Eclipse Film Partners (No. 35) LLP v Revenue and Customs Commissioners, [2014] BTC 503, [2013] UKUT 0639 (TCC), aff'd [2015] EWCA Civ 95

Before affirming a finding below that the appellant partnership, which had been licensed rights to exploit two films, was not carrying on a trade but instead had "non-trade business," Sales J stated (at paras. 78-79):

[78]…[A]n element of speculation in the sense of conducting an activity which might result in a profit or a loss is strongly indicative of that activity being capable of having the character of trading, and the absence of such an element is strongly indicative that it is not a trading activity.

[79] That interpretation is also supported by the way in which 'trade' was defined at the relevant time and has been defined in tax legislation for a long time, as including 'every trade, manufacture, adventure or concern in the nature of trade' (see e.g. section 832(1) ICTA 1988, set out at [398]). In a list of terms like this, the meaning of each item naturally takes some colour from those listed with it. In old legal language, the 'nosçitur a sociis' principle is relevant: the meaning of a term is given or informed by its fellow terms deployed in the same list. Here, the use of the word 'adventure' is redolent of business activity of a speculative kind, and this informs the meaning to be given to 'trade'.

[97] The law regarding the approach to construction of a consolidating statute was explained by the House of Lords in Farrell v Alexander [1976] UKHL 5, [1977] AC 59 and is well settled. When construing a consolidating statute, which is intended to operate as a coherent code or scheme governing some subject matter, the principal inference as to the intention of Parliament is that it should be construed as a single integrated body of law, without any need for reference back to the same provisions as they appeared in earlier legislative versions... . An important part of the objective of a consolidating statute or a project like the Tax Law Rewrite Project is to gather disparate provisions into a single, easily accessible code. That objective would be undermined if, in order to interpret the consolidating legislation, there was a constant need to refer back to the previous disparate provisions and construe them… .

After reviewing Explanatory Notes prepared by the Tax Law Rewrite Project at the Inland Revenue, which indicated that the provision before him was not intended to change the law, Sales J quoted approvingly (at para. 92) obiter comments of Lord Steyn in R (Westminster City Council) v National Asylum Support Service, [2002] UKHL 38; [2003] LGR 23 at [5]:

Again, there is no need to establish an ambiguity before taking into account the objective circumstances to which the language relates. Applied to the subject under consideration the result is as follows. Insofar as the Explanatory Notes cast light on the objective setting or contextual scene of the statute, and the mischief at which it is aimed, such materials are therefore always admissible aids to construction. They may be admitted for what logical value they have. Used for this purpose Explanatory Notes will sometimes be more informative and valuable than reports of the Law Commission or advisory committees, Government green or white papers, and the like. After all, the connection of Explanatory Notes with the shape of the proposed legislation is closer than pre-parliamentary aids which in principle are already treated as admissible: see Cross, Statutory Interpretation, 3rd ed (1995), pp 160-161. If used for this purpose the recent reservations in dicta in the House of Lords about the use of Hansard materials in aid of construction are not engaged…