PEPPER (INSPECTOR OF TAXES) Vs. HART AND OTHERS.

JUDGEMENT

(1.) This case concerns fringe benefits, as they are sometimes called, or more colloquially, "perks". Malvern College is a well -known independent school for boys. It was established in the middle of the last century, and was incorporated by Royal Charter in 1929. For some year, and in common with what happens in may other independent schools, masters at the school have not been charged the ordinary, full fees for the education of their sons at the school. To be admitted to the school sons of staff have to satisfy the same educational requirements as all the other boys, but at the discretion of the council of the school, staff of the school, including the bursar, are required to pay only a part, currently one -fifth, of the normal day boy or boarding fees. This concession made because the school council is concerned that otherwise staff may be lost to competing schools which operate such a concession. With school fees as high as they are these days, this is a valuable concession. The question raised by these appeals is how this concession is to be quantified when calculating the income tax payable by the staff in respect of their remuneration.

(2.) Before the court are 10 appeals. They all raise the same point. Nine of the taxpayers are assistant masters at the school or, in one instance, the personal representatives of an assistant master who has since died. The tenth taxpayer is the bursar. They have appealed against assessments to income tax under Schedule E made in respect of one or more of the three years 1983 -84, 1984 -85 and 1985 -86. In each case the taxpayer had one or more sons in attendance at the school pursuant to the concessionary fees scheme in one or more of these years. Twelve boys altogether, nine of whom were day boys and three were boarders, are concerned in these appeals. At any given time not more than nine boys occupied places in the school pursuant to the scheme.

(3.) During the three years in question the total number of boys attending the school averaged just over 600, mostly boarders. Between 60 and 70 girls, from two local independent girls schools, also received part of their education at the school, principally in the sixth form. Any additional costs to the school were covered by payments by the girls schools. The presence of the sons of staff did result directly in some additional expense on items such as food, laundry and stationary. That expense was amply covered by the reduced fees paid by the staff. Over the three years in question these additional direct expenses varied between Pounds 385 and Pounds 430 per boy per year. The normal school fees, of which the staff paid 20 per cent, varied in the case of boarders, between Pounds 4,675 and Pounds 5,300 per year and, in the case of day boys, between Pounds 3,360 and Pounds 3,825 per year. Further expense was incurred on some items such as music and handicrafts, as well as text -books, which were charged separately to the parents, in amounts which covered their cost. These extras were also paid in full by the taxpayers.