Monopoly value paid for a trading licence is capital expenditure and not deductible as a revenue expense.

Sums paid as monopoly value for the grant or renewal of a justices' on-licence for a term were treated as capital expenditure because they were the price of acquiring the right to trade for the relevant period. Payment by instalments did not change the character of the outlay, and the fact that the licence was term-limited and potentially renewable did not make it a revenue expense. The expenditure was compared with a premium for a lease or capital improvements and was therefore not deductible in computing trading profits.

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Issues: Whether sums paid as monopoly value on the grant of new justices' on-licences for a term were deductible in computing trading profits, or whether they were capital outlays.

Analysis: The payments were imposed as a condition of obtaining a licence to carry on the trade and represented the price of acquiring the right to trade for the relevant term. The form of payment by instalments did not alter its character. The reasoning treated the monopoly value as a capital sum, secured for the enduring benefit of the trade, and compared it with a premium paid on a lease or expenditure on capital improvements. The fact that the licence might be granted for a term, and renewed later, did not make the expenditure periodic in the revenue sense.

Conclusion: The sums were capital expenditure and were not deductible in computing profits.

Final Conclusion: The appeal failed because the payments were held to be part of the capital cost of acquiring the right to trade under the licence, not revenue expenses of the business.

Ratio Decidendi: A lump sum paid as monopoly value to obtain or renew the right to carry on a trade for a term is capital expenditure, even if payable by instalments, and is not deductible as a trading expense.

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