§ 59. Mr. ERNEST BROWN
asked the Chancellor of the Exchequer if he is aware that the Inland Revenue authorities are assessing local authorities in Scotland which have been receiving unemployment grants for revenue-producing undertakings for Income Tax on the amount of these grants; if he is aware that this results in the Government taking back 4s. in the £ for every £1 of grant received; if he can say whether any warning was given when the grants were offered and promised that such assessments would be made; if so, when and how; if he will further state under what authority these assessments are being levied; and if the Government will take immediate steps, either by a provision in the Finance Bill or otherwise, to have these demands discontinued and any such assessments withdrawn, and any tax so paid refunded to the local authorities?
§ The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)
I would refer the hon. Member to the reply which my hon. Friend the Financial Secretary to the Treasury gave on 12th November last to a question on this subject. I am sending him a copy of the question and answer. The grants referred to in the question are included in assessments on local authorities on the ground that they are receipts of a revenue nature, and, as such, are liable to tax under the general provisions of the Income Tax law. The liability in such cases was confirmed by the High Court on 30th April last in the case of the Seaham Harbour Dock Company versus Crook.
§ Mr. SNOWDEN
In regard to the first part of the supplementary question, I certainly cannot undertake to deal with 579 the matter. With regard to the second part of the question, it is not part of the duty of the Inland Revenue to invite attention to the question how particular receipts will be treated under provisions of the Income Tax law which are of general application. On the other hand, they are always ready to give information on any specific question addressed to them, and I think that the local authorities were generally aware of the view taken by the Inland Revenue of their liability under the law.
§ Mr. BROWN
Is not the right hon. Gentleman aware that the only difference in the scale granted by the present Government over the previous Government was on this very point of revenue? This has not been done before. The claim is first made with regard to a case of which I have knowledge in 1928, and it is made this year. Does not the Chancellor realise that this means that what the then Lord Privy Seal promised by way of increase is more than taken back by this unexpected decision of the Court?
§ Mr. SNOWDEN
It must not be assumed that I accept the interpretation placed on this matter by the hon. Member. The liability in such cases has been confirmed by the Courts.