NEW CLAUSE.—(Amendment of Rule 8 of No. V in Schedule A.) (Hansard, 19 June 1933)

§ Colonel Sir GEORGE COURTHOPE
I beg to move, "That the Clause be read a Second time."
I think a few sentences will serve to explain and justify this Clause. It does not ask for any remission of taxation, but seeks to secure uniformity of interpretation and practice in the administration of the law as it stands now. Briefly, 529 the position is this: when an owner of land is obliged to replace existing buildings in order to maintain his rent—without increasing it—he is entitled under the existing law to include that expense in (his maintenance claim, and it is treated as a statutory allowance for the purpose of arriving at Income Tax assessment; but if he puts up an improvement which gives rise to an increase in rental value, whether it is rent to a tenant or is the assessed annual value of the property in his own occupation, he cannot include that expenditure on improvements in his maintenance claim. I think that that is a fair statement of the existing position, and it has not been disputed.
There are, in practice, a great number of works which fall partly within one category and partly within the other, and there is a great lack of uniformity in the method of treating them in the districts of His Majesty's inspectors of taxes. I can, perhaps, make clear what I am aiming at by giving a very common form of illustration. Upon a dairy farm the owner finds it necessary, in order to maintain his rental value, to rebuild and to replace an existing cowshed. It may be that the sanitary inspectors have said: "You really cannot go on producing milk for sale in this out-of-date building; you must replace it." That replacement, if it stood alone, would be included in the owner's maintenance claim for the purposes of Schedule A assessment for Income Tax; but his tenant says to him: "When you are doing this job I should like you to make a good job of it," asks him to put in a water supply and to add, we will say, a mixing-trough, where food for the cows can be mixed, at one end of the building, and, possibly, at the other end, a sterilising room in which to keep the churns and vessels clean. These are improvements, and cannot be included in the maintenance claim, but in some districts there is a division, which we seek there should always be, between the expenditure upon replacement and the expenditure upon improvement.
In other districts, the practice is to hold that if there is any alteration, enlargement or improvement, when an existing building is replaced, that ceases to be replacement, and consequently the owner who incurs the expenditure is debarred from the right, which he admittedly has if he does nothing beyond 530 replace, of including the expenditure in his maintenance claim. By this Clause I ask that the practice which is common in many districts should be the correct and universal practice. That is the only purpose of the Clause.

§ Brigadier-General CLIFTON BROWN
I beg to second the Motion.
I want to emphasise the point that the object of the Clause is only to make clear what, I am quite sure, is really wanted by the officials, who are very sympathetic in regard to maintenance claims. It is rather difficult to interpret rules. You must allow the inspector on the spot to judge how much of the work that has been done to the cowshed is new work and how much is repair, in respect of which you ought to be allowed to make: a claim. The Amendment would just allow inspectors to use their judgment as to what was fair and what was not. We ask for nothing more and nothing less. The owner of an estate or cottages knows that there are many things which have to be done; for example, where a water-supply is wanted. At the begining of this year I had to replace about a quarter of a mile of pipe for water supply to cottages and there were two or three cottages outside that which were added on to that water supply. I do not anticipate any trouble with my inspectors in including a fair amount of that in my maintenance claim. There are cases where an inspector says: "I am not entitled, under the rule, to allow this. Therefore, you will have to pay the whole thing."

§ Mr. HORE-BELISHA
I will tell the hon. and gallant Baronet who moved this Clause exactly what is the legal position. A landlord who replaces farmhouses or part of a farmhouse can include the expenditure thereon in his maintenance claim. If, in addition, he makes the expenditure upon additions or improvements, such additional expenditure cannot be included. He can, however, include in his maintenance claim the amount expended on replacement, that is, the proportionate part of his total outlay properly applicable thereto, irrespective of whether the rent is increased or not. That is the law.
In moving this Clause, the hon. and gallant Baronet merely wishes to reiterate 531 what the law now says. The hon. and gallant Member for Newbury (Brigadier-General Brown) appreciated that the law is as this Clause endeavours to state it, and the Clause is therefore redundant. The complaint of the hon. and gallant Baronet was of a lack of uniformity throughout the country. I am not in possession of any information which would confirm that, and it is open to doubt whether there is a lack of uniformity. He is so well acquainted with all agricultural matters, and he evidently has something in mind; I should therefore be very grateful to him if he could supply me with concrete instances. I promise that everything possible shall be done to see that uniformity prevails. I suggest that he might withdraw the Clause which is, from a legal point of view, quite unnecessary.

§ Sir G. COURTHOPE
The speech which the Financial Secretary has just made may possibly secure uniformity of practice. I will bring some instances of non-uniformity to the notice of the Treasury. I beg to ask leave to withdraw the Clause.