§ MR. SCOTT (Ashton-under-Lyne)
To ask Mr. Chancellor of the Exchequer whether the Board of Inland Revenue, in order to arrive at the proper amount of assessment of profits due under Schedule D, are entitled to a statement of income and expenditure for three years in order to arrive at the average payable; whether, during the last year or two, the practice has come into vogue of surveyors of taxes asking for the production of balance sheets involving the disclosure of the financial position of traders in addition to the above; if he is aware that, when objection has been made to the production of these balance sheets, surveyors of taxes and special commissioners have admitted that they have no right to the production of the same, and that, notwithstanding this admission of no right on the part of surveyors and commissioners, they are refusing to allow for depreciation or wear and tear unless these balance sheets are produced, and that they are making supplementary assessments in order to drive income-tax payers to appeal and to produced balance sheets; that the before-mentioned practice varies in different parts of the country, and that in London, whilst balance sheets are frequently asked for by surveyors of taxes and special commissioners, they are not insisted upon when objection to their production is made, and yet in Lancashire and Yorkshire the balance sheets are insisted upon: and that this method of seeking and enforcing what admittedly the Inland Revenue are not entitled to is causing friction and indignation at this enforced disclosure of a man's financial position.
(Answered by Mr. Lloyd-George.) The district commissioners of taxes and the 66 commissioners for special purposes, and not the Board of Inland Revenue, are the authorities in whom is vested the power of assessing and determining the liabilities of taxpayers under Schedule D, and who alone are entitled to statements of accounts. All returns under the Income-Tax Acts are subject to examination and objection by the surveyors of taxes prior to the consideration of the same by the Commissioners, and in order that they may be in a position to certify that they are satisfied with such returns, and thus obviate the possibility of appeals, it is their practice in certain cases to ask for accounts. It is only the commissioners who are empowered (by Section 120 of the Income-Tax Act of 1842) to demand the production of "all particulars required by them" for the purposes of the Income-Tax Acts, and this only for purposes of appeal. The special commissioners, I am informed, have not, as is suggested in the hon. Member's Question, admitted that they have no right to call for the production of balance sheets; and they consider that in many cases the information contained in balance sheets is essential in arriving at the correct liability. For protecting the revenue supplementary assessments are frequently necessary in the case of taxpayers claiming allowances, for, e.g., wear and tear; and the Board are not aware of any cases in which surveyors have exceeded their powers in this connection.