[HOUSE OF LORDS]

and

INLAND REVENUE COMMISSIONERS

and

INLAND REVENUE COMMISSIONERS

[Consolidated Appeals]

Revenue - Tax avoidance - Annuity scheme - Scheme for sale of annuities to registered charities - Claims for deduction from total income for any "annuity or other annual payment" - Application of anti-avoidance principles to arrangements - Whether scheme fiscal nullity - Whether payments deductible for tax purposes - Income and Corporation Taxes Act 1970 (c. 10), s. 52(1)

The two taxpayers were among a number of persons who during the 1970s participated in versions of a tax avoidance scheme aimed at surtax payers which provided for a registered charity to purchase annuities from those wishing to participate in the scheme. By virtue of section 52(1) of the Income and Corporation Taxes Act 1970,¹ the charity was thought to be able to recover the tax deducted when the taxpayers paid the annuity to it and the taxpayers would be able to deduct the amount of the annuity from their income for tax purposes. To provide the charity with sufficient funds to make the capital payments to the taxpayers and to give it security against possible failure by a taxpayer to pay a due instalment, financing arrangements were made: thereby the sum received from the charity was used to purchase promissory notes that were deposited with the charity and the annual payments due from the taxpayer would be made therefrom. In 1979 the House of Lords held that such payments made by a taxpayer under a similar annuity scheme were valid "annual payments" within the meaning of section 52(1). In consequence of a later decision of

1 Income and Corporation Taxes Act 1970, s. 52(1): "Where any annuity or other annual payment charged with tax under Case III of Schedule D, not being interest, is payable wholly out of profits or gains brought into charge to income tax - (a) no assessment to income tax (other than surtax) shall be made on the person entitled to the annuity or other annual payment, and (b) the whole of the profits or gains shall be assessed and charged with income tax on the person liable to the annuity or other annual payment, without distinguishing the annuity or other annual payment, and (c) the person liable to make the payment, whether out of the profits or gains charged with income tax or out of any annual payment liable to deduction, or from which a deduction has been made, shall be entitled on making the payment to deduct and retain out of it a sum representing the amount of income tax thereon at the standard rate for the year in which the amount payable becomes due, and (d) the person to whom the payment is made shall allow the deduction on receipt of the residue of the payment, and the person making the deduction shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had been actually paid."

the House of Lords laying down principles rendering self-cancelling tax avoidance schemes fiscally ineffective, the revenue resisted claims made by the two taxpayers for tax deductions for the annuity payments made to certain charities for the years 1970-71 to 1976-77. Special commissioners, hearing appeals by the taxpayers against the consequential assessments to income tax and surtax raised on them, upheld the Crown's case that the arrangements they had entered into were a fiscal nullity, with the result that neither of the taxpayers was entitled when computing his total income for tax purposes to deduct the payments described as annuities. The commissioners' decisions were upheld by the judge, but the Court of Appeal, allowing the taxpayers' appeals, held that notwithstanding the principles nullifying the effect of self-cancelling tax avoidance schemes, the earlier decision of the House holding that a similar scheme fell within section 52(1) had not been overruled and was indistinguishable on the facts from the transactions by the taxpayers.

On appeal by the Crown: -

Held, allowing the appeals, that the annuity schemes entered into by the taxpayers were comprised in each case of a pre-ordained series of self-cancelling transactions designed to manufacture a claim by the taxpayers for reductions in their taxable incomes, and as such fell within the ambit of the principles laid down by the House whereby such schemes were rendered fiscally ineffective; that the earlier conflicting decision of the House on the legality of a similar scheme, having been made without consideration of the effect of self-cancelling tax avoidance schemes, was not to be followed; and that, accordingly, the payments made by the taxpayers could not be deducted from their total taxable incomes as "an annuity or other annual payment" within the meaning of section 52(1) of the Act of 1970 (post, pp. 268H,270B-D, E-F, 273B-F, 274B-C).

W. T. Ramsay Ltd. v. Inland Revenue Commissioners [1982] A.C. 300, H.L.(E.) applied.

Inland Revenue Commissioners v. Plummer [1980] A.C. 896, H.L.(E.) not followed.

Decision of Court of Appeal [1991] 1 W.L.R. 930 reversed.

The following cases are referred to in their Lordships' opinions:

Eilbeck v. Rawling [1980] 2 All E.R. 12, C.A.; sub nom. Ramsay (W. T.) Ltd. v. Inland Revenue Commissioners [1982] A.C. 300; [1981] 2 W.L.R. 449; [1981] 1 All E.R. 865, H.L.(E.)

Ensign Tankers (Leasing) Ltd. v. Stokes [1992] 1 A.C. 655; [1992] 2 W.L.R. 469; [1992] 2 All E.R. 275, H.L.(E.)

Furniss v. Dawson [1984] A.C. 474; [1984] 2 W.L.R. 226; [1984] 1 All E.R. 530, H.L.(E.)

Inland Revenue Commissioners v. Burmah Oil Co. Ltd. (1981) 54 T.C. 200, H.L.(Sc.)

Inland Revenue Commissioners v. Plummer [1980] A.C. 896; [1979] 3 W.L.R. 689; [1979] 3 All E.R. 775, H.L.(E.)

Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234; [1966] 3 All E.R. 77, H.L.(E.)

Ramsay (W. T.) Ltd. v. Inland Revenue Commissioners [1979] 1 W.L.R. 974; [1979] 3 All E.R. 213, C.A.; [1982] A.C. 300; [1981] 2 W.L.R. 449; [1981] 1 All E.R. 865, H.L.(E.)

The following additional cases were cited in argument:

Arnold v. National Westminster Bank Plc. [1991] 2 A.C. 93; [1991] 2 W.L.R. 1177; [1991] 3 All E.R. 41, H.L.(E.)

Ashmore v. British Coal Corporation [1990] 2 Q.B. 338; [1990] 2 W.L.R. 1437; [1990] 2 All E.R. 981, C.A.

Craven v. White (Stephen) [1989] A.C. 398; [1988] 3 W.L.R. 423; [1988] 3 All E.R. 495, H.L.(E.)

Customs and Excise Commissioners v. Faith Construction Ltd. [1990] 1 Q.B. 905; [1989] 3 W.L.R. 678; [1989] 2 All E.R. 938, C.A.

Fitzleet Estates Ltd. v. Cherry [1977] 1 W.L.R. 1345; [1977] 3 All E.R. 996, H.L.(E.)

Food Corporation of India v. Antclizo Shipping Corporation [1988] 1 W.L.R. 603; [1988] 2 All E.R. 513, H.L.(E.)

Geelong Harbor Trust Commissioners v. Gibbs Bright & Co. [1974] A.C. 810; [1974] 2 W.L.R. 507, P.C.

Hoystead v. Commissioner of Taxation [1926] A.C. 155, P.C.

Inland Revenue Commissioners v. Church Commissioners for England [1977] A.C. 329; [1976] 3 W.L.R. 214; [1976] 2 All E.R. 1037, H.L.(E.)

Inland Revenue Commissioners v. Frere [1965] A.C. 402; [1964] 3 W.L.R. 1193; [1964] 3 All E.R. 796, H.L.(E.)

London Street Tramways Co. Ltd. v. London County Council [1898] A.C. 375, H.L.(E.)

McIlkenny v. Chief Constable of the West Midlands [1980] Q.B. 283; [1980] 2 W.L.R. 689; [1980] 2 All E.R. 227, C.A.

Miliangos v. George Frank (Textiles) Ltd. [1976] A.C. 443; [1975] 3 W.L.R. 758; [1975] 3 All E.R. 801, H.L.(E.)

Rank Xerox Ltd. v. Lane [1979] Ch. 113; [1978] 3 W.L.R. 643; [1978] 2 All E.R. 1124, C.A.

Reg. v. Knuller (Publishing, Printing and Promotions) Ltd. [1973] A.C. 435; [1972] 3 W.L.R. 143; [1972] 2 All E.R. 898, H.L.(E.)

Reg. v. National Insurance Commissioners, Ex parte Hudson [1972] A.C. 944; [1972] 2 W.L.R. 210; [1972] 1 All E.R. 145, H.L.(E.)

Rhokana Corporation Ltd. v. Inland Revenue Commissioners [1938] A.C. 380; [1938] 2 All E.R. 51, H.L.(E.)

Sothern-Smith v. Clancy [1941] 1 K.B. 276; [1941] 1 All E.R. 111, C.A.

Appeals from the Court of Appeal.

These were appeals, by leave of the Court of Appeal, by the Inland Revenue Commissioners and Mr. Alan Michael Edwards, Inspector of Taxes, against the order of the Court of Appeal (Balcombe and McCowan L.JJ. and Sir Christopher Slade) [1991] 1 W.L.R. 930 allowing appeals by the taxpayers, Mr. Oliver Christopher David Moodie and Mr. Richard Eric Sotnick, from the order of Hoffmann J. [1990] 1 W.L.R. 1084 upholding orders of special commissioners dismissing appeals by the taxpayers against various assessments to income tax and to surtax for the years 1970-71 to 1976-77.

The facts are set out in the opinion of Lord Templeman.

Alan Moses Q.C., Launcelot Henderson and Peter Cranfield for the Crown.

Michael Burton Q.C., Andrew Thornhill Q.C. and Kevin Prosser for the taxpayers.

Their Lordships took time for consideration.

11 February. Lord Keith of Kinkel. My Lords, for the reasons given in the speech to be delivered by my noble and learned friend, Lord Templeman, which I have had the opportunity of reading in draft and with which I agree, I would allow these appeals.

I would add only that, having been one of the majority in Inland Revenue Commissioners v. Plummer [1980] A.C. 896, I feel no doubt that upon the issues which were actually argued before the House, that decision was correct. On the other hand, I have equally no doubt that if the argument which was successful in W. T. Ramsay Ltd. v. Inland Revenue Commissioners [1982] A.C. 300 had been presented by the revenue in Plummer's case my conclusion would have been against the taxpayer.

Lord Templeman. My Lords, income tax is a tax on wealth so that the higher the income of the taxpayer, the greater the amount of income tax which he must pay. Conversely, if a taxpayer reduces his income, he reduces his income tax. In 1971 there were in circulation a number of tax avoidance schemes which were designed to reduce the taxable income of an individual taxpayer without reducing his actual income. The Cardale Capital Income Plan mark I was designed to enable a taxpayer to enjoy part of his actual income tax free by exploiting the fiscal treatment of annuities.

By the Income and Corporation Taxes Act 1970 an annuity payable for at least four years and fulfilling certain other conditions ceases to be the income of the payer and becomes the income of the annuitant. By sections 108 and 109 of the Act of 1970 income tax is charged on the annuity and by section 52 income tax at the standard rate is deductible by the payer and retained by him if he pays the annuity out of his income. By sections 3 and 528, the payer may deduct from his total income for income tax purposes the gross amount of the annuity. Thus the gross amount of the annuity is paid out of the actual income of the payer reducing his actual income and reducing his taxable income by the like amount. The annuity becomes the actual and taxable income of the annuitant. Tax at the standard rate is deducted by the payer of the annuity. If the payer certifies that he has paid the annuity out of his actual income and if the annuitant's total income does not render the annuitant liable to income tax at the standard rate then the annuitant can claim from the revenue the amount of tax which has been deducted from the annuity so far as that deduction exceeds the amount of tax for which the annuitant is liable. But the taxable incomes of payer and annuitant are only altered if an annuity is paid and received.

In March 1971 the taxpayer Mr. Moodie paid a fee of £3,693 for the implementation of the Cardale Capital Income Plan mark I. The following steps were taken on 8 March 1971: (1) The bankers, Slater Walker Ltd. ("S.W.") advanced £59,400 to Home and Overseas Voluntary Aid Services Ltd. ("H.O.V.A.S."), a charitable trust company formed for the purposes of the plan. (2) H.O.V.A.S. paid £59,400 to Mr. Moodie in consideration of his covenanting to pay H.O.V.A.S. for five years, or, if shorter, the remainder of his life an annuity at such a rate as should equal £12,000 after deduction of tax at the standard rate. The first payment was to be made on 29 March 1971 and subsequent payment on each 29 March. (3) Mr. Moodie paid £59,400 to Old Change Court (Investments) Ltd. ("O.C.C.") a company comprised in the S.W. group of companies in consideration for 10 promissory notes for £60,000. The notes were deposited by Mr. Moodie with H.O.V.A.S. as security for the payment of the annuity of £12,000 pursuant to step (2). (4) O.C.C. advanced £59,400 to Baldrene Ltd., another S.W. company.

(5) Baldrene advanced £59,400 to H.O.V.A.S. (6) H.O.V.A.S. paid £59,400 to S.W. in discharge of the advance made under step (1).

On 29 March 1971 and the four succeeding anniversaries of that date the following steps were taken pursuant to the plan: (7) O.C.C. paid £12,000 to Mr. Moodie in redemption of two of the promissory notes in discharge of its obligations under step (3). (8) Mr. Moodie paid £12,000 to H.O.V.A.S. to discharge his agreement to pay an annuity under step (2). (9) H.O.V.A.S. paid Baldrene £12,000 in part discharge of the advance under step (5). (10) Baldrene paid O.C.C. £12,000 in part discharge of the advance under step 4.

With the benefit of the hindsight afforded by the speeches of this House in W. T. Ramsay Ltd. v. Inland Revenue Commissioners [1982] A.C. 300 it is now plain that Mr. Moodie did not pay an annuity within the meaning of the taxing statute because the steps taken under the plan were self-cancelling. The payments and receipts were recorded as book entries but it would have made no difference if payment had been made by cash or cheque. The plan provided that all ten steps should be taken and that no one should be financially better off or worse off. The Cardale Capital Income Plan was a tax avoidance scheme which had no object or effect save the manufacture for Mr. Moodie of claims that he had reduced his income by sums which amounted in the aggregate to £99,460. He had not reduced his actual income and had not been put to any capital expense save the cost of the scheme which amounted to £3,693. In due course Mr. Moodie's claims were disallowed by the Inspector of Taxes, the special commissioners and Hoffmann J. [1990] 1 W.L.R. 1084 but were allowed by the Court of Appeal (Balcombe and McCowan L.JJ. and Sir Christopher Slade) [1991] 1 W.L.R. 930. The Crown now appeals.

The taxpayer Mr. Sotnick paid a fee for the Cardale Capital Income Plan mark II. That plan incorporated variations from the mark I plan but the results were similar. The mark II plan was a tax avoidance scheme which manufactured claims by Mr. Sotnick that he had reduced his taxable income by sums which in the event amounted in the aggregate to £69,576. These claims were also allowed by the Court of Appeal [1991] 1 W.L.R. 930 and the Crown now appeals.

In 1971 Mr. Plummer took advantage of the Cardale Capital Income Plan mark I. In his case there were manufactured claims by Mr. Plummer that he had reduced his taxable income by some £20,000 and those claims were allowed by this House in Inland Revenue Commissioners v. Plummer [1980] A.C. 896. In the instant cases the Court of Appeal allowed the claims of Mr. Moodie and Mr. Sotnick on the ground that the court was bound by the result in Plummer's case. It is quite clear that the facts in Plummer's case were almost exactly the same as and cannot be distinguished from the facts in the case of Mr. Moodie or the facts in the case of Mr. Sotnick. On behalf of Mr. Moodie and Mr. Sotnick it is submitted that the House is bound by the result of Plummer's case to allow the claims of Mr. Moodie and Mr. Sotnick.

Plummer's case came before the House in 1979. The annuity was £851.06 and the capital sum was £2,500. The Crown made four submissions, each of which, if accepted, would defeat the claim of Mr. Plummer. (1) That a payment made under step (8) was the payment of an annuity but that the annuity was not paid out of income but out of the capital paid under step (2). (2) That a payment made under step (8) was paid by means of the promissory notes obtained under step (3) and

was not paid out of Plummer's income. (3) That the consideration for the annuity namely the sum paid by H.O.V.A.S. pursuant to step (2) was not "valuable and sufficient consideration" and the annuity fell to be disregarded under section 434 of the Income and Corporation Taxes Act 1970. (4) That the steps constituted a settlement within section 457 of the Act of 1970, that Mr. Plummer was the settlor and that the annuity payments remained part of his total income for income tax purposes by virtue of that section.

The four submissions made on behalf of the Crown were rejected by this House. On the assumption, accepted by all parties, that payments were made in implementation of each of the planned 10 steps which constituted the scheme, this House decided that step (8) was the payment of an annuity out of income since the taxpayer's actual income exceeded the gross amount of the annuity. The payments of the annuity were not made out of the capital constituted by the promissory notes. The consideration for the annuity was good and sufficient. There was no element of bounty so there was no settlement. On the assumption that Mr. Plummer paid an annuity, Plummer's case was rightly decided for the right reasons.

In the light of the submissions made by the Crown and the presentation of the facts in Plummer's case the failure of the Crown against Mr. Plummer was inevitable.

The argument that a self-cancelling tax avoidance scheme was effective to reduce tax was ridiculed in the Court of Appeal in W. T. Ramsay Ltd. v. Inland Revenue Commissioners [1979] 1 W.L.R. 974 and rejected in Eilbeck v. Rawling [1980] 2 All E.R. 12, 21. When these two cases came before the House of Lords in January 1981, the Crown "mounted a fundamental attack upon the whole of the scheme acquired and used by the [taxpayer in the Ramsay appeal]. It contended that it should simply be disregarded as artificial and fiscally ineffective:" [1982] A.C. 300, 321, per Lord Wilberforce. That attack succeeded. In Ramsay's case the taxpayer claimed to have made an allowable loss for the purpose of capital gains tax but when the scheme was analysed it was plain that the taxpayer by self-cancelling transactions made neither a loss nor a gain. In the Eilbeck v. Rawling appeal also, the scheme manufactured a tax loss by self-cancelling transactions without the taxpayer suffering any real loss. Lord Wilberforce laid down the applicable principle, at pp. 323-324:

"It is the task of the court to ascertain the legal nature of any transaction to which it is sought to attach a tax or a tax consequence and if that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded."

Lord Fraser of Tullybelton discussing the schemes in the Ramsay appeal and in the Eilbeck v. Rawling appeal said, at pp. 337-338:

"The essential feature of both schemes was that, when they were completely carried out, they did not result in any actual loss to the taxpayer. The apparently magic result of creating a tax loss that would not be a real loss was to be brought about by arranging that the scheme included a loss which was allowable for tax purposes and a matching gain which was not chargeable. In Ramsay the loss arose on the disposal of the appellant's shares . . . In Rawling it arose on the disposal of the appellant's reversionary interest . . .

But it is perfectly clear that neither of these disposals would have taken place except as part of the scheme, and, when they did take place, the taxpayer and all others concerned in the scheme knew and intended that they would be followed by other prearranged steps which cancelled out their effect. . . . There is, therefore, no reasons why the court should stop short at one particular step. . . . The absence of contractual obligation does not in my opinion make any material difference."

The effect of Ramsay's case was underlined by Lord Diplock in Inland Revenue Commissioners v. Burmah Oil Co. Ltd. (1981) 54 T.C. 200, 214:

"It would be disingenuous to suggest, and dangerous on the part of those who advise on elaborate tax avoidance schemes to assume, that Ramsay's case did not mark a significant change in the approach adopted by this House in its judicial role to a pre-ordained series of transactions (whether or not they include the achievement of a legitimate commercial end) into which there are inserted steps that have no commercial purpose apart from the avoidance of a liability to tax which in the absence of those particular steps would have been payable."

The effect of Ramsay's case was further elucidated in Furniss v. Dawson [1984] A.C. 474, 512, by Lord Fraser of Tullybelton:

"The true principle of the decision in Ramsay was that the fiscal consequences of a preordained series of transactions, intended to operate as such, are generally to be ascertained by considering the result of the series as a whole, and not by dissecting the scheme and considering each individual transaction separately."

Lord Bridge of Harwich said, at p. 517:

"It would need no more than a cursory exposition of the avoidance schemes in Ramsay and Eilbeck v. Rawling [1982] A.C. 300 to lead any intelligent layman to the conclusion that neither scheme was designed to achieve any substantial effect in the real world and that the elaborate steps designed to manufacture a tax deductible loss in each case were purely formal in character."

Lord Brightman discussing Ramsay's case in Furniss v. Dawson said, at pp. 522-523:

"Features of the scheme were as follows: 1. There was no commercial justification for the scheme. There was no prospect of a profit. In fact there was bound to be a small loss in the form of the fees and similar expenses which would be payable. 2. No step in the scheme was a sham. Every step was genuinely carried through, and was exactly what it purported to be. 3. There was no binding arrangement that each planned step would be followed by the next planned step, but it was reasonable to assume that all the steps would in practice be carried out. 4. The scheme was designed to, and did, return the taxpayer to the position which he occupied before it began, except for the payment of the expenses of the scheme. 5. The money needed for the various steps was lent by a finance house on terms which ensured that the loan came back to the finance house on completion; the taxpayer's personal outlay was confined to his expenses of the scheme."

The authorities which preceded and followed Ramsay's case were discussed in Ensign Tankers (Leasing) Ltd. v. Stokes [1992] 1 A.C. 655. For present purposes it suffices that an application of the Ramsay principle to the facts in Plummer's case must have led to a decision in favour of the Crown. In Ramsay's case the taxpayer did not make a loss. In Plummer's case Mr. Plummer did not pay an annuity.

Similarly Mr. Moodie did not pay an annuity. Book entries were made which purported to record that O.C.C. paid £12,000 to Mr. Moodie who paid £12,000 to H.O.V.A.S. which paid £12,000 to Baldrene which paid £12,000 to O.C.C. These circular book entries were all pre-ordained and made pursuant to a single composite contract effected on 8 March 1971. Upon the construction of the taxing statute and in the events which happened no annuity was paid. The results of the scheme were to manufacture a claim by H.O.V.A.S. against the revenue for repayment of tax and to manufacture a claim by Mr. Moodie against the revenue for a reduction in his taxable income. So too, Mr. Sotnick did not pay an annuity.

Mr. Thornhill on behalf of Mr. Moodie and Mr. Sotnick made a number of gallant attempts to argue that Plummer's case and the present appeals were distinguishable from Ramsay's case but all these attempts foundered because they depended on the assertion that the taxpayer in each case paid an annuity to H.O.V.A.S. If Plummer's case had been decided after Ramsay's case, the Crown would have succeeded, though not on any of the grounds advanced in Plummer's case. The present appeals are heard after Ramsay's case and this House is bound to give effect to the principle of Ramsay's case. I do not consider that it is necessary to invoke the Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234 which allows the House "to depart from a previous decision when it appears right to do so." The result in Plummer's case, which is a decision of this House, is inconsistent with the later decision in Ramsay's case, which is also a decision of the House. Faced with conflicting decisions, the courts are entitled and bound to follow Ramsay's case because in Plummer's case this House was never asked to consider the effect of a self-cancelling scheme and because the principle of Ramsay's case restores justice between individual taxpayers and the general body of taxpayers. I agree with the special commissioners and Hoffmann J. [1990] 1 W.L.R. 1084 that the Cardale Capital Income Plans are struck down by the Ramsay principle and that the inconsistent decision in Plummer's case must be ignored. If it were necessary to invoke the Practice Statement I have no doubt that this would be an appropriate course to take but in my opinion it is sufficient to state that the decision in Plummer's case would have been different if the appeal had been heard after the enunciation by this House of the Ramsay principle.

After Ramsay's case the Chancellor of the Exchequer announced that the decision had saved the revenue and thus the general body of taxpayers sums of about £300m. We were told that the results of the present appeal will decide the fate of claims to millions of pounds by taxpayers who are in the same position as Mr. Moodie and Mr. Sotnick. On their behalf Mr. Burton advanced several submissions designed to show that the application of the Ramsay principle to Mr. Moodie and Mr. Sotnick and others would be unfair. But his real complaint was that the Cardale Capital Income Plan succeeded for Mr. Plummer but fails for everybody else. The Crown failed against Mr. Plummer because the

Ramsay principle had not been adumbrated by the House at that time. The Crown succeed now because the Ramsay principle applies.

I would allow the appeals. The Court of Appeal in giving leave to the Crown to appeal to this House imposed terms namely that the Crown would not seek to disturb the order for costs made by the Court of Appeal and would not ask for an order for costs against the taxpayers in this House. There will therefore be no order for costs.

Lord Goff of Chieveley. My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Templeman, and for the reasons he gives I, too, would allow the appeals.

Lord Browne-Wilkinson. My Lords, I have read the speech prepared by my noble and learned friend Lord Templeman, and for the reasons he gives I, too, would allow the appeals.

Lord Mustill. My Lords, I have read the speech prepared by my noble and learned friend Lord Templeman, and for the reasons he gives I, too, would allow the appeals.

Solicitors: Solicitor of Inland Revenue; Berwin Leighton.

C. T. B.