HC Deb 28 June 1916 vol 83 cc945-7

For the purposes of assessment of Income Tax in respect of the profits of a controlled establishment the net profits of such establishment for the accounting period under this Act shall be deemed to be the amount of the net profits of such establishment, as ascertained for the purposes of the Munitions of War Act, 1915, of any accounting period or periods under that Act which expire during the currency of the accounting period under this Act.


This Amendment, standing in the name of the hon. Member for Hereford would, in some cases, involve a charge, and therefore is not in order.


May I point out that while the Clause, as a matter of fact, would undoubtedly raise the tax to some extent, yet, on the same basis as other taxes, there would be a reduction of charge. The hon. Gentleman will probably be induced to give us a little more information as to the incidence of this tax as it now stands—


I thought the hon. Member rose to address me on the point of Order. What I stated was that it appears to me that in some cases, if we allowed the proposed alteration in the law, it would involve a charge, and therefore the new Clause could not be moved. I can hear the hon. Member on the point of Order.


I respectfully submit that if the Clause were accepted there would be a relief, and not an imposition, of taxation—there would be no tax on anybody. It is proposed that the allowances for depreciation, and so forth, which are made under the munitions levy and the Excess Profits Tax, should be taken into consideration in assessing the Income Tax. The point of the argument is that the existing Income Tax law specifically does not allow all the depreciations which are admitted and accepted in the case of the munitions levy and the Excess Profits Tax. Under the Income Tax law, buildings are, by its terms, not susceptible of any reduction at all, and consequently the Income Tax will have to be charged in full on all these subjects of special depreciation. I think it is most important that this should be borne in mind by the Treasury, and also by those who are now, I believe, to come to some agreement on the subject of controlled establishments. I think that the point as to the effect of the existing Income Tax laws on buildings—and by buildings I mean, technically bricks and mortar—being to differentiate it entirely from these new proposals allowing special depreciation for buildings and plant, in certain cases, should be borne very fully in mind, and taken into consideration. I would point out, further, that these three taxes, the munitions levy, the Excess Profits Duty, and the Income Tax are all based on different standards, involving different calculations, and I submit that some attempt should be made to unify those standards by bringing these three taxes as far as possible into one line.


On the point of Order. I submit that this new Clause would alter the basis of computing the Income Tax in accordance with what is done under the munitions levy. In certain cases that would obviously increase the charge, for I understand that there are certain allowances made under the munitions levy which are not made in regard to Income Tax, and that there are allowances in regard to Income Tax which are not made under the munitions levy. In a great number of cases I agree this proposal would reduce the charge, but not in all.


On the point of Order. Can the right hon. Gentleman give any case where there is an allowance made in Income Tax assessment which would not be made in the munitions levy? That seems to be the whole point.


I may say that I made some inquiry, and the conclusion I arrived at was that probably in 95 per cent, of the cases it would mean a reduction, and in a small number of cases it would mean an increase. I have suggested to hon. Members a form in which they might make the proposal, but I think as it stands it is not in order.