Income tax

The court considered the principles established following Ramsay (W T) Ltd v IRC, Eilbeck (Inspector of Taxes) v Rawling [1981] 1 All ER 865. Applying a purposive construction, s 19(1) of the Income and Corporation Taxes Act 1988 (ICTA 1988) was intended to cover payments which, on a realistic view of the circumstances in which, and the reasons why, they had been made, would sensibly be regarded as coming “from” the recipient’s employment. In some cases, the facts would be closer to the borderline than in others.

 There was no basis for imposing the strictures of a ‘double source’ test on the simple words of the statute. The authorities required attention to the statutory words. The only statutory question was whether the emolument came from employment. Answering that question was not to be constrained by the mechanistic application of statements found in the case-law.

In some situations, the formulation of an antithesis between one source and another might clarify the process of reaching