Tax Reserve Certificates (Hansard, 26 January 1943)

§ 51. Sir F. Sanderson
asked the Chancellor of the Exchequer whether he is aware that owing to the conditions laid down by the Inland Revenue authorities for the acceptance of Tax Reserve Certificates in settlement of Excess Profits Tax, those concerns who are able to agree their liability within the six months' period cannot use the certificates for that liability except by surrendering 1 per cent. interest; and whether he will consider altering the conditions?

§ Sir K. Wood
My hon. Friend's Question seems to be based on a misunderstanding. For the purposes of Tax Reserve Certificates the Excess Profits Tax for any chargeable accounting period is deemed to be due, not when it becomes payable by virtue of Section 21, Finance (No. 2) Act, 1939, but at the expiration of six months after the end of the chargeable accounting period for which the tax is charged. Provided that the date on which the tax is deemed to be due is not less than two months and not more than two years from the date of the Tax Reserve Certificate tendered, interest at the rate of 1 per cent. per annum is allowed for each complete month from the date of the Certificate to the date six months after the end of the chargeable accounting period (not to the date on which the Certificate is tendered or accepted). I would refer my hon. Friend to the Treasury Leaflet explaining Tax Reserve Certificates and their use which is obtainable from any banker. I am sending him a copy for his information.

§ Sir F. Sanderson
Is my right hon. Friend satisfied that it does not react against those companies which are able to agree their Excess Profits liability within the six months period?

§ Sir K. Wood
My hon. Friend had better put that question on the Order Paper. It goes a little bit beyond this Question.

§ 60. Sir J. Mellor
asked the Chancellor of the Exchequer whether, as the Bank of England is closed on each 1st January and consequently it is not possible for purchasers of Tax Reserve Certificates to obtain more than 23 months' interest, he will amend the prospectus so as to provide that interest shall be calculated daily instead of for each complete month?

§ Sir K. Wood
No, Sir. I fear that my hon. Friend's proposal would require additional time and labour in the handling of these certificates which would be unjustifiable in present conditions.

§ Sir J. Mellor
Was it not the intention that these certificates should run for a maximum life of two years, and in those circumstances, why should purchasers who are prepared to hold for two years lose one month's interest?

§ Sir K. Wood
It is always difficult, of course, to say what intentions are, but this matter was clearly defined in the prospectus.