APPLICATION OF LAW

In this case, the law focused here is regarding the employment tax and it was narrowed

down to two issues namely the emolument and also the tips. For the first issue, the governing

principle was laid down in the case of Hochstrasser v Mayes1.the shares were given to

compensate the taxpayer for loss of his practice and it must be remembered the consideration

was the agreement for the service and based on the case of Bridges v Hewwit2, it does not

matter even the benefit is from someone else.

Two significant elements lay down by Upjohn J. First, the payment "must be made in

reference to the services the employee renders by virtue of his office," and, second the

payment "must be something in the nature of a reward for services."

To answer either the emoluments are within the statutory word ‘therefrom’, as

explained by the cases, or they are not. At one stage in the argument, in commenting on

Bridges v Bearsley3, Mr Heyworth Talbot said that the question there was whether the

employees in the case got the shares as remuneration for services or as personal gifts. In the

Hochstrasser case4, Parker LJ had expressed himself in terms of any benefit in money or

money’s worth received by an employee during the course of his employment from his

employer as being a taxable profit of his employment, with two exceptions, one of which was

a gift to him in his personal capacity. The true issue was not the twofold question whether the

benefit fell within the taxable category of remuneration for services or within the non-taxable

category of personal gift, but a single question, namely, whether or not it fell within the

taxable category of remuneration for services.

1
[1959] Ch. 22, 38
2
[1957] 1 W.L.R. 674
3
[1957] 1 W.L.R. 674
4
[1959] Ch. 22, 38
 ‘Personal gift’ is thus not a category which has to be defined or explained, but merely

an example of a transaction which will not fall within the taxable category of remuneration for

services. In other words, the question is not one of which two strait-jackets the transaction

best fits, but whether it comes within the statutory language, or else, failing to do so, falls into

the undefined residuary class of cases not caught by the Statute.’

THE JUDGEMENT

The court dismissed the appeal, the commissioners were correct to hold that the Crown

had failed to show that the transfer fell within the words of section 156 of the Income Tax Act

1952, since the transfer was not an emolument "from" any office or employment. it was not

"in the nature of a reward for services" and the transfer was not made "in reference to"

services.