Jennings (H.M. Inspector of Taxes) v Barfield(1) (1959-1963) 40 TC 365
HIGH COURT OF JUSTICE (CHANCERY DIVISION)–
22ND AND 23RD MAY, 1962
Income Tax, Schedule D – Deduction – Expense – Loss sustained by solicitor as a result of guaranteeing client’s bank overdraft – Income Tax Act, 1952 (15 & 16 Geo. VI & 1 Eliz. II, c. 10), Section 137 (a), (e) and (f).
The Respondents, a firm of solicitors, guaranteed a bank overdraft for a client who required it to complete the acquisition of a showroom, to pay a deposit on a house and to provide funds for carrying on his business. The client was subsequently adjudged a bankrupt and the Respondents were called upon to pay a sum of £412 under the guarantee.