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required by the company to often move from one part of the country to the other.
Under the company housing scheme the company agreed that it would make up any
loss on the sale of a house by an employee when the employee was required to
relocate. Mayes did make such a loss of £350 and it was reimbursed by the company.
The House of Lords held unanimously that the reimbursement receipt was not gross income.
220 Moorhouse (Inspector of Taxes) v Dooland [1955] 1 Ch 284, at p 292 Evershed MR.
222 Refer to Laidler v Perry [1966] AC 16 at p 35. This case is discussed already in this paper at page
The arguments centered on whether or not the receipt was a product of Mayes‘
employment relationship with ICIL. Viscount Simonds quoted Parker LJ, who
―Where you find that an employee has during the course of his employment
employment and taxable as such unless (1) it amounts to a gift to him in his personal
capacity, eg., a benefit conferred out of affection or pity; or (2) it has been received for
The receipt could not be characterised as a personal gift given out of affection or
pity. In Hochstrasser v Mayes224 therefore the more important question was whether
Mayes had provided services rendered in return for the receipt. The court found that
Mayes‘ salary was commensurate with others in similar positions and thus he was
fully recompensed for the services he provided to the company. There was nothing
express or implicit in the agreement to suggest that the payment was a reward for his
services except the relationship of parties, which was not sufficient by itself to justify
holding the payments assessable. As with other cases examined here, it was accepted
that Mayes would not have received the money ―but for‖ his employment relationship,
but the ―money was not paid to him as wages and ―it was not profits from his employment.
the causa causans of the payment and not merely the causa sine qua non. Lord
Radcliffe expressed this principle by saying that while it is not sufficient to render a
payment assessable that an employee would not have received it unless he had been an
employee, it is assessable if it had been paid to him in return for acting as or being an
employee.
226 Ibid.
65
Hochstrasser v Mayes230. In Pritchard the shares were given to Arundale under the
and relinquishing his former career as a chartered accountant. The transfer of shares
took place before Arundale started working for the company. It was held that the
return for services. Consideration for the shares was the undertaking to serve the
company.