Sir, – I enjoyed reading the discussion on tax avoidance and whether Jaffa cakes are a cake or a biscuit (Tim Harford, “How to devise and impose taxes: A guide for every government”, Business This Week, October 21st).
It recalled the conundrum faced by Mr Justice Henchy in the 1981 Supreme Court Kiernan case. In the Kiernan case, the inspector of taxes had assessed the taxpayer as “a dealer in cattle” because his principal farming activity on a holding of 27 acres was intensive pig production.
Consequently, Mr Justice Henchy had to decide whether “cattle” included “pigs”. He took the view that a word or expression should be given its ordinary colloquial meaning.
In addition, he stated that the judge construing the word should draw primarily on his own experience of its use.
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Finally, in relation to words used in a statute creating a penal or taxation liability, he stated that the word should be construed strictly to prevent a fresh imposition of liability from being created unfairly using oblique or slack language.
We can only speculate whether Mr Justice Henchy would have agreed with the UK view that Jaffa cakes are a tax-efficient cake and not a biscuit.
However, we have the benefit of his wisdom from his ruling in Kiernan that “to the ordinary person cattle and pigs are distinct forms of livestock”. – Yours, etc,
JOHN R QUIGLEY,
Senior Lecturer
in Taxation,
Department of Business
and Financial Services,
Technological University
of the Shannon,
Mid-West Campus,
Limerick.