HC Deb 06 October 1942 vol 383 c1075
58. Major Stourton

asked the Chancellor of the Exchequer whether he will clarify the position in relation to Excess Profits Tax of money lent to the Treasury at call, and free of interest, by an ordinary trading company; and whether money so lent is necessarily to be regarded for taxation purposes as an investment, or whether it may be treated as though it were held at the bank on call or at short notice?

Sir K. Wood

It is not a usual practice of the Treasury to accept loans free of interest at call, as if they were Bank deposits. Speaking generally, I should assume that a taxpayer who has made a loan free of interest to the Treasury would find it difficult to show that the money was employed in the business. Like considerations apply to bank deposits in excess of reasonable requirements. I would remind my hon. and gallant Friend that the effect of treating such money as capital employed in the business for Excess Profits Tax would be to give a return of 8 per cent. or 10 per cent. upon it.