Judge delves into mind of Pitt the Younger

Posted: 13th December 2012

A High Court judge has delved into the mind and motives of 18th Century Prime Minister, William Pitt the Younger, in ruling that the owners of a historic toll bridge cannot qualify for a £700,000 tax rebate. Whitchurch Bridge has crossed the Thames on the border between Berkshire and Oxfordshire since 1792 - a time, similar to our own, when Mr Pitt was tackling a crippling national debt - and has its very own act of Parliament to mark its unique status.

The bridge, originally built by 10 local dignitaries using their own funds, who wanted it kept and replaced to serve local people in perpetuity, is now in its third incarnation and the latest cast iron Grade II-listed structure is decaying. The Company of Proprietors of Whitchurch Bridge, whose 10 shareholders include direct descendants of the original builders, manages the landmark under the terms of the Whitchurch Bridge Act 1792 and wants to replace it with a new one.

Canal BridgeThe statute, re-enacted in 1988, stated categorically that the bridge would not be subject to any ‘rate, tax or duty whatsoever’ and the company argued that it should be refunded VAT that it will have to pay on the supply of goods and services relating to the construction of the new bridge. However, Treasury lawyers won the debate after leading Mr Justice Burnett on an historical journey to the time of the notorious 'window tax', imposed by Mr Pitt who was the youngest ever Prime Minister, at 24, and twice led the government.

The company argued that the cash-strapped Parliament of 1792 had intended the bridge to be self-funding through tolls. The perpetual immunity from tax was a just reward to the 10 original benefactors for taking on the burden of a vital infrastructure project without recourse to public funds. However, the judge upheld the Treasury's arguments that the exemption was ‘not ubiquitous’ and did not mean that the company was entitled to reclaim VAT on construction costs.

Speaking of the debts that mired the country during Mr Pitt's first tenure as Prime Minister, the judge observed: ‘There has rarely been a monarch or government in English or British history whose revenues comfortably exceeded expenditure’. Taxes were levied not just on alcohol, but on a multitude of mundane daily articles including leather, candles and soap. Building materials, such as bricks, tiles, window panes and even wood, did not escape Mr Pitt's depredations and, despite the exemption, the bridge builders were right from the start indirectly paying tax through their suppliers.

The judge said: ‘Both before and after the passage of the 1792 Act, bricks were subject to excise duty. Candles, no doubt, were used in the toll booths and even glass. They too were subject to excise duty, as were many of the goods consumed in the running of the bridge. Stamp duty was payable on paper used and so on. The company would not have been liable to account for any of these taxes to the various tax collection offices then existing. That would have been the responsibility of the suppliers of the goods and services. But the bridge and its proprietors undoubtedly bore the economic burden of them.’

It was submitted that parliament's intention had been to relieve the company of taxation ‘to the fullest extent allowed by law’ but the judge said that the introduction of VAT had not been contemplated by anyone in 1792. Legislators could have relieved the company from the indirect burden of the tax it had to pay on its supplies but had chosen not to do so, he added.

The judge emphasised that the company had not brought the case to court ‘out of any sense of narrow self-interest’. He said that the likelihood is that the company's VAT liabilities will result in users of the bridge paying higher tolls in future.