Gloucester Railway Carriage and Wagon Co., Ltd., [1925] AC 469, [1925] UKHL TC (HL)

The taxpayer manufactured railway wagons, which it sold outright (outright or under hire purchase agreements) as well as letting out wagons on simple hire (i.e., no purchase options). After the First World War there was a great scarcity of wagons and the taxpayer decided to sell all the wagons which were being hired out. The Special Commissioners had stated that "we are unable to draw the very sharp line which we are asked to draw between wagons sold, wagons let on hire purchase and wagons let on simple hire...." Before concluding that the gain on this sale was a taxable profit, Lord Dunedin stated (at p. 474):

The hiring accounts were kept separate, but is was all one business.

The taxpayer manufactured railway wagons, which it sold outright (outright or under hire purchase agreements) as well as letting out wagons on simple hire (i.e., no purchase options). After the First World War there was a great scarcity of wagons and the taxpayer decided to sell all the wagons which were being hired out. In confirming that the gain on this sale was a taxable profit, Lord Dunedin stated (at pp. 474-475):

...there was here one business. A wagon is none the less sold as an incident of the business of buying and selling because in the meantime before sold it has been utilized by being hired out.