§ LORD BALCARRES (Lancashire, Chorley)To ask Mr. Chancellor of the Exchequer whether it has been the intention in previous Finance Acts to mitigate the effect of the five years average as the basis of assessment to income-tax in the case of commercial concerns producing profits of a fluctuating character, especially when an average was sought to be attained by adding the higher profits of past years to diminishing profits of declining businesses; whether he will consider the propriety of substituting for the clause to be omitted some more effective remedy for the admitted hardships of the rigid application of the five years average system; and whether, in considering this question, he will have regard also to the amount of the deductions which ought to be allowed from gross profits before fixing their value for assessment, in respect of such things as depreciation of plant and machinery, or the replacement of capital expended in the acquisition of such things as leasehold interests in property, or mines liable to be exhausted in a short period of years.
§ (Answered by Mr. Asquith.) No such intention is within. my knowledge. The 1305 various considerations to which reference is made in the Question as bearing upon the assessment of profits were al fully considered by Lord Ritchie's Committee, and are discussed in Parts V. and VI. of the Committee's Report [Cd, 2575]. It may be added that the period over which an average is taken is three years for most trading concerns, and is extended to five years only in the case of mines.