The Company of Proprietors of Whitchurch Bridge, R (on the application of) v HM Treasury [2012] EWHC 3579 (Admin)

Case No CO/6647/2011[2012] EWHC 3579 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/12/2012
Before
THE HON MR JUSTICE BURNETT
Between
The Queen on the application of the Company of Proprietors of Whitchurch BridgeClaimantHM TreasuryDefendant
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
David Southern (instructed by Wilmot & Co) for ClaimantRaymond Hill (instructed by The Treasury Solicitor) for DefendantHearing Hearing dates: 25 October 2012
JudgmentThe Hon Mr Justice Burnett:Introduction
[1]The issue in this claim is whether HM Treasury is obliged by law to admit The Company of Proprietors of Whitchurch Bridge “The Company” to the scheme under section 33 of the Value Added Tax Act 1994 [“the 1994 Act”] which enables certain bodies not registered for VAT to have repaid to them the VAT levied upon goods and services provided to them.

The Factual and Legislative Background

[2]In 1792 the Whitchurch Bridge Act [“the 1792 Act”] established a body corporate which comprised 10 named individuals (and their successors) and authorised them to build a bridge over the River Thames between Whitchurch in Oxfordshire and Pangbourne in Berkshire. The body corporate was named The Company of Proprietors of Whitchurch Bridge. The crossing at this point had hitherto been made by ferry. The 1792 Act made provision for the owners of the ferry to be compensated on completion of construction of the bridge. The Company was empowered to raise money by issuing shares. The 1792 Act made detailed provision for the building and maintenance of the bridge, gave necessary power to override property rights and established mechanisms to resolve disputes. The bridge when built, along with toll houses, other buildings and approaches to the bridge, was vested in the Company and its successors. Section 31 of the 1792 Act made detailed provision for the tolls to be paid for use of the bridge in every imaginable situation. Whilst the structure of the tolls has become much simpler, they remain subject to statutory control.[3]The shares in the Company remain in the hands of a small number of people, some of whom are direct descendants of the original sponsors of the 1792 Act.[4]Onerous obligations were imposed upon the Company to maintain the bridge in perpetuity and to provide a ferry should the bridge become impassable or unsafe pending its repair or rebuilding: sections 2(1) and 43(1). The arrangement underlying the 1792 Act was, however, a commercial one in that dividends could be and were paid to the shareholders.[5]The use by Parliament of private Acts to authorise infrastructure projects (as they might now be called) at private expense was not uncommon at this time. The importance of convenient and safe river crossings had long been recognised. Although a herald of the modern private finance initiative the Crown paid nothing to the venture capitalists concerned. Rather Parliament swept away all the technical legal barriers that would have prevented such projects and often provided an incentive by way of tax relief. Section 42 of the 1792 Act did precisely that in respect of the Whitchurch Bridge:
“And be it further enacted, that the said Bridge, or the tolls thereof, shall not be rated or assessed for or towards any public or parish rate, tax, or duty whatsoever, but the same Bridge, with its appurtenances, shall be deemed extra-parochial to all intents and purposes; and the said bridge shall not be adjudged or taken to be a county Bridge, or to subject the counties of Oxford and Berkshire, or either of them, to the repairing amending, or supporting of the same, any law or statute to the contrary hereof notwithstanding.”
This case is concerned with the modern application of that provision.[6]After the passage of almost 200 years Parliament once again turned its attention to this Thames crossing and passed the Whitchurch Bridge Act 1988 [“1988 Act”]. The preamble recognised that the bridge continued to serve the needs of substantial volumes of traffic, that its maintenance costs were rising and that it would need to be replaced. Tolls were set under the Transport Charges etc. (Miscellaneous Provisions) Act 1954 [“1954” Act] but it was necessary to empower the company of proprietors to borrow money and create a reserve fund. Substantial parts of the 1792 Act were repealed, having become otiose. Section 43 was amended to relieve the Company from the obligation of providing a ferry should the bridge become impassable or unsafe, but the obligation to replace or repair it in those events remained. Section 42 of the 1792 Act was untouched.[7]Section 4 of the 1988 Act restated the purposes for which tolls exacted from bridge users could be used:
“Tolls taken under the Act of 1792 shall be applied by the company – (a) in meeting all expenses incurred in, and in connection with, taking of tolls and other administrative expenses of the Company incurred in connection with the bridge; (b) in defraying costs incurred as provided by section 10 of this Act; (c) in paying of taxes (if any); (d) in defraying the costs of providing, maintaining and renewing toll houses, toll-gates, signals, offices, equipment or other conveniences held or used by the Company in connection with the bridge; (e) in meeting any expenditure incurred by the Company in, or in connection with, the maintenance, repair or alteration of the bridge; (f) in paying interest on any moneys borrowed under section 6 of this Act; and (g) in setting apart contributions to a reserve fund under section 7 of this Act; And any balance remaining may be applied by the Company in payment of dividends on its paid up share capital.”
Section 7 provided that the reserve fund should make ‘due provision’ for the maintenance and removal of the bridge.[8]Section 2 of the 1792 Act contemplated that the bridge abutments would be constructed of stone, brick and other materials and that the Company would make up roads on either side of the bridge, which for a distance of 500 yards would form ‘part and parcel’ of the bridge. The evidence of Michael Beckley and Patrick Fitzgerald, members of the management committee of the bridge, is that the first bridge was constructed immediately in 1792. The bridge itself was of timber. It was replaced by a second bridge in 1853, also of timber. This in turn was replaced by the current iron and steel structure in 1902. That is nearing the end of its life and must be replaced. The structure is listed. The plan is to retain the aesthetics and various non-structural parts of the current bridge, supported on its piers, but replace its structural parts.[9]Section 6 (2) of the 1954 Act enables the Company to apply at any time to increase its toll charges. Section 6 (3) of that act, as amended by the 1988 Act provides: “In making any order on an application under this section, the Minister shall have regard to the financial position and future prospects of the undertaking and shall not make any revision of charges which in his opinion would be likely to result in the undertaking receiving an annual revenue either substantially less or substantially more than adequate to meet such expenditure on the working, management and maintenance of the undertaking and such other costs, charges and expenses of the undertaking as are properly chargeable to revenue, including reasonable contributions to any reserve, contingency or other fund and, where appropriate, a reasonable return upon the investment of the Company of Proprietors of Whitchurch Bridge in the bridge as defined in Section 2 of the Whitchurch Bridge Act 1988”.[10]On 31 October 2008 the Company made an application to increase the tolls. It is perhaps not surprising that the application attracted local objections. The Secretary of State for Transport, in whom the power to set the tolls is vested, convened a public inquiry which was held over two days in June 2009. In his report which followed the inquiry, the inspector noted:- “Timing and Cost of Future Major Maintenance 6.21 With respect to the timing and cost of the rebuilding of the Bridge, the Advice from the Company’s advisors was clear and unequivocal [3.6]. I was also able to see its structural failings at first hand when I undertook my site visits. I have no doubt that the Bridge is nearing the end of its useful life and that a rebuilding scheme, similar to that proposed [3.8] will be necessary in the near future.” The Secretary of State accepted the inspector’s conclusions. On 12 October 2009 he made a Tolls Order which made provision for increased 11. charges to enable the substantial works to be funded and implemented.

October 2009 he made a Tolls Order which made provision for increased

[11]Mr Fitzgerald’s statement of 7 July 2011 explains that the total cost of the proposed works is £3.3m excluding VAT. At the time of his statement it was expected that the accumulated reserves would be about £2.6m. Thus there was a likely need to borrow about £700,000 come what may. If the Company was unable to secure the repayment of the VAT which all the contractors and professionals would be obliged to add to their bills, a potential further financial outlay of £660,000 might be expected. Although the Company recognises that it is not VAT registered and so neither charges VAT on the tolls nor can it offset input tax, it makes the point that unless it gets a refund from HMRC it will bear the economic burden of the tax.

The VAT position of the Bridge

[12]The common system of VAT is based upon EU Law. Natural and legal persons carrying on activities in a member state must in principle register for VAT. But there are exceptions. Article 13(1)(2) of Directive 2006/112 /EC, which reproduces what was Article 4(5) of the Sixth VAT Directive (77/388/EEC), provides:
“1. States, regional and local government authorities and other bodies governed by public law shall not be considered taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with these activities or transactions.”
[13]‘Public Law’ in this context is an autonomous EU concept. The domestic and Luxembourg Courts have explored the parameters of this exception in a series of cases, It is necessary for the purpose of this judgment simply to note EC Commission v United Kingdom (case C- 359/97) [2000] STC 777 which was concerned with road, tunnel and bridge tolls. These were infraction proceedings brought by the Commission because no road, tunnel or bridge tolls were subject to VAT in the United Kingdom. The Luxembourg Court concluded that many providers of such services were not governed by ‘public law’ for these purposes with the consequence that VAT should have been payable. On 14 April 2003 the Treasury notified the Company (together with the operators of two other bridges at Swinford and Whitney-on-Wye) that they would not have to charge VAT on their tolls. The reason was that they were considered to be ‘public bodies’ for the purposes of EU Law. In the case of Whitchurch Bridge that conclusion stemmed from the special statutory regime under which it operates. It is common ground between the parties that the conclusion of the Treasury was correct. The same conclusion could not be reached in respect of a number of other bridge operators. The government was obliged to abide by the judgment of the Luxembourg Court. However, to neutralise its practical effect so far as consumers were concerned, the government reimbursed the VAT to the toll operators.[14]It is unnecessary to explore any further the detail of EU VAT law because the Company no longer pursues any argument that HMRC has an obligation under EU law to agree to reimburse the VAT that it will be charged in connection with rebuilding the bridge.

The Refund Request

[15]The statutory provision upon which the Company relies, to secure a refund in conjunction with section 42 of the 1792 Act, is section 33 of the 1994 Act. It is a creature of domestic law, with no EU analogue. “33 Refunds of VAT in certain cases(1) Subject to the following provisions of this section, where— (a) VAT is chargeable on the supply of goods or services to a body to which this section applies, on the acquisition of any goods by such a body from another member State or on the importation of any goods by such a body from a place outside the member States, and (b) the supply, acquisition or importation is not for the purpose of any business carried on by the body. The Commissioners shall, on a claim made by the body at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the VAT so chargeable.(2) Where goods or services so supplied to or acquired or imported by the body cannot be conveniently distinguished from goods or services supplied to or acquired or imported by it for the purpose of a business carried on by it, the amount to be refunded under this section shall be such amount as remains after deducting from the whole of the VAT chargeable on any supply to or acquisition or importation by the body such proportion thereof appears to the Commissioners to be attributable to the carrying on of the business; but where— (a) the VAT so attributable is or includes VAT attributable, in accordance with regulations under section 26, to exempt supplies by the body, and (b) the VAT attributable to the exempt supplies is in the opinion of the Commissioners an insignificant proportion of the VAT so chargeable, they may include it in the VAT refunded under this section.(3) The bodies to which this section applies are— (a) a local authority; (b) a river purification board established under section 135 of the Local Government (Scotland) Act 1973, and a water development board within the meaning of section 109 of the Water ) Scotland) Act 1980; (c) an internal drainage board; (d) an Integrated Transport Authority, Passenger Transport Authority of Passenger Transport Executive for the purposes of Part 2 of the Transport Act 1968; (e) a port health authority within the meaning of the Public Health (Control of Disease) Act 1984,…, (f) a police and crime commissioner, the Mayor’s Office for Policing and Crime and a police authority and the Receiver for the Metropolitan Police District; (g) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968, a new town commission within the meaning of the New Towns Act (Northern Ireland) 1965 and the Commission for the New Towns; (h) a general lighthouse authority within the meaning of Part VIII of the Merchant Shipping Act 1995; (i) the British Broadcasting Corporation; (j) the appointed new provider referred to in section 280 of the Communications Act 2003; and] (k) any body specified for the purposes of this section by an order made by the Treasury.(4) …(5) …(6) … (1) Subject to the following provisions of this section, where— (a) VAT is chargeable on the supply of goods or services to a body to which this section applies, on the acquisition of any goods by such a body from another member State or on the importation of any goods by such a body from a place outside the member States, and (b) the supply, acquisition or importation is not for the purpose of any business carried on by the body. (a) the VAT so attributable is or includes VAT attributable, in accordance with regulations under section 26, to exempt supplies by the body, and (b) the VAT attributable to the exempt supplies is in the opinion of the Commissioners an insignificant proportion of the VAT so chargeable, they may include it in the VAT refunded under this section. (a) a local authority; (b) a river purification board established under section 135 of the Local Government (Scotland) Act 1973, and a water development board within the meaning of section 109 of the Water ) Scotland) Act 1980; (c) an internal drainage board; (d) an Integrated Transport Authority, Passenger Transport Authority of Passenger Transport Executive for the purposes of Part 2 of the Transport Act 1968; (e) a port health authority within the meaning of the Public Health (Control of Disease) Act 1984,…, (f) a police and crime commissioner, the Mayor’s Office for Policing and Crime and a police authority and the Receiver for the Metropolitan Police District; (g) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968, a new town commission within the meaning of the New Towns Act (Northern Ireland) 1965 and the Commission for the New Towns; (h) a general lighthouse authority within the meaning of Part VIII of the Merchant Shipping Act 1995; (i) the British Broadcasting Corporation; (j) the appointed new provider referred to in section 280 of the Communications Act 2003; and] (k) any body specified for the purposes of this section by an order made by the Treasury.[16]On 12 June 2010 the Company wrote to the Treasury inviting the HMRC to specify them for the purposes of section 33(3)(k). It recognised that it did not fall within any of the categories identified in section 33(3)(a)-(j). It is fair to observe that both that letter and a good deal of the ensuing exchange of correspondence, together with discussion between the parties at a subsequent meeting, focussed on EU arguments which are no longer pursued. That said, in the course of the exchanges the Treasury identified two criteria which had consistently been applied before admitting a body to the refund scheme under section 33(3)(k):- a) The body must perform a function usually carried out by local government, and b) The body has power to levy local taxation or a local precept. The Treasury also asserted that section 33 of the 1974 Act was a provision upon which EU law had no bearing, which is now accepted, and that the 1792 Act was not relevant in the context of VAT.[17]The decision of the Treasury refusing the request was explained in a letter dated 15 April 2011. Having dealt with the EU argument the letter continued:
“6. In fact, section 33 and the other national refund schemes are public spending measures that are designed as a means of funding the VAT costs of certain public bodies in certain circumstances. Their purpose was explained by Moses J in R v. The Commissioners of Customs and Excise ex parte Service Authority for the National Crime Squad and others [2000] STC 638 at paragraph 39: “…the underlying purpose of the refund scheme enshrined in section 33 is to avoid the distortion of funding of public bodies. As the White Paper put it, it was to avoid tax on purchases for non-business activities falling as a burden on local taxpayers. Thus where money is raised by means of a local authority precept for non-business activities by local authorities or by bodies undertaking functions which might otherwise have to be carried out on behalf of a local authority, the refund scheme is designed to prevent a proportion of those monies, the amount of VAT paid, being diverted to central government…” 7. Moses J went on to reiterate that the underlying purpose of section 33 was “to prevent diversion of local authority sourced funds designed for local non-business activities to central government.” 8. In a nutshell, central government is prepared to provide public funding for the irrecoverable VAT incurred by certain public bodies in order to avoid the bodies concerned having to obtain increase funds by way of local taxation or precept – or a larger direct grant from central government. 9. While successive governments have chosen to use VAT refund schemes as a means of funding VAT costs for certain public bodies in certain circumstances, there are many public bodies whose activities fall within Article 13(1) of the Principal VAT Directive which are not covered by any VAT refund scheme.”
The Treasury then indicated that the Company of Proprietors satisfied the first criterion it had identified, but not the second. The payment of a toll is not a tax but payment for a service. The letter continued, “12. In paragraph 58 of the National Crime Squad case, Moses J stated that “the question whether the refusal to permit recovery of VAT does have a sufficient effect on local government sourced funds…seems to me to be a matter of judgment for government, particularly Her Majesty’s Treasury. The courts must exercise great caution before intervening to question that judgment, since it is a judgment in the context of national financial policy”. In that case, the learned judge went on to hold that the Chancellor of the Exchequer was entitled to take the view that the second condition for admission to the section 33 scheme was not satisfied. In particular, he stated that:
“…in my view it was a matter for the judgment of the Chancellor of the Exchequer to decide what criteria he would impose to achieve the purpose of avoiding the diversion of local authority sourced funds designed for non-business activities. The criteria may be stricter than necessary, and it may be that the purpose could have been achieved by more relaxed criteria, but it cannot be denied that those criteria imposed by the Chancellor did fulfil the purpose of the refund scheme; whether they were too strict was a matter for his judgment.” 13. Accordingly, given that admission to the section 33 scheme effectively amounts to a decision to provide the relevant body with central government funding, the Treasury is entitle to decide that the second condition - that the body must have the power to raise local taxation or a local precept - must be strictly applied.”
The Treasury then dealt with an argument no longer pursued that the criteria had not been consistently applied in the past. “…the underlying purpose of the refund scheme enshrined in section 33 is to avoid the distortion of funding of public bodies. As the White Paper put it, it was to avoid tax on purchases for non-business activities falling as a burden on local taxpayers. Thus where money is raised by means of a local authority precept for non-business activities by local authorities or by bodies undertaking functions which might otherwise have to be carried out on behalf of a local authority, the refund scheme is designed to prevent a proportion of those monies, the amount of VAT paid, being diverted to central government…” “…in my view it was a matter for the judgment of the Chancellor of the Exchequer to decide what criteria he would impose to achieve the purpose of avoiding the diversion of local authority sourced funds designed for non-business activities. The criteria may be stricter than necessary, and it may be that the purpose could have been achieved by more relaxed criteria, but it cannot be denied that those criteria imposed by the Chancellor did fulfil the purpose of the refund scheme; whether they were too strict was a matter for his judgment.”[18]It is now common ground that section 33 of the 1994 Act is not affected by EU VAT law. But both parties have approached the condition found in section 33(1)(b) (i.e. that no body may be admitted to the scheme if the supply of goods or services to it are for the purpose of a business carried or by the body) on the basis that if the body is governed by ‘public law’ for EU purposes it is not to be taken as carrying on business. Both the 1792 and 1988 Acts envisage that shareholders in Whitchurch Bridge may be paid a dividend. It might be thought that a corporation running an enterprise on behalf of shareholders who hope to be paid a dividend is carrying on a business even if it is a statutory corporation governed by ‘public laws’ for EU purposes. This is not a point on which the Treasury relied, nor has there been any argument upon it. In those circumstances I proceed upon the assumption, without deciding, that the Company is not excluded by section 33(1)(b) from admission to the scheme. The Submissions[19]Mr Southern’s submissions have an elegant simplicity. He submits that:- a) section 42 of the 1792 Act was intended to relieve the Company of the burdens of taxation to the fullest extent possible in law. b) the statute should ‘always speak’. Therefore it should be interpreted to apply to taxes created by Parliament since 1792. c) whilst the 1792 Act would have to be read subject to EU law, there is nothing in EU law to prevent the refund being sought. d) no statutory scheme existed before the 1994 Act to allow the recovery of taxation for which the Company bore the economic, but not legal burden. However, following the introduction of the scheme HM Treasury was obliged to allow the Company to benefit from it in order to give full effect to the intention of Parliament in 1792.[20]Mr Southern no longer pursues an argument that, quite apart from section 33 of the 1994 Act, the Treasury is obliged to reimburse on demand the Company of Proprietors a sum equivalent to the economic burden of tax they have borne. If that argument had been good it would have been available for decades in respect of VAT and over the centuries in respect of other taxes including, for example, excise duty, fuel duty and more recently Insurance Premium Tax.[21]Mr Hill submits that: a) Section 42 of the 1792 Act is concerned with taxes assessed on the Whitchurch Bridge or its tolls. b) VAT is a liability of the person making the supply of goods or services. He is liable whether or not he has made provision for it in the price he has charged his customer. c) Section 42 of the 1792 Act does not relieve the Company of the economic burden of taxes for which others are liable, for example income tax and national insurance contributions paid by its employees. d) Section 42 of the 1792 Act gives relief from property taxes and profits. e) Section 4(c) of 1988 Act contemplates the Company may itself be liable for taxes not exempted by section 42 of the 1792 Act. f) The Company’s complaint does not relate either to the imposition of VAT on the supplies made to it or to its inability to deduct that VAT as input tax.

Authority

[22]The principle that a statute is ‘always speaking’ is not disputed. In the context of statutory provisions granting tax exemptions it was confirmed in Associated Newspapers Ltd. v. Corporation of the City of London [1916] 2 A.C. 429. The case concerned land that had been enclosed and reclaimed from the River Thames following the enactment of a statute in 1767 whose purpose was to make a number of improvements to the City of London: 7 Geo. 3. c. 37. It included the completion of Blackfriars Bridge and the embanking of part of the north side of the river. To encourage private landowners to carry the burden of the cost of reclaiming land nearby, section 51 of that Act provided that the ground and soil enclosed and embanked in front of each existing wharf or ground would vest in the owner and be “free from all taxes and assessments whatsoever”. The House of Lords rejected an argument that the exemption (which was assumed to cover local taxes and assessments alone) applied only to such taxes as existed at the time of Royal Assent. It applied to all local taxes and assessments whether present or future.[23]The question whether a tax exemption extended beyond local taxes arose in Sir Reginald Pole Carew and another v. G. J. Craddock 7 TC 157, a decision of the Court of Appeal in 1920. The subject matter was the ferry across the River Tamar between Torpoint and Saltash. The ferry was established by and maintained under a statute of 1790 (30 Geo.3. c. 61) which provided that the proprietors “shall not be rated or assessed for or toward the payment of any Tax, Rate, or Assessment whatsoever, Parliamentary or Parochial, for or in respect of the said Ferry, or the tolls, rates or duties payable in respect thereof and the Boats, Vessels or Landing Places thereto belonging.” In the early years of the last century the ferry was very profitable. Its proprietors were assessed for income tax upon the profits but contended that the exemption should extend to income tax, because it was a Parliamentary tax. Income tax was not introduced until 1799 but the Associated Newspapers case decided that there was no impediment to exemption if the section properly construed extended to national taxation. The reference to “Parliamentary” was held to extend the exemption to assessment to taxes imposed directly by Parliament, such as Income Tax.[24]Sinclair v. Cadbury Bros. Ltd. 18 TC 157, a decision of the Court of Appeal in 1933, concerned an exemption from tax granted by Parliament shortly after the restoration in 1660 (12. Car. R. 2 di. No. 34) in respect of lands in Knighton, which in due course became part of the Bourneville site of Cadbury Bros by lease from the Haberdashers Company. The lands were “freed discharged and acquitted of and from the Payment of all and every or any Manner of Taxes Assessments or Charges Civil or Military whatsoever hereafter to be laid and imposed by the Authority of Parliament or otherwise. And that the said Mannors Messuages Lands Tenements and Premises and the Owners and Occupiers thereof or any of them shall not at any Time hereafter be rated taxed or assessed to pay any Sume or Sumes of Money or be otherwise charged in any way whatsoever for or in respect of the said Mannors Lands and Hereditaments or any of them for or towards any manner of publique Tax Assessment or Charge whatsoever and Statute Law or ordinance to the contrary hereof in any wise notwithstanding.”[25]The report does not reveal the reason for the apparent munificence of Parliament but the scope of the exemption came to be considered in a context far removed from the concerns of the King in Parliament at the end of the Commonwealth. At the time of the dispute between Cadbury Bros and Mr Sinclair, the Inspector of Taxes, companies were assessed for Income Tax rather than for Corporation Tax, as is now the case. Prior to the passage of the Finance Act 1926, the Revenue had allowed a deduction from profits of the annual value of the land and buildings comprised in the Knighton property before arriving at the profit on which Income Tax was paid. The Finance Act 1926 changed the basis upon which such deductions were allowed and linked them to the separate assessment of such property. The property at Knighton was not separately assessed, because it was exempt, and so the Revenue would not allow the deduction. Furthermore, the Revenue argued that the exemption from tax did not extent to trade carried out on the land, which was what Cadbury Bros were in effect contending for. The Court of Appeal rejected these arguments. By failing to allow Cadbury Bros to deduct the annual value of the land exempted from taxation by the 1660 Act when computing their Income tax liability, the Revenue were in effect taxing the occupiers contrary to the terms of the very wide exemption.[26]In each of these cases Parliament confirmed exemptions from taxes for which otherwise there would be direct liability. In each the court sought to identify the will of Parliament from the language it had used. Given the perennial ingenuity of Government in devising ways of securing the money needed to conduct its business, such exemptions would have been of less value if they applied only to taxes extant at the time of enactment. Furthermore, although local taxation is payable to various bodies under the authority of Parliament its precise form has been ever-changing. What none of the statutory provisions in these cases did, however, was to relieve the beneficiaries of the exemptions from the economic burden of taxes for which they were not liable to account.

Discussion

[27]The exemption conferred by section 42 of the 1792 Act provided that the bridge, including all the land associated with it together with buildings etc, were to be extra-parochial and thus not liable to pay any rate, tax or duty which was parochial in nature. The exemption went wider because it extended to public rates, taxes or duties. The revenues of the Company were exempt because the provision extended to the tolls. The immediate impact was to exempt the Company from paying rates and the then ubiquitous land tax. But it would have extended to any other tax for which they might otherwise have been liable as owners of the bridge or the recipients of the tolls.[28]In order to determine whether section 42 was designed, as Mr Southern submits, to relieve the Company of the burden of taxation to the fullest extent possible by law it is necessary to consider the environment of taxation in which it was enacted.[29]There has rarely been a Monarch or Government in English or British history whose revenues comfortably exceeded expenditure. The late 18th century was a period of especial difficulty in the public finances. After a brief period as Chancellor of the Exchequer, William Pitt the Younger returned as Chancellor and Prime Minister at the tender age of 24 following the dismissal of the Government at the end of 1783. He set to work in January 1784 to restore the country’s finances. The national debt had exploded. Interest payments were consuming more than half of government revenue. There were four tax collecting departments. Customs dealt with duty payable on imports and exports. Excise raised taxes on domestic consumption. Stamp duty was applied to many documents, insurance and goods. The tax office supervised the collection of Land Tax, Window Tax and Inhabited House Duty and other assessed taxes. Then, as now, excise duties were levied upon beer and spirits, but also on such mundane daily articles as leather, candles, soaps and a multitude of other things. In 1784 Pitt introduced a number of new taxes including excise duties on bricks and tiles. In both 1784 and 1785 he increased the duty paid by employers on servants and introduced new stamp duties (including upon annual certificates for attorneys and solicitors). By 1786 tax receipts exceeded outgoings. There was temporary peace with France. In 1788 he was able to start repaying the national debt. In his budget in February 1792 Pitt abolished excise duty on a number of items, including tallow but not wax candles. However, peace was not to last. In consequence, the budget on March 11 1793 increased a number of excise duties, including those on bricks and tiles, alcohol and plate glass, although Pitt hoped to be able to meet most of the immediate costs of war from additional borrowing. New taxes were imposed on a large range of goods in the years that followed, and additional stamp duties (for example on different types of papers) were imposed, amongst much else. In 1796 the duty on bricks doubled and stamp duties continued to rise; timber too was subject to excise duty. Pitt’s ingenuity in raising new taxes and increasing existing ones continued until his resignation in February 1801. He returned to office in 1804. In his last budget in 1805 he increased the excise duty payable on glass and bricks, and increased import duty by two and half percent.[30]This short diversion into fiscal history (of which more can be gleaned from W Hague, William Pitt the Younger, 2004 and John Jeffrey-Cook, William Pitt and his Taxes, [2010] BTR No. 4) shows that in the years leading up to and following 1792 there were many taxes upon which a taxpayer might be ‘assessed’, but many others in respect of which a person might bear the economic burden, whilst the liability to pay the tax rested on another. The bridge and its tolls were exempted from assessed taxes, which the Company would otherwise be liable to pay but there is nothing in the language of section 42 of the 1792 Act which suggests that Parliament intended that the bridge, or its proprietors, should be relieved of the economic burden of taxes which others were liable to pay to the Treasury, which were passed on by those others in the price they charged for goods or services. The 1792 Act itself contemplates the use of brick in the construction of the bridge. Both before and after the passage of the 1792 Act bricks were subject to excise duty. The evidence in this case shows that the bridge was in large part constructed of timber. That too became subject to excise duty. Candles, no doubt, were used in the toll booths and even glass. They too were subject to excise duty, as were many of the goods consumed in the running of the bridge. Stamp duty was payable on paper used and so on. The Company would not have been liable to account for any of these taxes to the various tax collection offices then existing. That would have been the responsibility of the suppliers of the goods and services. But the bridge and its proprietors undoubtedly bore the economic burden of them.[31]VAT is payable today on the materials which would be used in the reconstruction of the bridge. In 1792 excise duty was payable on at least some of the materials used in its original construction. Parliament took no steps to ameliorate the economic burden of such taxes in 1792. The claimant’s submission that the intention of Parliament was to relieve them of the economic burden of all and every tax is too widely stated.[32]Mr. Hill relied upon section 4 (c) of the 1988 Act (see paragraph 7 above) as suggesting that at the time of the re-enactment of the 1792 Act Parliament understood that the exemption from tax conferred by section 42 was not ubiquitous. The qualified nature of the subsection (“if any”) suggests that Parliament was not making an unequivocal statement that the Company might be liable for tax but merely including tax in the list of things to which the Company might apply its revenues. In any event, the task of this court is to divine the will of Parliament in 1792, rather than second guess what legislators in 1988 understood their predecessors to have intended.[33]The question then arises whether the introduction of a VAT repayment scheme for some non-registered public bodies by section 33 of the 1994 Act can make any difference to the position if, as I have concluded, the intention of Parliament was not as broad as the Company contends. Mr. Southern submits that to give effect to the Parliamentary bargain reflected in the 1792 and 1988 Acts, in other words to honour the intention of Parliament contained in section 42 of the 1792 Act, the Treasury is obliged to exercise the discretion found in section 33(3)(k) in favour of the Company and admit them to the scheme. But there is a circularity in this argument. Unless it was the intention of Parliament in 1792 that the Company should be relieved of the economic burden of taxes such as excise duty and customs duty, the 1994 Act could not assist. Mr. Southern meets that objection by submitting that the intention of Parliament was to relieve the Company of the burden of taxation ‘to the fullest extent allowed by law’. In 1792 there was no scheme to allow a rebate of taxes for which the Company bore the economic burden but did not themselves have to account. Mr Southern imputes to Parliament an intention that should such a scheme ever come into existence then, unless its terms could not accommodate the Company, it should take the benefit.[34]The King in Parliament was sovereign at the time that 1792 Act was passed. Parliament could order the tax affairs of the Company as it wished. The ‘fullest extent allowed by law’, was the fullest extent allowed by Parliament itself. It was within the power of Parliament to grant to the Company a periodic sum equivalent to the economic burden of all or any specified taxes. Since Parliament chose not to do so at the time, I cannot accept the argument that there should be imputed to Parliament an intention that the Company should benefit from such a scheme should it be introduced at a later date.[35]In R v. HM Treasury and another, ex parte Service Authority for the National Crime Squad and others [2000] STC 638 Moses J held that that the question of what criteria should be adopted, and how they should be applied, in determining whether to specify a body under section 33(3)(k) of the 1994 Act were matters of national financial policy with which the courts should be very slow to interfere. The Company does not advance an argument that, absent its reliance on section 42 of the 1792 Act, the decision of the Treasury could be impugned. The two criteria applied by the Treasury, identified in paragraph 16 above, are themselves unobjectionable. It is common ground that the Company of Proprietors does not meet the second.[36]The Company has not brought this claim out of any sense of narrow self interest. Its action stems from a recognition of the undoubted fact that if it is liable to bear the economic burden of the VAT associated with the imminent reconstruction of the bridge, when the Secretary of State comes to consider the appropriate levels of tolls for the future, he will be obliged to take those additional costs into account. The likelihood is that the users of the bridge will pay higher toll charges than would otherwise have been the case. However, my conclusion is that the Treasury is not obliged to admit the Company to the scheme found in section 33 of the 1994 Act. In consequence this claim must be dismissed.