References: FBD/MC P.S.1406/44
Oxford University Press
Mr Booth.
As requested I submit the following notes on the question of exemption of profits under Section 24, Finance Act, 1927.
(1) The University has not hitherto pressed a claim of exemption on the trading profits of the University Press, though their Accountants had advised them to do so.
(2) Cambridge University Press.
(i) in 1940 the Special Commissioners refused the claim for exemption of profits under Section 24, Finance Act, 1927, the terms of their decision being:-"The trade exercised by the Cambridge University Press is principally concerned with printing and publishing for the outside world. Thus, in our view, specialised though it is and devoted to the production of works of learning, it extends beyond the purposes and objects of the University. We find that the trade, except insofar as it is concerned with work for the internal use of the University is not exercised in the course of the actual carrying out of a primary purpose of the University". (T.1085/8/40).
Certain features should be noted
(a) The Press are both printers and publishers. Was printing is done as to 20% for the University and outside clients the main printing is for the publishing side.(ii) War Damage Contribution (see W.D.C. 598/1941).(b) The publications are practically without exception learned or at least educational.
(c) The press is willing to publish books at a loss if they consider the books exceptionally valuable.
(d) it was agreed for the purpose of the hearing that the Syndics of the Press can be described as a Committee of the University's governing body and their activities as activities of the University.
(e) property in the occupation of the Press is exempted under Section 30, Finance Act, 1921, on the grounds that it is in the occupation of the University.
The War Damage Commission determined that the purposes for which the proprietary interest of the University in the premises used by the Press is held are either for the advancement of education and learning only or charitable purposes which include the advancement of education and learning and that the use of the land is solely or mainly for or in connection with the carrying out of the purposes of the advancement of education and learning.
It will be noted that in paragraph (8) of their determination the War Damage Commission did not consider the fact that exemption was not due under Section 24, Finance Act, 1927, as relevant to the question as to whether the land was "used in any manner or in connection with the carrying out of the purposes" for which the proprietary interest is held. Mr Preston's minute of 26 September, 1945 on the papers draws attention to the different considerations involved.
(3) General observations.
(a) We have not such detailed information as to the precise constitution of the Oxford Press as we have regarding Cambridge but according to the Memorandum by the Vice-Chancellor it is merely a department at the University. If that is so it is similar to the Syndics of the Cambridge Press, but if the case should come before us as a formal claim, we ought to investigate its origin, as it may be that in some Act or charter the Press itself has been given a precise function. If it has been anywhere declared that its purpose is the advancement of education this would be very material to the claim. In our counter-statement on the W.D.C. case paragraph 7(a) we laid emphasis on the point that the letters Patent of Henry VIII in the case of Cambridge merely referred to "the printing and selling of books of every kind".
(b) As to the decision of the War Damage Commission, in the Cambridge case. The Commission ruled that the premises were used "for or in connection with the carrying out of the purposes for which the proprietary interest is held and not otherwise". As the Commission took the view that the premises were held for the advancement of education or charitable purposes which included education and the use was exclusively for those purposes and solely or mainly in connection with the carrying out of the advancement of education and learning, it seems to be that had it been relevant to the question at issue they would have been bound to hold that the trade was exercised in the course of the actual carrying out of a primary purpose of the charity. Their finding amounts to a holding that education was the primary purpose for which the premises were held and as they were used for that purpose the trade was being exercised in carrying out that primary purpose.
(c) Though the decision of the War Damage Commission is not relevant to the Income Tax claim it indicates that were the claim to go to the Courts we could not be certain that of a decision in our favour, but I consider we have no alternative but to resist any formal claim made for the following reasons:-
(i) the decision of the Special Commissioners in the Cambridge case(ii) we have hitherto maintained that the exemption should be given only where the trade is not only one of the means of carrying out the primary purpose, but is the end in itself e.g. a charity founded to carry on a school. Whilst we could not maintain, if the purposes of the Press was stated to be the carrying on of a business for the advancement of education that the trade was not a primary purpose (see T.1089/5/1929 not - The Christadelphian Magazine and Publishing Association Limited), we should maintain that if the purposes of the Press are those of the University, viz. the advancement of education in general, the carrying on of a publishing and printing business on commercial lines is not exercised in the course of the actual carrying out of a primary purpose.
(iii) these Presses are in competition with other Commercial printing and publishing concerns, and to admit exemption unless forced to on appeal may raise political issues of the kind that we may yet get in the field of theatrical activities following the results of the Royal Choral Society decision.