HC Deb 02 July 1923 vol 166 cc220-2

For the purpose of computing super-tax in the case of any individual carrying on a trade business, profession, or vocation either by himself or in partnership, application may be made in writing to the Special Commissioners by the individual or the partnership on behalf of the partners, as the case may be, to have the provisions of this Section applied to the individual or to the partners in respect of any year of assessment. If the applicant shows to the satisfaction of the Special Commissioners that a reasonable part of the actual income of the trade, business, profession, or vocation from all sources for the year preceding the year of assessment has been withdrawn by the owner or distributed to the partners of that trade, business, profession, or vocation, the Special Commissioners shall decide that the amount to be included for assessment to super-tax shall be the amount so withdrawn or distributed during the period of one year next before the year of assessment, as shown by the accounts of the trade or business for accounting periods, ending on a date prior to the fifth day of April next before the year of assessment. In the case of a partnership the amount distributed from the business shall be deemed to be apportioned to the partners for the purposes of this Section in the proportions in which the partners are entitled to divide the profits of the partnership. Any sum withdrawn by way of loan from a partnership by any partner during the said period prior to the year of assessment shall for the purposes of this Section be regarded as income of the partner during that period. Provided that— If and when such loan is repaid to the partnership a croresponding set-off against the income of the partner for the year in which repayment is made shall be allowed for the purposes of this Section. If either the applicant or the Commissioners of Inland Revenue are dissatisfied with the determination of the Special Commissioners on any applica- tion under this Section they may, on giving notice to the clerk of the Special Commissioners within twenty-one days after the determination, require the application to be reheard by the Board of Referees and the Special Commissioners shall transmit to the Board any document in their possession which was delivered to them for the purpose of the application. The Board shall re-examine the application and shall have and exercise the same powers and authorities in relation to the application as the Special Commissioners might have and exercise, and the determination of the Board thereon shall be final and conclusive.—[Mr. Dennis Herbert.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

This is a very long Clause, but I can move it in a speech which is not longer than the Clause itself. Last year there was a very drastic Clause in the Finance Bill in connection with preventing people from evading taxation by the formation of one-man companies. It was recognised that if a man formed his business into a limited company it was not fair that he should have Super-tax levied on the gross profits, as we may call them, which he was practically obliged to put back into the business. That was the accepted view of the Government and that was provided for in the Clause. My Clause is really to put on exactly the same footing a man who does not turn his business into a company, but continues to carry it on either by himself or in partnership. I have some reason to suppose it is not looked upon with disfavour by the Government and by the Revenue authorities. It is true it would no doubt reduce, in the first instance, at any rate, the yield of the Super-tax, and if my right hon. Friend says he cannot accept it this year I shall realise, as a supporter of the Government, that one cannot press on them a Clause which is going to upset their financial arrangements for the year, but I hope he will be able to say the Clause is a reasonable one, framed in such a way as to carry out what might reasonably be carried out another year if it is considered by the Chancellor when framing his Budget.

Lieut.-Colonel NALL

I beg to second the Motion.


I am very much obliged to my hon. Friend for saying that he would not press this Clause if I told him that it would make a considerable inroad into our taxes for the current year. That saves me from arguing the Clause. I am afraid I do not take quite such a favourable view of it as the hon. Member does. It would need a really considerable argument to discuss it in full, but the one objection, which will be conclusive to the hon. Member and the House at the present moment, is that it might cost anything up to £3,000,000 a year. Of course, therefore, it is impossible, at the present stage of the Finance Bill, to accept a proposal which would create such havoc. I shall be very glad if the hon. Gentleman will withdraw the Clause.


After what the Financial Secretary has said, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.