§ MR. HANBURY (Preston)I beg to ask the Chancellor of the Exchequer whether he is aware that, in arriving at the assessable balance of trading profits liable to Income Tax, it is the practice of surveyors of taxes to disallow the deduction from trade expenses of the amount paid as Income Tax, or, in other words, that the assessors insist upon adding to the amount of net profits the amount paid as Income Tax, thus taxing taxes as if they were profits instead of a trade loss like all other outgoings incident to the carrying on of trade; whether this practice is in contravention of the Act of Parliament and the Rules made thereunder; if not, under what clause or section of which Act the practice is justified; and whether he is aware that, in any case, the decision of the House of Lords last year in the case of "Styles v. the Gresham Life Assurance Company" authoritatively decided the question in a sense adverse to the practice in question?
§ SIR J. T. HIBBERT(who replied) said: I am advised that there is no authority in the Income Tax Acts for the deduction of the amount paid as Income Tax as if it were a trade loss or a trade expense. The practice is not in contravention of the Acts. The Act of 1842 expressly 1700 states that only such deductions shall be made as the law expressly enumerates, and there is no provision that I am aware of for making the deduction in question. The case of "Styles v. the Gresham Life Assurance Society" has no bearing on this particular matter.
§ MR. HANBURYThen it is the practice of the Treasury to charge Income Tax on Income Tax?
§ SIR J. T. HIBBERTYes.
§ MR. BARTLEY (Islington, N)Is it not a fact that some surveyors of taxes have allowed the deduction, and that, consequently, the practice is not universal?
§ SIR J. T. HIBBERTIf the head office found that any subordinate official was allowing the deduction, I imagine a stop would soon be put to the practice.