Although the whole of a man's rights and interests, which include his rights in his own personal safety, may not be readily divisible between his income and his capital assets, it is axiomatic that all those rights and interests are either subject to tax or not. It follows, therefore, that in an action for damages a claim may be made not only for loss of or damage to some non-taxable interest, but also, and perhaps exclusively, for a reduction in the plaintiff's taxable income caused by the wrongful act of the defendant. In such cases the plaintiff's liability to tax may become a relevant consideration, either as between himself and the Commissioners of Inland Revenue or as between himself and the defendant. It is the purpose of this article to consider some aspects of the inter-relationship of damages and tax, with particular reference to the decision of the House of Lords in British Transport Commission v. Gourley and the subsequent Report of the Law Reform Committee.
