HC Deb 28 April 1931 vol 251 cc1440-2
40. Sir WALTER PRESTON

asked the Chancellor of the Exchequer whether the 82 bona fide commercial private companies who were assessed as regards their undivided profits for Sur-tax by the Inland Revenue, and who did not appeal against this assessment, have paid 7s. in the £ Sur-tax on all their undivided profits; and whether the 34 companies who appealed, and subsequently withdrew their appeal, also paid 7s. in the £ on the whole of their undivided profits, or was some arrangement come to with the Inland Revenue Department?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

Sur-tax was not paid on the undivided profits of the companies referred to at a rate of 7s. in the £. In each case the income for the particular period concerned was deemed to be the income of the members of the company and apportioned among them on the basis of their respective interests in the company. Surtax was charged in the case only of those members whose total incomes, including the amount of the company's income apportioned to them, rendered them liable to Sur-tax and then by reference to the graduated rates appropriate to their respective total incomes.

Sir W. PRESTON

Are these companies penalised because they were conservative in finance or because they were trying to evade payment of Sur-tax?

47. Sir W. PRESTON

asked the Chancellor of the Exchequer, in view of the desirability of private companies engaged in manufacture conserving their assets and not unduly dividing their profits in order that they may be in a position to provide up-to-date machinery and plant, can he state how much the Inland Revenue allow as a reasonable amount for a manufacturing company to put to reserve; and what percentage of the profits must be divided so as to secure immunity from assessment for Sur-tax on undivided profits?

Mr. PETHICK-LAWRENCE

The question whether or not there has been a reasonable distribution of income in a particular case is one which can only be determined by reference to the facts and circumstances of that case. A percentage of income which would constitute a reasonable distribution in the circumstances of one case might be quite unreasonable in the circumstances of another, and no formula of general application could possibly be devised.

Sir W. PRESTON

Is the hon. Gentleman aware that many private companies are distributing far more of their profits in dividends than is considered safe because of this unknown and uncertain factor?

Mr. LOUIS SMITH

In the case of a highly technical industry will the hon. Member obtain the services of somebody who will be able to advise as to how much it will be safe to place in reserve?

Mr. PETHICK-LAWRENCE

That is a matter of detail which does not in the least vitiate the substance of the answer which I have given.