Relief in Respect of Income Tax under Schedule A.

HC Deb 12 December 1911 vol 32 cc2289-95

"(1) Notwithstanding anything contained in Section thirty-five of the Finance Act, 1894, in respect of Income Tax imposed under Schedule A, the amount of the assessment shall, for the purposes of collection be reduced by a sum equal to one-fourth part thereof—

1. (a) in the case of an assessment on lands, inclusive of the farmhouse and other buildings, if any; and
2. (b) in the case of an assessment on any house, the annual value of which, as adopted for the purpose of Income Tax under Schedule A, does not exceed eight pounds.

(2) Section 69 of the principal Act is hereby repealed."

The House will remember that Section 69 of the principal Act inserted a certain measure of relief from Income Tax under Schedule A in certain cases. The case of assessments on land inclusive of farmhouses and other farm buildings, and the case of assessments on houses, the assessment of which did not exceed £8; in other words, labourers' cottages. I do not propose by the new Clause which I am moving to deal with any larger class of property and hereditaments than those already dealt with by Section 69 of the right hon. Gentleman's Act. I think that what has been happening under that Section is generally admitted. It is generally admitted that whenever a claim has been made for rebate under that Act it has been successful, and that the experience of the Treasury has been that the 25 per cent. rebate from the assessment for Income Tax under Schedule A for repairs, insurance, and management under that Section has always been maintained wherever a case has come under the notice of the Treasury. It will also be admitted that there are two special reasons why it should no longer be necessary, once it is proved that these claims can be successfully made, to make a claim under the flat rate. One reason is that an increased amount of trouble has admittedly been caused to the staff at Somerset House—trouble which is quite incommensurate with the amount of saving to the Treasury through the work which the staff does.

The second reason is that the cases in which failure to obtain rebate under Section 69 of the Finance Act has arisen are the cases of very small owners who have not got agents, estate staffs, and the other necessary assistance to enable them to make the claims which the larger landowners can make under the Section. It is perfectly easy on a large estate to fill up Form 99 in claiming rebate, and to give all the necessary particulars. I do not say there is no trouble, but there is no great difficulty about it. The books dealing with estate expenditure are there to hand, the staff is there to do the work, and the big landowners have no particular difficulty in respect of matters of that kind. With a small landowner it is a very different matter. He has not got the staff or the agents; in many cases he has not got the elaborate form of book-keeping, and it may be very difficult for him to give the necessary particulars entitling him to claim this rebate in respect of insurance and repairs. In every case where 25 per cent. is spent in repairs he must have the particulars at hand. But the claim which may be made on the Treasury this year, next year, and in the year following in that respect, will each year become smaller, and at the end of five years after the passing of the principal Act it will certainly cease altogether.

Let me make my meaning clear. The claim under Form 99 is based on the expenditure not of the preceding year, but of the five preceding years. Many small owners may possibly not have got carefully-kept books showing in detail the expenditure on this class of work for five years back, but since the passing of the Act every single owner has kept the necessary accounts to enable him to claim in future, and five years after the passing of the Act, only two and a half years off now, every owner, large or small, whether he has to keep his own accounts or whether he has experts to do it, will be able to make a successful claim under Section 69 of the principal Act. Unless the right hon. Gentleman who will deal with this matter is able to show—and I know he cannot show—that in any substantial number of cases a successful claim cannot be made for this rebate, I do not think this Clause can be reasonably resisted. It is moved not in the interests of the large landowner, but of the small man, who has not had the advantages many of the larger estates have, and in addition to the interests of the small owner it is moved in order to save unnecessary labour and unnecessary expense on behalf of the staff of the Treasury. I think if the matter is referred to them it will be found that an immense saving might be made in the Treasury if a flat rate was substituted for the rebate claim under Section 69. At this late hour I will not go into greater detail, and I will not give specific instances of this point, as I do not think the facts are in serious dispute. I appeal to the right hon. Gentleman to give this matter his favourable consideration, and to tell the House what the experience is of the permanent officials of Somerset House who have to deal with the details.

Mr. J. W. HILLS

I beg to second the Motion.

Mr. McKINNON WOOD

This is a case in which a concession was made as a maximum and it is now sought to be made usual in a considerable number of cases in which no claim has been made for reduction.

Mr. COURTHOPE

For the reasons I have stated.

Mr. McKINNON WOOD

This matter was discussed so lately as last March and then my right hon. Friend the Chancellor of the Exchequer stated that he had a strong objection to making a deduction of this kind. Now it is proposed to turn the concession which he gave as a maximum into a flat rate. I am sorry the Government is not able to accept the Amendment.

Mr. BRIDGEMAN

I should like to re-remind the right hon. Gentleman who has just spoken that he is not correct in saying that this was offered as a maximum. If he will allow me to read what the Chan- cellor of the Exchequer said on this subject when dealing with it on 20th September, 1909, he will find that he was wrong in that statement. He said that there were many landlords who spent more than 25 per cent. in repairs, and he was going to allow half-a-million to meet those claims. He added that if the whole of that half-a-million were not absorbed by conceding those claims he would then consider the question of giving what was over to those who had spent more than 25 per cent. These are the words the Chancellor of the Exchequer used, and I should like the right hon. Gentleman (Mr. McKinnon Wood) to note them:— If it is found that the £500,000 is not altogether disposed of by this concession, the Government will probably be in a position, at any rate next year, to increase the maximum. If there is any surplus we propose to increase the maximum to those who are spending more than 25 per cent. and no doubt, there are several landlords who are spending considerably more. So the right hon. Gentleman (Mr. McKinnon Wood) is entirely wrong in saying that the maximum was fixed definitely by the Chancellor of the Exchequer in 1909. What I want to know is, what is the Chancellor of the Exchequer going to do to redeem the pledge which he gave distinctly in 1909 that if the £500,000 was not spent—and it has not been spent—he would give whatever was over to those who have spent more? I do not know that I altogether agree with the proposal of my hon. Friend (Mr. Courthope), but I say that the Government ought to fulfil the promise made by the Chancellor of the Exchequer on the occasion to which I have referred. If they are not prepared to give a flat rate of 25 per cent. all round then I say they are still under the obligation to give more in the way of relief to those who have spent more in repairs. I should like to know from the right hon. Gentleman how the Chancellor of the Exchequer proposes to carry out his specific undertaking.

Mr. HICKS BEACH

Surely we are entitled to hear some answer from the Treasury Bench to the remarks of my hon. Friend. He has pointed out that there was a distinct undertaking given by the Chancellor of the Exchequer in September, 1909, to the effect that he was allotting £500,000 to pay for the abatement on the Income Tax under Schedule A. The Chancellor of the Exchequer distinctly told the House at that time that if this sum was not sufficient he would take steps to allot a larger sum in years to come, but if, on the other hand, the £500,000 should prove more than sufficient for the purpose in view——

Mr. McKINNON WOOD

On a point of Order. The point which has been discussed by the last two speakers is not the point raised by the Amendment, but a distinct point.

Mr. HICKS BEACH

Surely we are allowed to discuss one or two items which have a considerable bearing on the question in connection with which my hon. Friend has moved his new Clause. The ground on which my hon. Friend has brought forward his proposal is very largely that in practically all the cases which have been submitted to the Inland Revenue authorities there have been shown to be good grounds for demanding this abatement. In connection with the new Clause, I submit that we are entitled to some explanation regarding the undertaking which the Chancellor of the Exchequer undoubtedly gave. If there were any other at any other time than half-past twelve in the morning of raising this question we should be only to glad to discuss it then, but as far as I know this is the only possible occasion on which it can be discussed. What we also want to know is this, if the £500,000 is more than the amount required to pay the claims which have been sent in up to 25 per cent., are we then going to have an extra allowance made in the case of those claims in which it has been proved that a greater amount than 25 per cent. has been spent? I hope the right hon. Gentleman will give us some answer on that point and also with respect to the Chancellor of the Exchequer's undertaking.

Mr. McKINNON WOOD

This is quite a distinct point from that raised in the new Clause which has been moved by the hon. Member opposite (Mr. Courthope), but the position is this: Whatever pledge my right hon. Friend the Chancellor of the Exchequer gave, he will be prepared, as I think the House recognises, to fulfil to the full. I am advised, however, that it is quite impossible to tell how far the money will go towards fulfilling this arrangement of 25 per cent. Sufficient time has not yet elapsed to enable us to judge as to whether there will be any margin.

Mr. BRIDGEMAN

The Chancellor of the Exchequer said distinctly that he would do it "next year," which was last year.

Question, "That the Clause be read a second time," put, and negatived.

Mr. WHELER

I beg to move that the following new Clause be read a second time:—