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| Knowledge |
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| Case law |
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| Hyett v Lennard |
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| [1940] 23 TC 346 |
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| Income Tax, Schedule D - Profits of trade - Deduction - Difference between rent payable for former branch premises and rent received under sub-lease - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Schedule D, Cases I & II, Rule 3. |
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| Summary |
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| Lennard owned several London shops. He opened a store in Oxford Street, on a 35 year lease starting from 25 March, 1929, at an annual rent of £3,500. The lease gave Lennard no option to terminate at an earlier date. After running profitably for two years, the Oxford Street shop led to Lennard making losses and was closed down in July, 1935. By an underlease, Lennard sub-let the premises for the remaining lease term of 28.75 years at £2,500 per annum. |
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| On appeal to the Special Commissioners against an additional assessment for 1937-38, Lennard claimed that the difference of £1,000 between the rent paid under his lease of the Oxford Street premises and the lesser rent received under the sub-lease was an expense wholly and exclusively laid out for the purpose of his trade under Rule 3(a) of the Rules of Cases I and II of Schedule D, and that it should be allowed as a deduction. |
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| The Crown argued that the rent, was in respect of premises which Lennard had ceased to occupy for the purpose of his trade and which were no longer available for that purpose, so were not an expense which could be allowed under Rule 3. |
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| The Special Commissioners decided that the deduction claimed should be allowed, and reduced the tax assessment accordingly. |
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| Held , that the Special Commissioners' decision was correct. |
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