CLAUSE 46.—(Determination, of accounting period.) (Hansard, 13 July 1920)

§ Mr. HOLMES
I beg to move, in Subsection (1), to leave out the words A period of twelve months ending in the date up to which the accounts of the company are usually made up: Provided that where the accounts of a company have been made up for a period greater or less than twelve months, or where the accounts have not been made up or where the company has ceased to carry on business or has transferred its business or part of its business to some other person, the accounting period shall be such period not exceeding twelve months as the Commissioners of Inland Revenue may determine. and to insert instead thereof the words taken to be the period for which the accounts of the trade or business have been made up, and where the accounts of a company have not been made up for a definite period, or for the period for which they have been usually made up, or a year or more has elapsed without accounts being made up, or where the company has ceased to carry on business or has transferred its business or part of its business to some other person, shall be taken to be such period not exceeding twelve months as the Commissioners of Inland Revenue may determine. I suggest to the Chancellor of the Exchequer that he should do the same in regard to the Corporation Profits Tax as to the Excess Profits Tax, and not wait until the end of the year and then add two or more accounts together, but he should assess the Corporation Profits Tax at the same time as the Excess Profits Duty is assessed, so that the two things can be settled at the same time. There is no need to wait until the end of the year in order to deal with the matter.

§ Mr. BALDWIN
If the Excess Profits Duty were a recurrent tax there might be some substance in the suggestion of my hon. Friend, but, in the circumstances of the case, I cannot see any advantage in it. Our experience is, that although the practice to which the hon. Member has alluded is not uncommon among companies which pay Excess Profits Duty, there has been a desire manifested on the part of these to make their returns for a shorter period—to have a return made for the whole twelve months. I think, from my experience, that I should much prefer such a period. For the purposes of a tax of this kind, which has many points of resemblance to Income Tax, I confess that I think the most convenient practice will be to take the longer period.

§ Mr. HOLMES
I beg to move, at the end of the Clause, to add a new Subsection: (4)Where a company proves that in any accounting period which ended after the first day of January, nineteen hundred and twenty, it has sustained a loss, it shall be entitled to repayment of such amount paid by it as Corporation Profits Tax in respect of any previous accounting period or to set off against any Corporation Tax payable by it in respect of any succeeding accounting period such an amount as will make the total amount of Corporation Profits Tax paid by it during the whole period accord with its profits during that period. This is to provide that where a company pay the tax for one accounting period for one year and in the following year make a loss they shall be entitled to recover the tax to that extent in just the same way as they have been allowed to recover the Excess Profits Duty. We will say that a company makes £5,000 in one year and pays £250 in Corporation Tax and that in the next year it makes a loss of £5,000, so that in the two years together it has made no profit, then my Amendment would enable it to recover the £250 it paid in the first year. It was recognised that this was a fair thing in connection with the Excess Profits Duty, and I suggest it is fair with regard to, the Corporation Profits Tax.

Mr. CHAMBERLAIN
I really think my hon. Friend is inclined to press too far the analogy of the Excess Profits Duty, and that we are not called upon to introduce into a tax at a low rate like this, and of a continuing or per- 2337 manent character, all the provisions which were introduced into a tax levied at the high rate at which the Excess Profits Duty has been put and under the special circumstances of the War period. As the hon. Member probably knows, the Income Tax Commission has given some attention to analogous cases and has suggested some change in the law, and therefore I think if he introduces this principle at all into the Corporation Profits Tax it should be on the analogy of the Income Tax and follow anything we may do there rather than that we should prejudge the issue by acting in this case.