Tennant v Smith
A benefit in kind received by an employee is taxable as income only if it can be converted into money, so the value of accommodation which an employee was required to occupy was not taxable.
Facts
Mr Tennant was the agent of a bank in Montrose. He was required, as a condition of his employment, to live in the bank's premises, rent free, so that he could look after the bank's business and property outside banking hours. He could not let the accommodation or use it for any other purpose. The Inland Revenue sought to include the annual value of the accommodation in his income for the purpose of income tax.
Legal principle
The House of Lords held that the value of the accommodation was not taxable. Lord Halsbury LC said that the Income Tax Acts charged a person on what he received as income, and that a benefit could be income only if it was money or could be turned into money. Mr Tennant could not let or sell the right to occupy the premises, so the benefit could not be converted into money, and was not income. The principle that benefits in kind are taxable only at their money's worth remains part of the general law, but many benefits in kind are now taxed under specific statutory rules, including the rules on living accommodation provided by employers.
Related cases on income and corporation tax: employment, trading and residence
- Edwards v Bairstow [1956] AC 14
- Hochstrasser v Mayes [1960] AC 376
- Jones v Garnett [2007] UKHL 35
- Mallalieu v Drummond [1983] 2 AC 861
- Marks & Spencer plc v Halsey (2005) Case C-446/03
- Pepper v Hart [1993] AC 593
- R (Gaines-Cooper) v Revenue and Customs Commissioners [2011] UKSC 47
- RFC 2012 plc v Advocate General for Scotland [2017] UKSC 45
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