NEW CLAUSE.—(Amendment of Section 33 (2) of Finance (No. 2) Act, 1915.) (Hansard, 28 June 1916)

Mr. DENNISS
I suppose it is intended that not merely individuals and firms but also companies shall be allowed to take advantage of the provision enabling Income Tax to be paid in two instalments. I have in mind a company which pays £70,000 in Income Tax. With the Income Tax amounting to 5s. in the £, it is very often extremely inconvenient for such companies to pay it in one sum. If this beneficial provision applies to individuals or firms, why should it not apply to limited liability companies also? As a matter of fact, the wording of this Section is peculiar. There you find "persons and firms." Here you have an "individual or a firm." Therefore it is perfectly true that it cannot include companies.

§ Mr. MONTAGU
That is quite true.

Mr. DENNISS
If my Amendment is accepted it will apply to companies, because the same consideration, I think, applies to them. I know firms which are just as large as companies and who pay as much Income Tax as do limited liability companies. The difficulty in either case is in raising the money. I do not see any distinction between a firm which has to pay Income Tax of £70,000, and is allowed by this Act to pay it in two instalments of £35,000 each in January and July, and between a limited liability company which has got to do precisely the same thing. Neither do I see any difference between 954 that and an individual. The right hon. Gentleman promised to explain why it is that he does not propose to allow this-Section to be extended to limited liability companies, but I appeal to the Financial Secretary and to the Chancellor of the Exchequer to see that this helpful provision shall be extended to limited liability companies.

§ Mr. MONTAGU
I do not know why the hon. Member for Oldham is so surprised at the wording of the Act. The wording: simply says that the concession therein granted shall be granted to individual and firms. It says "individuals" and not "persons," because it is desired to exclude from relief the very people whom the hon. Member now seeks to include. Surely there is nothing very peculiar in saying what you mean! The reasons for this peculiarity were these: Parliament last year allowed a man who was called upon to pay Income Tax to pay it in half-yearly instalments—the second half-year being postponed—in respect of an income from husbandry under Schedule B, from trade and business under Schedule D, from professions under Schedule D, from employments under Schedules D and E, and weekly wage-earners manually employed; but on no other kind of income at all, not from land, or rents, or interest, nor from anything which was taxed before receipt. The reason of that distinction is quite obvious. If you are-an individual whose business or occupation constitutes his livelihood, and there is a large increase in the rate of Income Tax, it is a hardship suddenly to have to find the whole of that Income Tax, very often at a period when the man has not yet enjoyed the whole income for which he is-taxed. With regard to a company which is assessed under Schedule D, we retain the collection in a single sum, because the individual recipient of the income from those sources gets the whole income at the same time as he pays the tax. From the point of view of the individual who derives his income from companies there is no-hardship in having to pay the whole of the Income Tax at the same time. In regard to the companies themselves, there are two objections. In the first place, it would mean, in this year, a very serious postponement of revenue for which we have not budgeted. That is the first and the least reason; but there is a much better reason—at least, I submit it is. Companies have the power to take the tax from time to time as they pay the interest to 955 debenture holders, and their interim dividends. They take and keep the tax, and they may keep it for many weeks and months before they pay it over to the revenue. If you allowed them to postpone part of their payment to the second half of the year, you would be merely increasing a very valuable privilege which the company now enjoys without giving any individual any compensating advantage. Therefore, I think we were wise, both from the point of view of revenue, and from that of equity, in limiting this Clause as we did, designedly, and in refusing to include what it is now asked we should include.

Mr. DENNISS
I cannot answer the right hon. Gentleman. It may be that I had a bad case, but probably the right hon. Gentleman is right in his argument. Therefore I beg to ask leave to withdraw.