Taxpayer growing Christmas trees – Income tax assessments laid on taxpayer as “deemed farmer” – Revenue assessing tax – Whether site on which trees grown was “woodlands” and exempt from assessments – Section 53(4) of Income and Corporation Taxes Act 1988 – Commissioner concluding site not woodlands – High Court dismissing taxpayer’s appeal
Since 1990 the taxpayer carried on an enterprise of growing and selling Christmas trees on land comprising an area of approximately nine acres on the south western fringe of the town of Newport, Isle of Wight (the site). Apart from a parking area, hedges and perimeter and access tracks, it was all planted with young coniferous trees. The plantings took place when the trees were four years old in 1985, 1986 1990 and 1991. Although the predominant species was Norway spruce, there was also a substantial area of Noble Fir and a small area of Caucasian Fir. All were planted at 3 ft to 3 ft 6 ins spacing. The norm for forestry was a spacing of 5 to 6 ft. The trees were pruned in a manner which produced a bushy pattern of growth. No timber had been produced and was not likely to be produced in the future. Income tax assessments were laid on the taxpayer as a “deemed farmer” within section 53(3) of the Income and Corporation Taxes Act 1988 under Schedule D, Case I for the years 1990-1991 to 1995-1996 inclusive in respect of the enterprise carried on by her at the site. The taxpayer appealed to a special commissioner against the assessments claiming that the assessments fell to be discharged because the site comprise “woodlands” or “land . . . being prepared for the use for forestry purposes” within section 53(4) of the 1988 Act and therefore was exempted from the scope of section 53(3) of the Act. The commissioner concluded that “the visual impression of the site is not one of woodland” but of a Christmas tree plantation and dismissed the appeal. The taxpayer appealed to the High Court.
Held The taxpayer’s appeal was dismissed.
1. For the purposes of section 53(4) of the 1988 Act “woodlands” and “land used for forestry” were to be treated as synonymous. The subsection provided protection for land being prepared for forestry purposes and land used for forestry, namely as woodlands. The period of preparation was the period until any saplings grew into trees of required maturity, height and size to constitute “woodland”.
2. The term “woodland” connoted a wood which was a sizeable area of land to a significant extent covered by growing trees of some maturity, height and size. Whether the trees of a particular area of land were such as to be entitled to be regarded as woodlands was a matter of judgment. There was something to be said for the rule of thumb that the wood of the trees should be capable of being used as timber for it to be regarded as woodland.
3. The trees on the site had neither maturity, height nor size and resembled bushes rather than timber trees. Therefore the commissioner had been entitled to conclude that the site resembled a nursery rather than a wood.
Aparna Nathan (instructed by Cohen & Naicker) appeared for the appellant; Timothy Brennan (instructed by the solicitor to the Inland Revenue) appeared for the respondent.
