Annex 1: Minor Changes in the Law Change 2: Trading income: omission of references to a company carrying on a profession or a vocation: section 35 (and other sections) Corporate bodies and professions Case law
HMRC know of no case in which it was necessary to decide whether a corporate body can carry on a profession for tax purposes.
William Esplen, Son and Swainston Ltd v CIR (1919), 2 KB 731 concerned a corporate body whose shareholders and directors were three naval architects who had previously carried on their profession in partnership. Their activities had not changed in any way since incorporation.
There was an exception from Excess Profits Duty for:
Rowlatt J said in his judgment that the company was not carrying on a profession for the purpose of that provision. But his reasoning was that “profession” in that provision means a profession the profits of which are mainly dependent on the personal qualifications of the person who carries it on, and only an individual can have professional qualifications. In CIR v Peter McIntyre Ltd (1926), 12 TC 1006 CS on page 1014 the Lord President (Clyde) explained Rowlatt J’s decision as follows:
The decision in the Esplen case was referred to by Scrutton L J in Brighton College v Marriot (1925), 10 TC 213 HL. He said on page 226:
And on page 227:
But his interpretation of that decision appears to go too wide and should probably not be given much weight.
So these cases contribute little to the question whether a corporate body can carry on a profession for the purposes of corporation tax.