§ 55. Sir Stanley Reedasked the Chancellor of the Exchequer whether he is aware that payments made by trading concerns to their superannuation funds, or in connection with other schemes to provide pensions for their employees, sometimes include considerable sums to cover provision in respect of back service of employees; and whether such sums are 752 allowable, for the purpose of Excess Profits Tax, against profits of the standard period, or of the chargeable accounting period, according to the time when the payment was made?
§ Sir K. WoodI am aware of the circumstances to which my hon. Friend refers. It has been the practice of the Commissioners of Inland Revenue in computing profits for the purposes of Excess Profits Tax to treat as an expense only so much of the payment made by the concern as relates to current service of the employees. This is in my opinion a reasonable treatment of the matter and achieves equitable results, but I understand that a recent decision of the Board of Referees on an appeal under subsection (2) of Section 33 of the Finance Act, 1940, does not accord with this practice and would result in an undue proportion of the cost of the pensions being deducted from current profits. I propose, therefore, in the forthcoming Finance Bill to introduce a Clause to give statutory sanction to the practice of the Commissioners of Inland Revenue.