HC Deb 30 June 1927 vol 208 cc746-8
Mr. H. WILLIAMS

I beg to move, in page 14, line 21, after the word "solely," to insert the words "or mainly."

Last year I urged upon the Chancellor that he should give some consideration to cases where real continuity is preserved in a private business which for good reasons is turned into a company, and I was given the promise that something should be done in this Finance Bill, and Clause 27 represents the performance of that promise. I wish to express my grateful thanks for what has been done. I think, however, that there are respects in which the Clause is a little narrow, and accordingly I have put forward my Amendment. It might happen that some small consideration other than shares might be given. It might be of small importance. I might also mention another point. Where the shares are allotted, people should not be debarred from enjoying the same benefits.

The ATTORNEY-GENERAL

This seems to us to be a reasonable Amendment, and I accept it on behalf of my right hon. Friend.

Amendment agreed to.

Mr. H. WILLIAMS

I beg to move, in page 14, line 24, after the word "whom," to insert the words "or to whose nominee or nominees."

The ATTORNEY-GENERAL

On behalf of my right hon. Friend, who is agreeable, I also accept this Amendment.

Amendment agreed to.

Mr. H. WILLIAMS

I beg to move, in page 15, line 22, at the end, to insert the words (3) Notwithstanding the provisions of section thirty-three of The Finance Act, 1926, where any indiviual is the proprietor of any trade or business and the interest or any part of the interest in that trade or business passes by a voluntary disposition, inter vivos, made by that individual, or under his will, or on his intestacy to the husband or the wife, or any ancestor or lineal descendant, of that individual any loss sustained in such business may be carried forward in like manner as if such individual had remained the beneficial owner thereof. Two Amendments standing in my name have been accepted, and I hope my good fortune will be the same in the case of the present Amendment, which of course is a matter of great importance. I wish to draw the attention of the Committee to the fact that the Royal Commission on Taxation did suggest that something of the kind ought to be put down. Where a business remains in the family it does seem hard that losses should not be set off if the business is transferred to a company which belongs to the owner of the business. I hope the Government will give some consideration to this point and look into the matter further to see if something cannot be done.

The ATTORNEY-GENERAL

I am sorry my hon. Friend backed his luck once too often. I am afraid we cannot accept this Amendment for this reason: The Clause is designed, as the hon. Member has pointed out, to ensure relief in cases where a business has passed from a private individual to a company and is really the same business carried on in the name of the company. But the same principle of granting relief does not apply when the business is passed from one person to a different person, as for instance from a father to his son as contemplated by my hon. Friend. Father and son are regarded for Income Tax purposes as entirely different persons; if you are going to assess Super-tax on the profits of the business, you do not aggregate the profits of father and son. You have the father taxed on his share and the son on his share. They are separate persons. So we do not think we can treat them as the same persons as regards obtaining relief. Income Tax is essentially a personal tax and not a tax on business as in the case of Excess Profits Duty. It is a personal burden on the individual, and we do not think it right therefore to ask the Committee to accept a provision that enacts in a case like this that two persons shall be treated as one. If the son succeeds to a business which had originally a capital of £20,000 and the father has losses of £3,000 the son gains £17,000 instead of gaining £20,000.

It does not seem, therefore, fair that for Income Tax purposes he should be allowed to keep it for his own. For these reasons the Government cannot accept the Amendment.

Amendment negatived.