HC Deb 13 July 1922 vol 156 cc1551-4

(1) Corporation Profits Tax shall not be charged on the profits of an association which is registered under Section twenty of the Companies (Consolidation) Act, 1908, as a company with limited liability without the addition of the word "limited" to its name, so long as it continues so registered.


I beg to move, in Subsection (1), after the word "registered" ["continues so registered"], to insert the words or on the profits of a company which is established solely for the advancement of religion or education and which, under its memorandum or articles of association, is prohibited from distributing any part of its profits to its members. This Amendment is designed to exempt from Corporation Profits Tax institutions which are established solely for the advancement of religion or education, and which are prohibited from distributing any part of their profits to their members. The question was raised by the hon, and learned Member for Cambridge University (Mr. Rawlinson), and he presented very cogent reasons. An organisation which comes within the terms of my Amendment certainly seems to me an organisation which deserves consideration, and should certainly not be mulcted in Corporation Profits Tax. The hon. and learned Gentleman gave an instance in which an educational organisation had borrowed money and set up an institution, and was then compelled to borrow to pay the Corporation Profits Tax, although the institution was being run at a loss. Under these circumstances, I think it was certainly our duty to try to meet the case, and this Amendment is designed to meet that purpose.

Amendment agreed to.


I beg to move, at the end of Sub-section (1), to insert the words or on the profits of an association incorporated by Royal Charter which complies with the conditions as to its objects and profits or other income set out in Sub-section (1) of the said Section and so long as it complies with the said conditions. 8.0 P.M.

I wish to return the thanks of my hon. and learned Friend the Member for Cambridge University (Mr. Raw-linson) and my own thanks for the Amendment which has just been made. There is, however, one class of association which is left out. There are a considerable number of associations in this country which are established, not as companies under the Limited Liability Companies Act, but by Royal Charter. Those which are established by Royal Charter are in just the same position as those registered under the Companies Acts, which are not obliged to use the word "limited," because they make and distribute no profit and are not formed for the purpose of profit at all. For instance the Greenock Chamber of Commerce was incorporated by Royal Charter in 1913, and it makes no profit, and is just as if it had been a limited liability company registered under the Companies Act leaving out the word "limited." The Amendment follows exactly Section 20 of the Companies (Consolidation) Act, which says that associations may be registered as limited liability companies if they make no profits and are not formed for the purpose of profits. I am told—and, of course, there is great force in the contention—that whilst limited liability companies included under Clause 36 are under the jurisdiction of the Board of Trade, and the Board of Trade can see that they make and distribute no profits, and if they do make or distribute profits can revoke the registration and generally have jurisdiction over them, there is no Government Department which has jurisdiction over associations incorporated by Royal Charter. That may be a difficulty in the Chancellor's way in accepting this Amendment, and if he cannot incorporate it in the Bill now because he has not had time, as I suppose he has not—this was only sprung upon him by me on the Report stage—he will have plenty of time between now and the next Budget, and I ask him if he will consult his advisers and see whether it is not strictly on all-fours with the new Clause which he has already incorporated in this Bill. That is the one plea I make. A promise of that kind will satisfy me, because, after all, these associations incorporated by Royal Charter have only just communicated with me, and it is not my fault or the fault of the Chancellor if they have not been more vigilant. The only other point I wish to make is this, that during this next year these associations will be subject to Corporation Profits Tax. It is the Inland Revenue officials who assess them for that tax, and if the Chancellor of the Exchequer will kindly intimate to those officials that during this year they should be very tender with these associations in regard to their assessments, and not treat their balances, or whatever they might be, as profits except in so far as they are absolutely obliged to do so, the effect may be the same as if this Amendment were accepted now. If the right hon. Gentleman can give me that assurance, I am sure I shall be quite satisfied.

Lieut.-Colonel HURST

I beg to second the Amendment.

The associations for whom my hon. Friend the Member for Oldham (Sir E. Bartley-Denniss) has just pleaded are on all-fours with those companies to whom the right hon. Gentleman has already granted immunity. They are associations which aim at the encouragement of commerce, art, science, religion, charity, or other useful objects, and, like the companfes to whom immunity has been given, they do not exist for the purpose of profits or for the purpose of distributing dividends among their members. For these reasons, it seems to me that exactly the same principle ought to apply to these associations, and I hope the Chancellor of the Exchequer will see his way to meet the very reasonable proposition which has been put forward.


I am grateful to the hon. Member for Oldham (Sir E. Bartley-Denniss), who moved this Amendment, because he made both my speech and his own. I am under the difficulty which he describes. I have not had an opportunity of really investigating the problem which he has adumbrated sufficiently to be able to give a decided reply. I realise that there are eases, such as the Greenock Chamber of Commerce, to which he has referred, where it is anomalous that they should be treated differently, and I can give him the assurance that I shall look into these cases in the immediate future and that my advisers will be consulted, and we will see before the Finance Bill of next year is presented what the precise situation is and what can be done to remedy the grievance to which he has referred.

Amendment, by leave, withdrawn.