Judgments - Maco Door and Window Hardware (UK) Limited (Respondents) v Her Majesty's Revenue and Customs (Appellants)

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62.  I readily concede that none of the arguments so far discussed would, if considered individually, be determinative of the point at issue. However, I consider that, when taken together, they make out a conclusive case in support of the Commissioners’ interpretation of section 18(2), unless there is a compelling reason, which I have not so far considered, for rejecting that interpretation. I turn, then, to consider the arguments raised on Maco’s behalf (insofar as I have not already dealt with them)

63.  First, it is said that there are previous decisions which favour Maco’s approach. Only one, Saxone Lilley & Skinner (Holdings) Ltd v IRC (1967) 44 TC 122, is a decision of your Lordships’ House, and it does not, in my view, have any relevance to the point at issue here. The decision of the Inner House in Kilmarnock Equitable Co-operative Society v IRC (1966) 42 TC 675 is more in point on the facts, and there is a strong case for saying that the outcome is hard to reconcile with the Commissioners’ approach in this case.. However, quite apart from the fact that the decision is not binding on this House, it does not appear to me that the Commissioners raised the point that they are relying on here. In Vibroplant Ltd v Holland (HMIT) (1981) 54 TC 658, a view was expressed at first instance by Dillon J (whose decision was upheld on appeal), which was supportive of Maco’s case, but it was both tentative and obiter. Maco also relied on the decision of His Honour Judge Finlay QC, sitting in the High Court, in Crusabridge Investments Ltd v Casings International Ltd (1979) 54 TC 246, where the point now raised by the Commissioners would very probably have produced a different outcome, but it does not seem to me to have been raised.

64.  Accordingly, I do not consider that the reasoning in the earlier cases relied on by Maco provides much assistance to its case. I should also mention that more recently in Bestway (Holdings) Ltd v Luff (HMIT) (1998) 70 TC 512, the point presently at issue was addressed in detail by Lightman J, who resolved it in favour of the Commissioners’ interpretation.

65.  Secondly, Maco argues that the Commissioners appear to have accepted, at least until they took their present stance in, or shortly before, Bestway, that Maco’s interpretation was correct. To my mind, the only value in that point is to weaken any reliance that might be placed on the alleged impracticality of Maco’s interpretation. It is true that there is no evidence either way as to the practicality of Maco’s interpretation, but I consider that there is something (but not a great deal) in the argument that the Commissioners might have been expected to produce evidence of difficulties, especially if they had been frequently encountered.

66.  Apart from this rather limited sort of factor (and ignoring cases where legitimate expectation or the like could be relied on), the fact that, for a substantial period, the Commissioners interpreted a particular provision in a taxing statute in a certain way is normally of limited assistance as to the provision’s meaning. The interpretation of legislation is, of course, ultimately a matter for the judiciary, not the executive. Quite apart from this, the Commissioners’ change of stance in this case would, as mentioned, work to the advantage of some taxpayers. It cannot conceivably be argued that such a taxpayer could not invoke what is now the Commissioners’ interpretation, and, if such an argument succeeded, the Commissioners would be bound to give effect to that interpretation in other cases, including those where it worked against a taxpayer.

67.  Thirdly, it is said that the effect of the Commissioners’ interpretation can be avoided through the means of the relevant part of the business being carried on through a subsidiary company. Thus, in the present case, if Maco had set up a subsidiary which had carried on the storage aspect as its own business, the building in which the storage was carried on would have fallen within section 18(1)(f). That is true, but the outcomes of disputes in revenue law (and indeed in many other areas of law) often turn on the corporate structure which parties such as taxpayers, or those controlling taxpayers, choose to adopt.

68.  Finally, reliance is placed on the proviso to section 18(3), which, it is said, is only consistent with Maco’s interpretation. I think there are two points to be made about that argument. The first is that section 18(3) reproduces a sub-section introduced into section 7 of the 1968 Act, with the purpose of reversing the effect of the decision in Vibroplant. Given that (as already mentioned) Dillon J expressed the obiter views that he did in that case, it is not surprising that the proviso was included. Secondly, the proviso to section 18(3) is not so much inconsistent with the Commissioners’ interpretation of section 18(2) as unnecessary if that interpretation is correct. It would be surprising if repair was treated in the way the Commissioners argue because of the proviso to section 18(3), but other operations were not, but that would be the effect of Maco’s interpretation.

69.  Combining these two points, I conclude that the proviso to section 18(3) does not assist Maco’s case. The proviso to section 18(3) is consistent with the Commissioners’ interpretation of section 18(2), and was included in relation to repair because of the obiter view expressed in the very case which section 18(3) (or, to be more accurate, its statutory predecessor) was introduced to reverse.

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