COMMISSIONERS OF INLAND REVENUE v. GARDNER, MOUNTAIN & D'AMBRUMENIL, LTD.

(1944) 78 Ll.L.Rep. 572

KING'S BENCH DIVISION.

Before Mr. Justice Macnaghten.

Revenue - National Defence Contribution - Assessment - Underwriting agents-Computation of profits - Basis of liability - Chargeable accounting period-Practice of Lloyd's-Company acting as agents for various Lloyd's underwriting syndicates- Company to receive as remuneration fixed salary and expenses and commission on net profits on each year's underwriting- Tax returns for accounting period Apr. 1, 1938/Mar. 31, 1939, showing commission relating to transactions initiated in 1936-Commission relating to transactions initiated in 1938 included in returns for 1941 (when commission finally ascertained) - Additional assessment to National Defence Contribution for 1938/1939 period made in respect of commission on 1938 transactions - Agency agreement providing that "An account shall be kept for the period ending Dec. 31 [next after the agency commences] and for each subsequent year of the agency and all premiums salvages reinsurances recoveries and other receipts and all losses averages returns of premium and other payments and outgoings including cost of reinsurance (if any) of outstanding liability in respect of the underwriting carried on during each such period or year shall be carried to the account for such period or year and each such account shall be made up and balanced at the end of the second clear year from the expiration of the period or year to which it relates and the amount then remaining to the credit of the account shall be taken to represent the amount of the net profit of the period or year to which it relates and the commission payable to the company shall be calculated and paid thereon"-Further provision that salary and expenses should cease at termination of agency "but after such termination (whether by death of the underwriter or otherwise) the company shall be entitled to wind up the underwriting and the accounts in connection therewith and shall be paid for its services in connection therewith a remuneration of not less than 100 guineas"-Construction of agreement-Evidence as to Lloyd's practice-Whether, for the purpose of computing profits, such commission should be credited at the date actually received or at the date when the policies were underwritten.