§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ 4.34 P.m.
§ The Chancellor of the Exchequer (Sir John Simon)
The Clause is not opposed, but I think I had better say a word as to its purpose and effect. It deals with the assessment of property for Income Tax under Schedule A and extends the provisions of the present law for another five years. As the Committee knows, the assessment of property for Income Tax under Schedule A represents, 1994 broadly speaking, the rental payable to a landlord who himself undertakes the cost of repairs. In order, therefore, to arrive at the net income enjoyed under the property it is necessary to subtract a figure representing the expenses incurred for the repair and maintenance of the property. In 1894 the allowance for repairs was a flat rate allowance fixed in respect of houses and buildings at one-sixth of the gross assessment. You take the gross assessment, divide by six and treat the five-sixths which are left as being the net income. It was pointed out that in some cases the cost of repairs was more than one-sixth, and therefore provision was made in 1923 that a larger figure might be substituted, a scale ranging from one-fourth to one-sixth being introduced for a period of years. That is what we propose to continue for another five years. From the point of view of the Chancellor of the Exchequer, I do not know whether it is a favourable arrangement, because the taxpayer gets one-sixth subtracted now, although in fact in his case the repairs might be less than one-sixth, but it would be quite impracticable in every single case for inquiry to be made as to how much the repairs had cost. They would be endless, would cost a great deal and would take a great deal of time, whereas one of the most important things is to get your tax paid at the proper time. This is a provision which has been repeated in previous Finance Bills, and I suggest that we should continue the practice for another five years. It has worked quite fairly to the taxpayer.
§ 4.37 P.m.
§ Mr. Bellenger
Although I am not opposing the Clause, I think the Committee might be interested to hear a little more about repairs and allowances. It is true that allowances for repairs are deducted from the gross assessment when the demand is made for the tax at the beginning of the year, but during the last year or so, by virtue of the Finance Act of 1930 or 1931, gross assessments under Schedule A, at any rate in the case of London property, have been considerably increased, and they now bear no relation to the rateable value which used to be accepted as a basis for Schedule A tax. In view of this large increase in the gross assessment under Schedule A, the allowances for repairs, 1995 which we are asked to stereotype for another five years, will have to be considered by the Chancellor of the Exchequer. The time is coming when, owing to the remarkable increase in gross assessments, and also in the increase in the cost of repairs, the taxpayer should have an increase of the allowance under Schedule A. With regard to the actual cost of repairs, the situation at present is that although the taxpayer is automatically allowed this reduction when the demand is made, if be can prove that he has expended more than the statutory allowance on repairs he can make a claim for the repayment of the excess, but, unfortunately, that is spread over a period of five years. That is also a matter which wants looking into. There is also a large amount of leasehold property in London which will come to an end in the next 15 or 20 years, and the cost of repairs during the last few years is considerably higher owing to the dilapidations which have accrued, and freeholders taking the opportunity of seeing that repairs are carried out as the lease comes to an end. I hope when representations are made to the Chancellor of the Exchequer he will take a sympathetic view of the case, which, I am sure, is bound to be put before him sooner or later.
§ Sir William Davison
There is one small point in this Clause, in line 3—the words "and which." It is rather an inelegant phrase. It seems to me that the second "which" is not required. The Clause would read quite well without it. It would read in this way:Section twenty-eight of the Finance Act, 1923 (which relates to the allowance for repairs and was continued in force by section twenty-four of the Finance Act, 1935.I think the second "which" might be omitted.
§ Sir J. Simon
When the hon. Member commenced to charge me with having perpetrated an "and which" I got thoroughly alarmed. No doubt there are cases in which it should not be used, but in this case I do not think the rules of grammar are being offended. At the same time I am delighted to find that the hon. Member, like myself, is somewhat of a purist in these matters. I always like the language of a Statute to be as free as possible of such phrases, but I 1996 expect the draftsmen will be able to adduce many Clauses in which "which" and "and which" are to be found.
§ 4.43 P.m.
§ Mr. A. V. Alexander
I hope the Chancellor of the Exchequer will look at the point made by the hon. Member for Bassetlaw (Mr. Bellenger). I recognise that there is considerable difficulty in dealing with such matters. It would be unreasonable to ask in the case of the ordinary householder that he should be able to make a claim oftener than five years for small sums for repairs, but when you deal with large buildings it seems rather objectionable that the owner should have to wait for five years in order to prove to the revenue authorities that his expenditure is much higher than the statutory allowance. Perhaps the right hon. Gentleman will look into the matter and see if he can reduce the period.
§ Sir J. Simon
I will certainly bear in mind what has been said, but I think probably the Committee will consider that the best thing to do is to continue this provision for another five years.