Palmer v Moloney & Anor

For retirement relief, a person is a full-time working officer or employee where they are required to devote substantially the whole of their normal full working time to the relevant company in a managerial or technical capacity. The statutory reference to his time means working time assessed by comparison with normal full-time work, not all hours in the day and not all work undertaken for other enterprises. A person who works full-time for the relevant company does not lose relief merely because they also undertake separate non-qualifying work elsewhere. Whether substantially the whole of the relevant full-time work is devoted to the company is fact-sensitive. The appeal also confirms that administrative practice cannot determine the meaning of the statute and that Parliamentary material is inadmissible where it is not directed to the statutory wording in issue.

Mr Palmer claimed damages from his accountants after receiving advice which led him not to claim retirement relief on a capital distribution from Autofreight (UK) Ltd. The relief depended on his being a full-time working officer of that company under section 163 of the Taxation of Chargeable Gains Act 1992 and Schedule 6.

Mr Justice Laddie dismissed the claim, holding that Mr Palmer was not a full-time working officer because he also operated a substantial parallel business, G.P. Enterprises. Mr Palmer appealed. The central issue was whether his work for G.P. Enterprises prevented him from satisfying the statutory definition when he worked approximately 42.5 to 45 hours each week for Autofreight.

1. Appeal allowed. Aldous LJ delivered the leading judgment and Clarke LJ agreed. Nourse LJ dissented and would have dismissed the appeal.
2. The statutory question was whether Mr Palmer was a full-time working officer of Autofreight under section 163(5)(b) and paragraph 1(2) of Schedule 6 to the Taxation of Chargeable Gains Act 1992. The definition must exclude part-time workers. Accordingly, “his time” means the working time of a full-time employee, assessed by comparison with normal full-time managerial or technical work.
3. The relevant work is work for the company in respect of which relief is claimed. Separate work for another enterprise is irrelevant if the claimant’s work for the relevant company itself amounts to substantially the whole of the claimant’s normal full working time. Mr Palmer worked at least 42.5 hours per week for Autofreight, which exceeded the time expected of a full-time officer. His additional work for G.P. Enterprises therefore did not disqualify him.
4. The court declined to treat Inland Revenue practice as stating the law. It was useful for consistency and planning, but statutory meaning had to be derived from the statutory words. The court also rejected reliance on Hansard concerning the 1984 Finance Bill and later legislation because the statements were not directed to the meaning of the provision in issue.
5. Aldous LJ considered that the meaning of “substantially the whole” was a fact-sensitive, jury-type question and that it was unnecessary to decide whether “substantially” meant “in the main”. The respondents were ordered to pay damages of £49,472.67, with interest, and costs in both courts. Leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): appeal allowed; damages of £49,472.67 awarded with interest and costs.
• High Court of Justice, Chancery Division: Mr Justice Laddie dismissed the claim on 20 January 1998, holding that Mr Palmer was not a full-time working officer.