HC Deb 16 June 1915 vol 72 cc751-3

Where an assessment to Income Tax has become final and conclusive for the purposes of the Income Tax for any year, the assessment shall also be final and conclusive in estimating total income from all sources for the purposes of Super-tax for the following year, or of any exemption, relief, or abatement under the Income Tax Acts, and no allowance or adjustment of liability on the ground of diminution of income or loss shall be taken into account in estimating the total income from all sources for such purposes unless that allowance or adjustment has been previously made in respect of Income Tax on an application under the special provisions of the Income Tax Acts relating thereto.

Motion made, and Question proposed, "That the Clause stand part of the Bill."


I wish to ask what is the meaning of this Clause? It seems to me that when an income has been arrived at for the purposes of Income Tax it is intended the same figure shall be taken as applicable to Super-tax. I think sometimes there are differences between the amount which is assessable to Income Tax and the amount which is under the present law is assessable to Super-tax. I want to ask whether this is a Clause which means that Super-tax is to be modelled on the figure arrived at by the Income Tax Commissioners? If that is so I would like to know what the merits of that proposition are.


This is a matter which received some prominence in former Debates with which I was associated. My hon. Friend asks what is the object of this Clause. I will try in a few words to make its object clear. In order that I may be followed I must remind the House that Super-tax is a tax imposed upon the total income of the individual from all sources without regard as to whether he has been taxed at the source for ordinary Income Tax purposes or not. A successful professional man, for instance, who makes £5,000 or £6,000 a year is taxed for Super-tax at a figure which includes not only his professional earnings but also the returns from his investments. The successful professional man, when taxed for Income Tax under Schedule D, is only taxed on his professional earnings, and before the amount on which he pays tax under Schedule D is fixed he has every opportunity of challenging the assessment. As the Committee knows, he has to go to the Commissioners in the place where he carries on business, or the special Commissioners if necessary. There is an appeal, and on a case stated it may come up to the High Court, and then the right figure is fixed once and for all, and that having been fixed he pays ordinary Income Tax upon it. It was always intended, and was so explained from this Box years ago, that when Super-tax was exacted from such an individual his professional earnings which have already been ascertained and checked, and assessed for the purposes of Schedule D, should when so fixed be treated as an element in the calculation for Super-tax purposes. Otherwise you would be doing the same thing twice over, and that would not result in an advantage to him. He may have got a good assessment under Schedule D, and he would have reason to complain if the revenue officer said to him, "Now I am on Super-tax, I will go through the operation all over again." It was always understood and intended that the assessment to Schedule on which he pays ordinary Income Tax on his professional or commercial earnings should stand, once ascertained, as an element in the Super-tax calculation. It is only an element because, in addition to the professional earnings under Schedule D, you would, for Super-tax purposes, add his income from investment. A short time ago an ingenious person thought he could argue that really he was entitled to have the Schedule D calculation revised before he paid Super-tax. He was not only an ingenious person but he employed ingenious counsel, and in the House of Lords he succeeded, and Lord Loreburn said that although he quite appreciated that the result was one which might be inconvenient for the subject and for the Exchequer, he thought it was the true construction of the Statute as it stood. The object of Clause 11 is to make the necessary amendment which will secure the continuance of the practice as it has hitherto always been understood. The result is that a man has every opportunity of challenging his assessment for Schedule D or any other Schedule, and he may succeed in cutting it down, just as the Exchequer may succeed in making it bigger by objection. But once fixed it ought to be regarded as fixed as between the State and the individual, and it should not be the subject of a second series of disputes before Super-tax is charged.

Question put, and agreed to.