance to them. Counsel for the Crown suggested that they might have been inserted to cover a case where a husband and wife jointly but not separately had control of a company. I find it difficult to accept that this provision was inserted by Parliament to meet that situation. I think it is much more likely that they were inserted to secure that the wife or the husband of the transferor was brought within the scope of the section and I consequently regard this provision as an indication that by 'such an individual' is meant an individual who has sought to avoid tax by the transfer of assets abroad.
   In Congreve the House did not have to consider, and, so far as one can see, did not when construing the section consider, the operation of sub-ss (1) and (2) when there was more than one individual who had acquired rights giving power to enjoy income of a person resident or domiciled abroad, and more than one individual had received or was entitled to receive a capital sum connected with the transfer of assets abroad. Walton J ([1977] 3 All ER 1073 at 1088, [1979] Ch 177 at 184 [1977] STC 414 at 429), when considering sub-s (2), said that if its provisions were taken literally the income of the person resident or domiciled abroad was to be deemed without limit of time to be the income of each individual who received or was entitled to receive such a capital sum 'so992 that the Crown is, at the end of the day, entitled to multiple tax, the multiplier being the number of different appointments made'.
   He refused to believe that Parliament can ever have so intended, and relying on a passage from Lord Loreburn LC's speech in Drummond v Collins ([1915] AC 1011 at 1017, 6 Tax Cas 525 at 538-539) he thought he was entitled to treat sub-s (2) as so amended as to secure that the individual who received or was entitled to receive the capital sum was taxable only to the extent to which the capital sum comprised income which by virtue of a transfer of assets had become the income of a foreigner. Such a radical alteration of the plain language of this part of the subsection is one that in my opinion can only be made by Parliament. Counsel for the taxpayers suggested another amendment of the subsection. If made, I am not at all sure that it would work as he desired but again such an alteration as he proposed could in my view be made by Parliament alone.
   In Inland Revenue Comrs v Hinchy ([1960] 1 All ER 505 at 512, [1960] AC 748 at 767, 38 Tax Cas 625 at 652) where the Crown contended that Mr Hinchy was liable under s 25(3) of the Income Tax Act 1952 to pay a penalty of treble the whole tax with which he ought to be charged for the relevant year for failing to disclose in his return the receipt of £32 19s 9d in interest, Lord Reid gave instances of that penalty being 'grossly and extravagantly disproportionate to the offences' and said:

   'Difficulties and extravagant results of this kind caused DIPLOCK, J., and the Court of Appeal to search for an interpretation which would yield a more just result. What we must look for is the intention of Parliament, and I also find it difficult to believe that Parliament ever really intended the consequences which flow from the Crown's contention. But we can only take the intention of Parliament from the words which they have used in the Act and, therefore, the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreasonable or unjust the consequences, and however strongly we may suspect that this was not the real intention of Parliament.'
He concluded that the words were not capable of a more limited construction.
   My Lords, I see no escape from the conclusion, if Congreve was rightly decided, that each individual who receives or is entitled to receive a capital sum of the character referred to in sub-s (2) must be deemed to have the income of the foreigner with the result, as Walton J ([1977] 3 All ER 1073 at 1088, [1979] Ch 177 at 184, [1977] STC 414 at 429) said, 'that the Crown is, at the end of the day entitled to multiple tax'. If Congreve is right, sub-s (1) would produce the same result if a number of individuals had acquired rights giving them power to enjoy a part of the income of a foreigner.
   I share Walton J's view that Parliament cannot have intended that a person, who might be unborn at the time of the transfer of assets, should be chargeable to tax on the whole of the income of the foreigner if he acquired rights giving him power to enjoy part of that income or received or was entitled to receive a capital sum coming within sub-s (2) and without limit of time or that the Revenue should be able to recover multiple tax if there were a number of such individuals.
   None of these consequences would arise if the persons deemed to have the income of the non-resident were the individuals who had sought to avoid income tax and, by virtue of s 412(8) (a), his wife or her husband. It would not be unjust that they should be chargeable to income tax on the income enjoyed by the non-resident in consequence of the indvidual's transfer of assets abroad to avoid tax. Further, the omission to make any provision in the section when, if Congreve is right, a number of individuals have to be deemed to have the income of the non-resident is, I think, very significant.
   The choice lies between the section having a limited application, applying only to the individual who has sought to avoid income tax and his or her spouse and a wide993 application to all individuals who have the rights bringing them within sub-s (1) or who have received a capital sum within sub-s (2), however innocent of tax avoidance an individual might be and without regard to the amount which he might have power to enjoy or which he has received or is entitled to receive as a capital sum.
   The limited application would leave, it is said, 'a yawning gap'. Persons who transfer assets abroad may do so for the benefit of their families and not for their own benefit. With this construction their descendants would not come within the section. Gaps when they are found in our tax laws are usually speedily filled. The wider application is productive of such manifest injustices that in my view Parliament cannot have intended it.
   I have therefore come to the conclusion that the decision in Congreve on this question was wrong, though the actual decision of the case can be upheld on the alternative ground stated by Cohen LJ ([1947] 1 All ER 168, 30 Tax Cas 163) in his judgment.
   The Crown has not in this case sought to assess each taxpayer on the whole of the income of the non-resident trustees. They have apportioned each year that income in proportion to the capital sum received by each individual between October 1962 and November 1966, so, if the Crown is right, the extent of Mr Baddeley's liability to tax depended on the amounts received by the others. In its case the Crown says that it has always been their practice to apportion the income between the individuals concerned in what seems the most appropriate manner. Although an individual has the right to appeal against an assessment made on him, this right is worthless if the amount of his assessment depends solely on the discretion of the Revenue:

   'This practice [it was said] may be justified either on the ground that the section does impose multiple liability, but that the [Revenue] are not required as a matter of law and ought not as a matter of proper administration, to recover tax on the income more that once or on the ground that the [Revenue] are not entitled to tax the same income more than once.'
   In the course of his judgment in relation to sub-s (1) Walton J ([1979] 2 All ER 225 at 241, [1979] Ch 198 at 213, [1978] STC 567 at 583) said that the Crown had submitted that-

   'if the conditions of the section were satisfied, then the taxpayer was chargeable in respect of the whole of the income of the non-resident ... and that nonetheless because there might also be somebody else who was in precisely the same situation.'
   This, if the decision in Congreve was right, must be so. Has the Revenue then any right or power to mitigate the gross injustice that results? I think not. The section is mandatory. It says that the income of the non-resident 'shall ... be deemed to be income of that individual for all the purposes of the Act'. The income of each individual to whom the section applies must be deemed to include the income of the non-resident. There is no question of the income of any individual being taxed more than once.
   On this view the consequences to each individual may be even worse than they are to the respondents in this case and in my opinion the Revenue has no power to override the clear provisions of this section.
   I now turn to the question whether, if as I think the decision of this House in Congreve was wrong, it should not now be followed. That case decided 31 years ago. It was followed and not questioned in Bambridge v Inland Revenue Comrs and it does not appear to have been questioned in any subsequent case.
   In Jones v Secretary of State for Social Services the decision of this House in Minister of994 Social Security v Amalgamated Engineering Union ('Dowling's case') was challenged and the question whether it should be overruled was considered by a committee of seven, four of whom came to the conclusion that the case had been wrongly decided but four of whom held that it should not be overruled, my noble and learned friends, Lord Wilberforce and Lord Diplock, and I thinking that it should be. Lord Reid said that in his opinion ([1972] 1 All ER 145 at 149, [1972] AC 944 at 966)-

   'the typical case for reconsidering an old decision is where some broad issue is involved, and that it should only be in rare cases that we should reconsider questions of construction of statutes or other documents. In very many cases it cannot be said positively that one construction is right and the other wrong. Construction so often depends on weighing one consideration against another. Much may depend on one's approach. If more attention is paid to meticulous examination of the language used in the statute the result may be different from that reached by paying more attention to the apparent object of the statute so as to adopt that meaning of the words under consideration which best accord with it. Holding these views, I am firmly of opinion that Dowling's case ought not to be reconsidered. No broad issue of justice or public policy is involved nor is any question of legal principle. The issue is simply the proper construction of complicated provisions in a statute. There must be a large number of decisions of this House of this character. Possibly some of your Lordships may think the decision in Dowling's case more wrong than most of them. But a decision to reconsider Dowling's case would I think encourage those who would like to see others of such decisions reversed to think that litigation for that purpose might be worthwhile and would have a rather far-reaching tendency to impair existing certainty.'
   Lord Morris of Borth-y-Gest ([1972] 1 All ER 145 at 155, [1972] AC 944 at 973) thought it wholly inappropriate not to treat Dowling's case as a binding authority. 'It was', he said, 'essentially a decision which involved questions of construction of the statutory provisions.'
   Lord Pearson ([1972] 1 All ER 145 at 174, [1972] AC 944 at 996-997) pointed out that in Dowling's case there were conflicting views and that each of them was tenable, and said:

   'If a tenable view taken by a majority in the first appeal could be overruled by a majority preferring another tenable view in a second appeal, then the original tenable view could be restored by a majority preferring it in a third appeal. Finality of decision would be utterly lost.'
   Lord Simon of Glaisdale ([1972] 1 All ER 145 at 196, [1972] AC 944 at 1024), while thinking the decision in Dowling's case wrong, thought that it would be wrong to depart from it for a number of reasons, one of which was that-

   'A variation of view on a matter of statutory construction-so much a matter of impression-would, I should have thought, rarely provide a suitable occasion, by itself, that is to say, for it would be different if it were convincingly shown that a previous construction, clearly demonstrated to be wrong, was causing administrative difficulties or individual injustice.'
   My Lords, it is clear that our power to depart from previous decisions is one that should rarely be exercised. None of their Lordships in Jones's case said that it should never be exercised in relation to the construction of a statute but the passages from the995 speeches which I have cited indicate that in such cases it should be exercised very rarely indeed. Here the choice is not between a literal construction and what is now not infrequently called a purposive construction. Here, as Walton J showed, the construction placed on the section in Congreve can be productive of very great injustice to persons like Mr Baddeley and many others. I would myself be reluctant to assert that any decision of this House on a question of law was not a tenable view and when this House has reconsidered a previous decision there is always the possibility, remote though I think it is, that in a further appeal the first decision would be restored. Indeed where a decision on construction has been reconsidered, I would have thought that the possibility of this House reconsidering it again very remote indeed.
   Is this one of those very rate cases in which it would be right to depart from the construction placed on the subsection in Congreve? At one time I thought not and that it should be left to the legislature to remedy the injustice but on further consideration I have come to the conclusion that it is.
   There is no indication in the judgments in the Congreve case or in the speech of Lord Simonds that in the course of that litigation any consideration was given to s 412(8)(a) or to the fact that the construction this House accepted meant that the income of the non-resident was to be deemed the income of as many individuals as had rights giving them power to enjoy any income of the non-resident or as had received any capital sum, however small, coming within sub-s (2). If these matters had been adverted to, it is, I think, inconceivable that Lord Simonds would not have referred to them in his speech. It is these matters which have led me to think that the decision in Congreve was wrong, and if these matters had been brought to the attention of the House in that case it might well be that a different conclusion would then have been reached.
   In my opinion the decision in Congreve v Inland Revenue Comrs should be overruled with the consequence that none of the assessments in the present case should be upheld.
   If, however, a majority of your Lordships take a different view and hold that, despite the injustice that can ensue, that decision should be followed, in my view the assessments made on Mr Baddeley for the years 1963-64, 1964-65 and 1965-66 should in any event be discharged. While the income of the non-resident trustees would be deemed to be income of his wife on her receipt of the £100,000 on 2 May 1966 in that and subsequent financial years, I see nothing in sub-s (2) which gives it retroactive effect. It does not provide that the income of the non-resident in any year before a person receives or is entitled to receive it is to be deemed that person's income. Assessments totalling £449,782 were made on him for those three years. Mr Payne is in the same position as Mr Baddeley as his wife received £100,000 on the same date and in my view the assessments made on him for those years should also be discharged.
   Leading counsel for the taxpayers contended that the capital sums received were not within sub-s (4) associated operations as those sums originated from the accumulations of income derived from accumulations of income made by the trustees. That subsection is in very wide terms and reads as follows:

   'For the purposes of this section, "an associated operation" means, in relation to any transfer, an operation of any kind effected by any person in relation to any of the assets transferred or any assets representing, whether directly or indirectly, any of the assets transferred, or to the income arising for any such assets, or to any assets representing, whether directly or indirectly, the accumulations of income arising from any such assets.'
   This submission was rejected by Walton J and I think rightly for the reasons he gives. I would, however, point out that whether or not the distribution of capital was an996 associated operation, a capital sum which comes within sub-s (2) is one which is 'in any way connected with the transfer or any associated operation ... '
   In my opinion the capital sums in this case were clearly so connected.
   Leading counsel for the taxpayers also contended that the income of the three companies in which the non-resident trustees held all the shares was not to be regarded as the income of the non-resident trustees. The Crown conceded that the income of the Commercial Insurance Corpn Ltd was not to be treated as the income of the trustees as they had purchased all the shares but I see no ground for not treating the income of the two companies, the shares in which were subscribed for by the trustees, as part of their income.
   Leading counsel for the taxpayers did not pursue the point he took in relation to the Hon Mark Vestey before Walton J and on which he failed.
   I now turn, on the basis that the Congreve decision is followed, to the Crown's alternative claim under sub-s (1). Section 412 was amended by s 33 of the Finance Act 1969 to read as follows:

   '(1) Where by virtue or in consequence of any such transfer, either alone or in conjunction with associated operations, such an individual has, within the meaning of this section, power to enjoy ... '
   The effect of this amendment was to make it unnecessary for the Revenue to establish that the individual had acquired any rights. It sufficed, to bring him within the subsection, to establish that he had 'power to enjoy'.
   Leading counsel contended that no rights giving a power to enjoy had been acquired and that there was no power to enjoy. Walton J ([1979] 2 All ER 225 at 236, [1979] Ch 198 at 206, [1978] STC 567 at 577) held, again in my opinion rightly, that 'none of these discretionary beneficiaries had any "right" to anything at all which could possibly bring the subsection into play prior to the Finance Act 1969'.
   I need not repeat the reasons he gave for that conclusion with which I agree. Before the second hearing before him assessments for the year 1968-69 were added to those under consideration at the first hearing by agreement between the parties in order to obtain a decision on the effect of the amendment of s 412.
   'Power to enjoy' is given a very wide meaning by sub-s (5). So far as material that subsection reads as follows:

   'An individual shall, for the purposes of this section, be deemed to have power to enjoy income of a person resident or domiciled out of the United Kingdom if ... (c) the individual receives or is entitled to receive, at any time, any benefit provided or to be provided out of that income or out of moneys which are or will be available for the purpose by reason of the effect or successive effects of the associated operations on that income and on any assets which directly or indirectly represent that income; or (d) the individual has power, by means of the exercise of any power of appointment or power of revocation or otherwise, to obtain for himself, whether with or without the consent of any other person, the beneficial enjoyment of the income, or may, in the event of the exercise of any power vested in any other person, become entitled to the beneficial enjoyment of the income ... '
Subsection (8)(c) provides that 'benefit' includes a payment of any kind.
   I can see no ground for holding that the capital sums received were not provided 'out of [the] income [of the trustees] or out of moneys ... available' for that purpose by reason of the effect or successive effects of the associated operations; nor do I see any ground for holding that when Edmund's manager and Samuel's manager exercised the power vested in them of directing the trustees to make the capital payments, the recipients of the capital sums did not become entitled to the beneficial enjoyment of the income. In my view paras (c) and (d) apply.
997
   So, in my opinion, if the Congreve decision is followed, the assessment for the years 1963-64, 1964-65, 1965-66 and 1966-67 cannot be sustained under sub-s (1) but the assessments for 1968-69 can be sustained under that subsection as amended. It is common ground that an individual cannot be assessed under sub-s (1) and also under sub-s (2) though the assessments made under s 412 may be justified under either subsection.
   My Lords, in this complicated case at least one thing is clear and that is the urgent need for the reconsideration by Parliament of the terms of s 412 as amended (now re-enacted by s 478 of the Income and Corporation Taxes Act 1970). If the conclusion I have reached as to the construction of the section is accepted, then there is indeed a gap to be filled for then the section only applies to the individual who has sought to avoid tax and to his or her spouse and others who may benefit from the tax avoidance will not be penalised even though they participated in the tax avoidance. I need not dilate on the injustice which may be suffered by a number of individuals if the Congreve construction is applied. They would not I think have grounds for complaint if they were only assessed to tax on the sums they received or were entitled to receive or had power to enjoy, though a distinction might be drawn between those who participated in the tax avoidance and those who did not. The former category might continue to be liable to be assessed to tax on the whole income of the non-resident.
   Consideration of the penalty provisions in s 25 of the Income Tax Act 1952 in Inland Revenue Comrs v Hinchy led to the law being changed in the next Finance Act. I hope that in consequence of the light now thrown on s 412, that section may equally speedily be amended. In my opinion it certainly should be.
   For the reasons I have stated, in my view the appeals should be dismissed with costs and the cross-appeals allowed with costs.
LORD SALMON. My Lords, I agree so completely with everything stated in the luminous speech of my noble and learned friend, Lord Wilberforce, that I find it impossible to add anything. I would dismiss the appeals and allow the cross appeals.
LORD EDMUND-DAVIES. My Lords, these appeals and cross-appeals arise from assessments to income tax and surtax made on each of the taxpayers under s 412 of the Income Tax Act 1952, which contained provisions formerly in s 18 of the Finance Act 1936. They were some (but not all) of the potential beneficiaries under a discretionary settlement of 25 March 1942, the nature of which has been helpfully summarised in the speeches of my noble and learned friends, Lord Wilberforce and Viscount Dilhorne. The assessments were made on the basis that s 412 deemed the income of the non-resident trustees of that settlement to be the income of each respondent for all the purposes of the Income Tax Acts. None of the respondents was, either directly or indirectly, a settlor of the settlement. The primary point of substance is whether the Commissioners of Inland Revenue can, as they assert, apply s 412 to a person or persons other than the individual who made the transfer contemplated by the settlement. The point can best be dealt with by asking two questions. (1) Was Congreve v Inland Revenue Comrs correctly decided by this House? (2) Even if it was wrong, should your Lordships nevertheless follow it?
   By way of a preface, reference should first be had to the earlier decision in Lord Howard de Walden v Inland Revenue Comrs, which, like Congreve, turned on s 18 of the Finance Act 1936, but which, unlike Congreve and the instant case, related only to the liability to tax of the actual transferor of assets to foreign companies and did not deal with the998 position of later beneficiaries under the settlement. Upholding Machaghten J's ((1941) 25 Tax Cas 121)finding that such a transferor was liable to be assessed to income tax and surtax, Lord Greene MR said in his extempore judgment ([1942] 1 All ER 287 at 289, [1942] 1 KB 389 at 396-397, 25 Tax Cas 121 at 134):

   'If, as it seems to us, the language of the section clearly does not limit the income of the non-resident, in respect of which the taxpayer is charged, to the actual benefit which he draws from the income of the non-resident-a construction, be it observed, which would largely defeat the expressed purpose of the section-it is illegitimate to force upon that language a strained construction merely because it may otherwise lead to a result which to some minds may appear to be unjust. However ... we are not prepared to say that it is necessarily as unjust as [the taxpayer's counsel] contends. The section is a penal one, and, whatever its consequences may be, they are intended to be an effective deterrent to practices which the legislature considers to be against the public interest. For years a battle of manoeuvre has been waged between the legislature and those who are minded to throw the burden of taxation off their own shoulders on to those of their fellow-subjects ... It scarcely lies in the mouth of the taxpayer who plays with fire to complain of burnt fingers.' (Emphasis mine.)
And, again speaking of the transferor himself, Lord Greene MR added ([1942] 1 All ER 287 at 290, [1942]1 KB 389 at 398, 25 Tax Cas 121 at 134-135): ' ... the father will be taxed on the companies' income because he is the "person against whom the deterrent action of the section is directed."' (Emphasis mine.)
   The actual decision in Lord Howard de Walden Inland Revenue Comrs turned on the amount of the assessments appealed against, which were based on the view that the whole income of the foreign companies were, under s 18 of the 1936 Act, to be deemed to be the transferor's income for the purposes of the Income Tax Acts. Notwithstanding that the transferor himself received and enjoyed far less, the Court of Appeal held that the whole income was to be deemed his, since the companies' income was traceable to the assets he had transferred. The decision has been criticised, notably by Buckley LJ who described it in Lord Chetwode v Inland Revenue Comrs ([1976] 1 All ER 641 at 657, [1976] 1 WLR 310 at 328, [1976] STC 43 at 70) as 'extremely harsh' and expressed difficulty in accepting that the construction of s 18 had received adequate consideration. And in the instant case Walton J regarded it as 'wrong', but added ([1979] 2 All ER 225 at 243-244, [1979] Ch 198 at 215-217, [1978] STC 567 at 584-586):

   'I do not see how I can escape the straitjacket ... Standing Lord Howard de Walden v Inland Revenue Comrs, my own fundamental conception of the rule of law is deeply offended. The only alternative is for the Crown to tax all who could possibly under any circumstances be recipients of any sliver of income on the whole of that income; a suggestion equally as offensive. Being bound by that case I am, unhappily, in no position to right a clearly perceived wrong.'
But, although I confess to entertaining considerable sympathy with those views, we are not presently concerned to determine the correctness of the Lord Howard de Walden decision. Right or wrong, its present importance lies in the fact that it was within the framework of that case that Congreve was considered, both the Court of Appeal ([1947] 1 All ER 168, 30 Tax Cas 163) and the House of Lords citing it with apparent approval. The primary holding in the latter case was that s 18 of the 1936 Act applied if the transfer was procured by the taxpayer, even999 though not actually executed by him. So far, so good. But more important for present purposes was the further holding that s 18 was not directed solely against such a taxpayer, Cohen LJ saying ([1947] 1 All ER 168 at 172, 30 Tax Cas 163 at 196):

   'We do not think the words "by means of" [in the preamble to s 412] connote activity by the individual concerned ... [The words] are fully satisfied if the avoidance of tax is effected through the instrumentality of the transfer by whosoever it is executed.'
   Any doubt as to the ambit of those words was removed in the House of Lords, Lord Simonds saying ([1948] 1 All ER 948 at 952-953, 30 Tax Cas 163 at 204-205):

   'My Lords, on this question I agree at all points with the unanimous judgment of the Court of Appeal which was delivered by COHEN, L.J. The preamble or introductory words of the section which state its purpose do not, in my view, assist the contention, which was developed on its operative words, that the avoidance by an individual of liability to tax must be achieved by means of a transfer of assets effected by that individual. They are, on the contrary, in the widest possible terms, and I do not know what better words could be used if the legislature intended to define its purpose as covering a transfer of assets by A, by means of which B avoided liability to tax ... If there has been such a transfer as is mentioned in the introductory words, and if an individual has by means of such transfer (either alone or in conjunction with associated operations) acquired the rights referred to in the section, then the prescribed consequences follow.'
   Your Lordships were invited to hold that these passages were merely obiter dicta and, as such, need not now be applied. But it is an invitation that, for my part, I find it impossible to accept. On the contrary, they appear to me to contain the true ratio decidendi of both courts. There is accordingly no escape from the problem of whether it can and should now be departed from, and this is particularly so when regard is had to its application by this House in such later cases as Bambridge and Philippi.
   My Lords, the correctness of the general proposition enunciated in Congreve can be tested by applying it to facts which, while markedly different from those which were there being considered, may (as the Crown contends) nevertheless be regarded as falling completely within its ambit. Although Congreve dealt with the tax liability of a single beneficiary of a settlement giving rise to the transfer of assets abroad, the Crown submits it applies with full force to the instant case of multiple beneficiaries, none of whom played any part in the transfer. The astounding consequences of assessing some (but not all) of them in accordance with that submission were condemned in understandably strong language by Walton J, and they have been closely considered in the speeches of my noble and learned friends, Lord Wilberforce and Viscount Dilhorne. So startling and unattractive do I find them that I gladly abstain from covering the same ground. Instead, I content myself with recalling that learned counsel for the Crown informed your Lordships at one stage, 'We accept that the result of applying Congreve to the taxpayers here may be disastrous', while, at another stage, he submitted that a strict application of s 412 would have entitled them to assess a single beneficiary on the basis of the total income of the settlement in the year of apportionment of the capital sums, and this regardless of the amount of benefit actually received by him. The commissioners never went as far as to do that, but one solitary example should serve to illustrate the breathtaking implications of even a modified application of their basic contention. In 10001966-67 Mrs Baddeley, one of the beneficiaries, received a capital sum of £100,000 from Edmund's fund; as a result, her husband was assessed in the following amounts of surtax and income tax:
 
 
 
 
Income tax
 
Surtax
 
 
£
 
£
 
1963-64 (nothing received)  
20,013.71
 
40,075.00
 
1964-65 (nothing received)  
21,100.14
 
43,718.00
 
1965-66 (nothing received)  
22,777.91
 
61,889.85
 
1966-67 (£100,000 received)  
21,416.86
 
41,130.50
 
   
In the result, arising out of the receipt of one capital sum of £100,000, Mr Baddeley suffered a claim of £274,121‡97. And that is not the end of the story, for the Crown contended that, even so, they had exercised a 'dispensing' power in claiming no more, since by strict entitlement they could have assessed the Baddeleys on the basis the whole trust income of some millions of pounds.
   My Lords, such boldness has no connection with Lord Greene MR'sg view that a taxpayer who plays with fire has no right to complain if his fingers get burnt. The truth is that the strict application of Congreve to the facts of the present case leads to such extraordinary conclusions that the commissioners have found themselves compelled to temper the wind to the (comparatively) shorn lamb. This procedure has been attacked as highly questionable, but, invoking the provision in s 5(2) of the Income Tax Act 1952, that they 'may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the [income] tax in the like and as full and ample a manner as they are authorised to do with relation to any other duties under their care and management' the commissioners' claim to exercise dispensing powers and to make 'extra-statutory concessions' in suitable cases. They submit that they have done no more than exercise those powers in the instant case 'by apportioning the estimated "foreign income" for each year ... in the proportions in which the appointees had benefited, in the aggregate, by actually receiving accumulated income'. Indeed, they added that in the present case they have done no more than their predecessors did in Corbett's Executrices v Inland Revenue Comrs and in Bambridge, and that 'sub silentio such apportionments were approved by the court in both cases'.
________________________________________
g    In Lord Howard de Walden v Inland Revenue Comrs [1942] 1 All ER 287 at 289, [1942] 1 KB 389 at 397, 25 Tax Cas 121 at 134
żżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżżż
   My Lords, it is surely high time to consider the basis of this claim by the executive to make such extra-statutory concessions. It is, of course, well known that published lists of concessions have existed for many years. The first was in 1944, though in practice they have existed in one form or another for a much longer period. But, beneficent and relatively harmless though such concessions may have been in most cases, it is difficult to reconcile them with the view expressed by Lord Loreburn LC in Drummond v Collins ([1915] AC 1011 at 1018, 6 Tax Cas 525 at 539) that-

   'Lord Cairns long ago said that "if the person sought to be taxed comes within the letter of the law, he must be taxed". And though there have been cases in which the letter of the law has been disregarded in view of other statutory language, I think it can be only in case of necessity. It must be a necessary interpretation.'
   It has recently been pointed out in an articleh to which I am considerably indebted that Sir Stafford Cripps said in 1947 that they had come into existence 'without any particular legal authority under any Act of Parliament, but by the Inland Revenue under my1001 authority'i. And, despite the reliance sometimes placed on the Income and Corporation Taxes Act 1970, s 115(2), the Taxes Management Act 1970, s 1, and the Inland Revenue Regulation Act 1890, s 1, the fact is that there exists no statutory support for the assessment procedure adopted in the present case. And, even were there some statutory or other basis for the published list of concessions, Walton J ([1979] 2 All ER 225 at 234, [1979] Ch 198 at 204, [1979] STC 567 at 575-576) made the important point that-
________________________________________
h    'Extra Statutory Concessions' by David W Williams [1979] British Tax Review 137 at 140
i    446 HC Official Reprint (5th series) col 2266
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   'they do represent a published code, which applies indifferently to all those who fall, or who can bring themselves within, its scope. What is claimed by the Crown now is something radically different. There is no published code, and no necessity for the treatment of all those who are in consimili casu alike. In one case the Crown can remit one-third, in another one-half, and in yet another case the whole, of the tax properly payable, at its own sweet will and pleasure. If this is indeed so, we are back to the days of the Star Chamber. Again, I want to make it crystal clear that nobody is suggesting that the Crown has, or indeed ever would, so utilise the powers which it claims to bring about unjust results ... The root of the evil is that it claims it has, in fact, the right to do so.' (Emphasis mine.)
   Judicial comment regarding extra-statutory concessions has been mixed. Speaking 'in no spirit of criticism' Donovan LJ observed in FS Securities v Inland Revenue Comrs ([1963] 3 All ER 229 at 234, [1963] 1 WLR 1223 at 1233, 41 Tax Cas 666 at 683) that 'This is a difficult code to administer, and practical considerations no doubt justify at times some departure from strict law for the common convenience of the revenue and the taxpayer'. Even Lord Upjohn spoke with two voices. In 1966 he said in Bates v Inland Revenue Comrs ([1967] 1 All ER 84 at 96, [1968] AC 483 at 516, 44 Tax Cas 225 at 268):

   '... the Commissioners of Inland Revenue realising the monstrous result of giving effect to the true construction of the section, have in fact worked out what they consider to be an equitable way of operating it which seems to them to result in a fair system of taxation. I am quite unable to understand on what principle they can properly do so ... '
Yet in the following year he said in Inland Revenue Comrs v Korner ([1969] 1 All ER 679 at 686, [1969] 1 WLR 554 at 558, 45 Tax Cas 287 at 297) of an unpublished concession: 'This practice is very old, works great justice between the Crown and the subject, and I trust will never be disturbed.' Among the critics was Lord Radcliffe, who 'never understood the procedure of extra-statutory concessions in the case of a body to whom at least the door of Parliament is opened every year for adjustment of the tax code' (Inland Revenue Comrs v Frere ([1964] 3 All ER 796 at 806, [1965] AC 402 at 429, 42 Tax Cas 125 at 154)), and in another another case Lord Wilberforce, in rejecting a concession, observed that 'administrative moderation ... is ... no real substitute for legislative clarity and precision' (Bates v Inland Revenue Comrs ([1967] 1 All ER 84 at 100, [1968] AC 483 at 521, 44 Tax Cas 225 at 272)). And, my Lords, it should above all be remembered that none other than the Bill of Rights declaredj:
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j    Will & Mar sess 2 c 2 (1688)
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   'That the pretended power of suspending of laws or the execution of laws by regall authority without consent of Parlyament is illegall. That the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath been assumed and exercised of late is illegall.'
   Wholly in line with such authoritative declarations were the observations of Scott LJ in Absalom v Talbot ([1943] 1 All ER 589 at 598, 26 Tax Cas 166 at 181) that:
1002

   'No judicial countenance can or ought to be given in matters of taxation to any system of extra-legal concessions. Amongst other reasons, it exposes revenue officials to temptation, which is wrong, even in the case of a service like the Inland Revenue, characterised by a wonderfully high sense of honour. The fact that such extra-legal concessions have to be made to avoid unjust hardships is conclusive that there is something wrong with the legislation.' (Emphasis mine.)
   But the alternative explanation, my Lords, may in the instant case be that the fault lies not in s 412 of the Income Tax Acts 1952, but in the way in which it (like its forerunner, s 18 of the Finance Act 1936) has been interpreted. In my judgment, the words 'such an individual' appearing in sub-ss (1) and (2) hark back to the opening words of the preamble, namely to individuals whose purpose is the avoidance of liability to tax, and do not refer simply to any individual 'ordinarily resident in the United Kingdom'. Indeed, as the noble and learned Lord, Viscount Dilhorne, has observed, if the latter, restricted interpretation is to be adopted it is not easy to see why sub-s (8) of s 412 provided that 'For the purposes of this section-(a) a reference to an individual shall be deemed to include the wife or husband of the individual ... ' As was submitted in the taxpayers' case: 'Section 412(8)(a) has a positive and important function if the [taxpayers] ... are correct; but otherwise it is superfluous.' And, indeed, Walton J ([1977] 3 All ER 1073 at 1087, [1979] Ch 177 at 183, [1977] STC 414 at 428) had himself expressed the view that 'the provisions of sub-s (8)(a) ... do not otherwise make good sense ... ' It follows that in my judgment the extension of s 412 by the judgment of this House in Congreve to beneficiaries wholly disconnected with the original transferor or transferors was erroneous.
   Even so, my Lords, ought we now to depart from it? It has stood for 30 years and, as previously observed, it has been followed in this House. But if it be permitted to stand, we have the deplorable situation that the Commissioners of Inland Revenue can capriciously select which of several beneficiaries they are going to tax, and may equally capriciously decide the basis on which they are going to be assessed. And it is said that all this is perfectly lawful even though the afflicted taxpayer has no means of challenging his assessment. Viscount Dilhorne has analysed in some detail the circumstances in which this House, by a majority, refused in Jones v Secretary of State for Social Services to overrule a five-year-old decision, Lord Reid saying ([1972] 1 All ER 145 at 149, [1972] AC 944 at 966):

   '... I am firmly of opinion that Dowling's case ought not to be reconsidered. No broad issue of justice or public policy is involved nor is any question of legal principle. The issue is simply the proper construction of complicated provisions in a statute. There must be a large number of decisions of this House of this character.'
   I have also in mind the earlier observation of Lord Reid that 'it should only be in rare cases that we should reconsider questions of construction of statutes or other documents', and, like others of your Lordships, I was minded at one time to conclude that, despite the strong adverse view I had formed about the decision in Congreve, this House ought not now to overrule it. But there can be no absolute veto against overruling decisions turning on the construction of statutes or other documents, or, indeed, any other type of decision. We can now see the startling and unacceptable consequences of Congreve when applied to circumstances never contemplated when that case was being considered. So remarkable are they, and so disturbing are the unconstitutional devices now resorted to by the Commissioners of Inland Revenue, that I am forced to the1003 conclusion that the interests, not only of the taxpayers but of the public at large alike, demand that the claim of the executive in this matter be challenged and rejected. The Crown takes its stand on Congreve and claims that while that decision remains the devices the commissioners have resorted to may continue. My Lords, they must not, and I judge that in these circumstances the Crown itself leaves us with no alternative but to overrule Congreve. I accordingly concur in dismissing the appeals and allowing the cross-appeals.
LORD KEITH OF KINKEL. My Lords, I agree with the views expressed in the speeches of my noble and learned friends, Lord Wilberforce and Viscount Dilhorne, which I have had the opportunity of considering in draft.
   The important issues in these appeals are whether the principal ground for the decision of this House in Congreve v Inland Revenue Comrs was erroneous, and, if so, whether the decision, in so far as it proceeded on that ground, should now be departed from.
   The ground in question consisted in a clear ruling on the proper construction of s 412 of the Income Tax Act 1952, and was thus stated by Lord Simonds ([1948] 1 All ER 948 at 952, 30 Tax Cas 163 at 204):

   'The preamble or introductory words of the section which state its purpose do not, in my view, assist the contention, which was developed on its operative words, that the avoidance by an individual of liability to tax must be achieved by means of a transfer of assets effected by that individual. They are, on the contrary, in the widest possible terms, and I do not know what better words could be used if the legislature intended to define its purpose as covering a transfer of assets by A, by means of which B avoided liability to tax.'
   In the result, transfers of assets by the taxpayer's father were held to involve her in liability under the section. The House also accepted an argument that in any event certain transfers had been organised or brought about by the taxpayer herself, but this ground, though capable of supporting the correctness of the actual decision on liability to tax, was plainly a subsidiary one.
   I have arrived at the firm opinion that the principal ground of decision in Congreve was indeed erroneous. I consider that the natural and intended meaning of the words 'such an individual' in s 412(1) is that they indicate not merely an individual ordinarily resident in the United Kingdom, but an individual so resident who has sought to avoid liability to income tax by means of such transfers of assets as are mentioned in the preamble. Further, this meaning gives a sensible content, which would otherwise be lacking, to the provision in sub-s (8)(a) that reference to an individual shall be deemed to include the husband or wife of the individual. Finally, the consequences which follow from attributing the wider meaning to the words, when that meaning is applied to a numerous class of beneficiaries under a discretionary trust, are so dramatically unjust, as the facts of the present case illustrate, that I cannot think it to have been intended by Parliament. These consequences have been examined in depth in the speeches of my noble and learned friends, and need no repetition.
   So it is necessary to consider whether this is one of these rare cases where it would be proper for this House, acting under the practice direction of 1966 (Note [1966] 3 All ER 77, [1966] 1 WLR 1234), to depart from one of its own previous decisions. In my opinion it is. The decision was one on a matter of statutory construction. It turned on a view which was a tenable one, regarded from the purely linguistic angle, although no attempt was made in the speech of Lord Simonds to account for the presence in s 412 of sub-s (8)(a), which may not have been drawn to their1004 Lordships' attention. But the implications of that view, as now revealed in the instant appeals, were not present to the minds of their Lordships. A consideration of these implications must, in my opinion, lead to the conclusion that the view taken is not tenable, and would not have been so regarded at the time had their Lordships had the opportunity of such consideration. For the reasons fully developed in the speeches of my noble and learned friends, these implications are of the greatest importance from the point of view of constitutional propriety and the proper administration of revenue law. In my opinion they involve broad issues of justice and public policy, such as were mentioned by Lord Reid in Jones v Secretary of State for Social Services ([1972] 1 All ER 145 at 149, [1972] AC 944 at 966), the character of which makes it not only proper but necessary to depart from the earlier decision.
   Accordingly, I too would dismiss the appeals and allow the cross-appeals.
Appeals dismissed. Cross-appeals allowed.
Solicitors: Speechly, Bircham & Co (for the taxpayers). Solicitor of Inland Revenue.
Rengan Krishnan Esq Barrister.1005APPENDIX TO LORD WILBERFORCE'S OPINION AGREED FIGURES FOR INCOME TAX AND SURTAX 1963-64 TO 1966-67
 
 
1963-64
 
 
 
 
Income tax
 
 
Surtax
 
 
 
 
Share of gross amount
 
 
Assessed
 
 
Share of gross amount
 
 
Assessed
 
 
 
 
£
 
 
£
 
 
£
 
 
£
 
 
BENEFICIARIES OFEDMUND'S FUND  
 
 
 
 
 
 
 
 
 
Mr Ronald Arthur Vestey  
 
193,623
 
 
193,623
 
 
307,147
 
 
307,147
 
 
Mr Edmund Hoyle Vestey  
 
488,037
 
 
488,037
 
 
774,180
 
 
774,180
 
 
Mrs Jane McLean Baddeley assessed on her husband Mr J R Baddeley  
 
53,047
 
 
53,047
 
 
84,150
 
 
84,150
 
 
Mrs Margaret Payne assessed on her husband Mr J G Payne  
 
53,047
 
 
53,047
 
 
84,150
 
 
84,150
 
 
Total number of potential beneficiaries of Edmund's fund alive at any time during year  
 
 
 
(16)
 
 
 
 
BENEFICIARIES OF SAMUEL'S FUND  
 
 
 
 
 
 
 
 
 
Samuel, 3rd Lord Vestey  
 
489,628
 
 
 
 
776,704
 
 
 
 
Reduced because of non-residence for part year  
 
 
 
461,535
 
 
 
 
748,611
 
 
Eliminated because of non-residence for whole year  
 
 
 
 
 
 
 
 
 
Hon Mark William Vestey  
 
106,095
 
 
106,095
 
 
168,300
 
 
168,300
 
 
Reduced because on non-residence for part year  
 
 
 
 
 
 
 
 
 
Eliminated because of non-residence for whole year  
 
 
 
 
 
 
 
 
 
Total number of potential beneficiaries of Samuel's fund alive at any time during year  
 
 
 
(13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL GROSS AMOUNT  
 
1,383,477
 
 
1,355,384
 
 
2,194,631
 
 
2,166,538
 
 
 
 
 
 
1964-65
 
 
 
 
Income tax
 
 
 
 
Share of gross amount
 
 
Assessed
 
 
 
 
£
 
 
£
 
 
BENEFICIARIES OFEDMUND'S FUND  
 
 
 
 
 
Mr Ronald Arthur Vestey  
 
203,894
 
 
203,894
 
 
Mr Edmund Hoyle Vestey  
 
513,925
 
 
513,925
 
 
Mrs Jane McLean Baddeley assessed on her husband Mr J R Baddeley  
 
55,861
 
 
55,861
 
 
Mrs Margaret Payne assessed on her husband Mr J G Payne  
 
55,861
 
 
55,861
 
 
Total number of potential beneficiaries of Edmund's fund alive at any time during year  
 
 
 
 
 
BENEFICIARIES OF SAMUEL'S FUND  
 
 
 
 
 
Samuel, 3rd Lord Vestey  
 
515,601
 
 
 
 
Reduced because of non-residence for part year  
 
 
 
 
 
Eliminated because of non-residence for whole year  
 
 
 
-
 
 
Hon Mark William Vestey  
 
111,723
 
 
111,723
 
 
Reduced because on non-residence for part year  
 
 
 
 
 
1006
Eliminated because of non-residence for whole year  
 
 
 
 
 
Total number of potential beneficiaries of Samuel's fund alive at any time during year  
 
 
 
 
 
 
 
 
 
 
 
TOTAL GROSS AMOUNT  
 
1,456,865
 
 
941,264
 
 
 
 
 
 
 
 
1965-66
 
 
 
 
Surtax
 
 
Income tax
 
 
 
 
Share of gross amount
 
 
Assessed
 
 
Share of gross amount
 
 
Assesse
 
 
 
 
£
 
 
£
 
 
£
 
 
£
 
 
BENEFICIARIES OFEDMUND'S FUND  
 
 
 
 
 
 
 
 
 
Mr Ronald Arthur Vestey  
 
319,143
 
 
319,143
 
 
207,176
 
 
207,176
 
 
Mr Edmund Hoyle Vestey  
 
804,415
 
 
804,415
 
 
522,197
 
 
522,197
 
 
Mrs Jane McLean Baddeley assessed on her husband Mr J R Baddeley  
 
 
 
 
 
 
 
 
 
Mrs Margaret Payne assessed on her husband Mr J G Payne  
 
87,436
 
 
87,436
 
 
56,761
 
 
56,761
 
 
Total number of potential beneficiaries of Edmund's fund alive at any time during year  
 
 
 
 
 
 
 
 
 
BENEFICIARIES OF SAMUEL'S FUND  
 
87,436
 
 
87,436
 
 
56,761
 
 
56,761
 
 
Samuel, 3rd Lord Vestey  
 
 
 
 
 
 
 
 
 
Reduced because of non-residence for part year  
 
(18)
 
 
 
 
 
 
(18)
 
 
Eliminated because of non-residence for whole year  
 
 
 
 
 
 
 
 
 
Hon Mark William Vestey  
 
807,038
 
 
 
 
523,900
 
 
 
 
Reduced because on non-residence for part year  
 
 
 
 
 
 
 
 
 
Eliminated because of non-residence for whole year  
 
 
 
-
 
 
 
 
-
 
 
Total number of potential beneficiaries of Samuel's fund alive at any time during year  
 
 
 
 
 
 
 
 
 
 
 
174,873
 
 
174,873
 
 
113,521
 
 
 
 
TOTAL GROSS AMOUNT  
 
 
 
 
 
 
 
77,754
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(14)
 
 
 
 
 
 
(14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,280,341
 
 
1,473,303
 
 
1,480,316
 
 
920,649
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1965-66
 
 
1966-67
 
 
 
 
surtax
 
 
 
 
Income tax
 
 
 
 
surtax
 
 
 
 
 
 
Share of gross amount
 
 
Assessed
 
 
Share of gross amount
 
 
Assessed
 
 
Share of gross amount
 
 
Assessed
 
 
 
 
£
 
 
£
 
 
£
 
 
£
 
 
£
 
 
£
 
 
BENEFICIARIES OFEDMUND'S FUND  
 
 
 
 
 
 
 
 
 
 
 
 
 
Mr Ronald Arthur Vestey  
 
410,721
 
 
410,721
 
 
196,416
 
 
196,416
 
 
300,252
 
 
300,252
 
 
Mr Edmund Hoyle Vestey  
 
1,035,243
 
 
1,035,243
 
 
495,077
 
 
495,077
 
 
756,801
 
 
756,801
 
 
Mrs Jane McLean Baddeley assessed on her husband Mr J R Baddeley  
 
 
 
 
 
 
 
 
 
 
 
 
 
Mrs Margaret Payne assessed on her husband Mr J G Payne  
 
112,527
 
 
112,527
 
 
53,813
 
 
53,813
 
 
82,261
 
 
82,261
 
 
Total number of potential beneficiaries of Edmund's fund alive at any time during year  
 
 
 
 
 
 
 
 
 
 
 
 
 
BENEFICIARIES OF SAMUEL'S FUND  
 
112,527
 
 
112,527
 
 
53,813
 
 
53,813
 
 
82,261
 
 
82,261
 
 
Samuel, 3rd Lord Vestey  
 
 
 
 
 
 
 
 
 
 
 
 
 
Reduced because of non-residence for part year  
 
 
 
 
 
 
 
(18)
 
 
 
 
Eliminated because of non-residence for whole year  
 
 
 
 
 
 
 
 
 
 
 
 
 
Hon Mark William Vestey  
 
1,038,619
 
 
 
 
496,691
 
 
 
 
759,269
 
 
 
 
Reduced because on non-residence for part year  
 
 
 
 
 
 
 
360,611
 
 
 
 
623,189
 
 
Eliminated because of non-residence for whole year  
 
 
 
-
 
 
 
 
 
 
 
 
 
 
Total number of potential beneficiaries of Samuel's fund alive at any time during year  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225,053
 
 
 
 
107,625
 
 
 
 
164,522
 
 
 
 
TOTAL GROSS AMOUNT  
 
 
 
189,286
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,934,690
 
 
1,860,304
 
 
1,403,435
 
 
1,159,730
 
 
2,145,366
 
 
1,844,764
 
 
1007