B5.665B Treatment of receipts and expenses of petrol retailers
A number of cases which are concerned with bargains made between petrol retailers and their suppliers, have raised the difficult point as to what weight, if any, should be attached to the method of application for tax purposes of amounts received by the retailer in consequences of such bargains. In these cases, the method of application has been the subject of express stipulation, so that an indirect benefit to the supplier, whether of an enduring nature or not, could be inferred, and this clearly had relevance to the deductibility, or otherwise, of the payment, for the purpose of the supplier's computation of profits. If the retailer also gave covenants unconnected with the application of moneys received (eg to buy petrol from no other supplier), which was the case in the majority of instances, it was possible to say that the supplier's cash outgoing was for more than one purpose, conceivably one of a capital nature and the other not. However, this did not necessarily solve the problem as to the nature of such a cash sum in the retailer's hands, having regard to the various undertakings he had given in order to obtain it.
Nature of receipt by payee
In Wheatley1 the respondent taxpayer entered into an agreement for ten years with the Regent Oil Co Ltd whereby he undertook, among other restrictions, to sell only Regent petrol. He was to receive up to £115 in each of the
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