HC Deb 30 May 1916 vol 82 cc2558-61

The following questions stood on the Paper in the name of Colonel NORTON GRIFFITHS:

27. To ask the Chancellor of the Exchequer, with reference to the fact that he has agreed that in the case of controlled firms depreciation allowance accepted by the Ministry of Munitions will also be accepted by the Treasury for Excess Profits Tax purposes, whether he is aware that anxiety still exists amongst controlled establishments as to whether settlements made with the Ministry of Munitions with a view to ensuring the maximum output of munitions are liable to be put aside and set at naught by any other authority; and, if so, whether he will state immediately in clear phraseology, with a view to ensuring the position of manufacturers and enabling them to devote their funds without hesitation towards the maximum output of munitions, that all arrangements made with the Ministry of Munitions regarding taxation or levies under the Munitions Act will be upheld by the Treasury in connection with assessments for Excess Profits Tax, and will give manufacturers a clear assurance that contradictory assessments will not be made by the two taxing authorities?

39. To ask the Minister of Munitions if he is aware that uncertainty now exists amongst producers of munitions throughout the country as to whether financial agreements made with his Department will be rendered nugatory in consequence of contradictory assessments for taxation which may be made by the Treasury for Excess Profits Tax, and is he aware that this state of uncertainty must cause delay and difficulty in the production of munitions, and will necessitate manufacturers making provision in their tenders for such unusual contingencies and so cause unnecessary increase of cost to the nation; and whether the proposes to take any action in the matter?

70 and 71. To ask the Secretary to the Treasury (1) whether he will state what the position will be of controlled firms who may effect settlements with the Ministry of Munitions of their liability to taxation under the rules framed by the Ministry; if such settlements are to be accepted as final for the purposes of Excess Profits Tax assessments under the Finance Act, and if not, whether it will be necessary for manufacturers, for the protection of their legitimate interests, to decline any settlements with the Ministry of Munitions; whether he is aware of the effect of the present state of uncertainty in this connection upon the production of munitions of war; and (2) whether he is aware that uneasiness and perplexity exist to-day in view of the uncertainty of the financial position, as between the Munitions Act and the Finance Bill, of manufacturers desirous of producing materials urgently required for the War, and that manufacturers are in a state of indecision as to whether they are justified in expending further money or increasing output in consequence of the uncertainty as to how money devoted to facilitating and improving the production of munitions will be regarded for taxation purposes; and if he will state, for the information of the manufacturing world in general, what their actual financial position will be as between the Treasury and the Ministry of Munitions?

The CHANCELLOR of the EXCHEQUER (Mr. McKenna)

A controlled establishment shares with all other trading concerns the liability to Excess Profits Duty, which is a tax of general application, but I would refer the hon. and gallant Member to Clause 32 of the Finance Bill, which provides for an adjustment of the payment of this duty and of the Munitions Levy. As I have already stated, it has been arranged that in assessing controlled firms to Excess Profits Duty, in cases where new capital has been put into their business for the special purpose of making munitions of war, the Inland Revenue authorities will accept the depreciation allowance agreed between the firm and the Minister or awarded by the Board of Referees set up by the Minister.

Mr. RUPERT GWYNNE

Are we to understand, apart from the question of new machinery, that the arrangements entered into with the Minister of Munitions have been set aside by the Treasury?

Mr. McKENNA

I do not understand that there are any other arrangements entered into by the Minister of Munitions except those to which I have referred.

Sir A MARKHAM

Is my right hon. Friend not aware that the controlled firms are all unanimous in the belief that the arrangement entered into with the Chancellor of the Exchequer is contrary to the statement he has made?

Mr. McKENNA

I do not understand. I have made no arrangement.

Sir A. MARKHAM

Is it not the fact that controlled firms were distinctly under the impression that they were not to be charged Excess Profits Tax beyond that fixed by the Minister of Munitions?

Mr. McKENNA

I am utterly unable to say what is the impression of the controlled firms, but I am sure they have no reason for being under any impression of the kind.

Mr. S. ROBERTS

Is the right hon. Gentleman aware that the arrangements under the Munitions Act were made at the suggestion of two or three of the large armament firms and were accepted by the Ministry? They were suggested on the understanding that they should continue during the War.

Mr. McKENNA

I understand the arrangements referred to all dealt with the question of the allowance for depreciation. I am not aware of any arrangement which relates to anything else. If the hon. Member will be so good as to bring any other circumstances to my notice I shall be very happy to consider them.

Mr. GWYNNE

Will the right hon. Gentleman consult with the Minister of Munitions and find out what arrangements were made.

Mr. McKENNA

I have consulted with the Minister of Munitions and I understand no arrangements have been made, except relating to depreciation.

Sir A. MARKHAM

What about the different lot of auditors distinct from Somerset House?

Mr. McKENNA

I am quite unable to understand that question.

Sir A. MARKHAM

rose—

Mr. SPEAKER

The hon. Baronet had better ask the Minister of Munitions, and not the Chancellor of the Exchequer.

Colonel NORTON GRIFFITHS

In the right hon. Gentleman's opinion, will his answer clear up this interesting point whether the arrangement made by the Minister of Munitions is going to be upset by the Chancellor of the Exchequer?

Mr. McKENNA

I believe it will settle the difficulty entirely. Once the controlled firms know that for the purpose of depreciation they are to come under the arrangements made between them and the Minister of Munitions they will be quite satisfied.