HC Deb 15 May 1941 vol 371 cc1253-4
Mr. Loftus (by Private Notice)

asked the President of the Board of Trade whether he has any statement to make regarding the taxation position of firms affected by the policy of concentration of production?

Captain Waterhouse

Yes, Sir; but as the answer is lengthy and its terms technical, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the reply:

My right hon. Friend has consulted the Chancellor of the Exchequer who has agreed to the following arrangements: The Finance Bill includes provisions relating to the liability to taxation of concerns which are certified by the Board of Trade as being parties to approved arrangements for the concentration of production. The provisions will be to the following effect:—

  1. 1. For the purpose of computing Income Tax and Excess Profits Tax, the cessation of its production by a concern when a factory is closed, or the undertaking by a nucleus concern of new activities, in consequence of concentration arrangements approved by the Board of Trade, will not be treated as effecting a discontinuance of the business of the one or the setting up of a new business by the other.
  2. 2. Any sum (except a sum of a capital nature or a sum payable under deduction of tax) payable as a result of an approved 1254 concentration arrangement to a closed concern by a nucleus concern shall be allowed as a deduction in computing the profits of the latter and shall be treated as a trading receipt in computing the profits of the former.
  3. 3. If in exceptional circumstances an industry or a part of an industry sets up a central fund approved by the Board of Trade into which nucleus concerns pay levies and from which compensation is paid to closed concerns, then the amounts paid in by the nucleus concerns (not being payments to be used for capital purposes) will be allowed as deductions in computing their tax liability, provided that there is no residue in the fund, and amounts drawn out by closed concerns will be treated as trading receipts.
  4. 4. In computing liability to Excess Profits Tax the amount of capital represented by machinery and plant which, under a concentration scheme approved by the Board, a closed concern has temporarily ceased to use, will be regarded as still employed in the business.
  5. 5. The deduction allowable for Income Tax purposes for the wear and tear of machinery and plant will continue to be allowed to a concern which has closed as a result of an approved concentration arrangement, but still retains the machinery, and this deduction will be computed as if the machinery and plant were in normal use.