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United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Owen (H M Inspector of Taxes) v Southern Railway of Peru, Ltd [1956] UKHL TC_36_602 (21 June 1956)
URL: http://www.bailii.org/uk/cases/UKHL/1956/TC_36_602.html
Cite as: [1956] UKHL TC_36_602, 36 TC 602

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Owen (H M Inspector of Taxes) v Southern Railway of Peru, Ltd - [1956] UKHL TC_36_602 21 June 1956

Under Peruvian law the Respondent Company was bound to pay its employees in Peru prescribed compensation payments upon the termination of their services with the Company, subject to the fulfilment by the employee of certain conditions. The amount to be paid depended on (a) length of service and (b) rate of pay at the end of the period of service, except that a reduction in pay would not affect the amount to which an employee was entitled by reference to the period of service already performed. On appeal against assessments to Income Tax on the Company made under Case I of Schedule D for the years 1947-48 to 1951-52 inclusive, it was contended on behalf of the Company that upon proper principles of commercial accountancy amounts of compensation calculated to have accrued due to each employee from year to year as deferred remuneration should be allowed as a deduction. The Special Commissioners held that it was a matter of correct accountancy practice to make provision in the accounts for the sums in question, and allowed the appeal.

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URL: http://www.bailii.org/uk/cases/UKHL/1956/TC_36_602.html