HC Deb 19 July 1944 vol 402 cc193-5
62. Mr. Higgs

asked the Chanceller of the Exchequer if, owing to the necessity for building up reserves for the post-war development of industry, he will discontinue using the power granted him under Section 21 of the Finance Act, 1922, which permits Surtax being charged on private limited companies on the ground that a reasonable part of the income has not been distributed.

The Financial Secretary to the Treasury (Mr. Assheton)

I have been asked to reply. No, Sir. I must point out that the provisions of Section 21 of the Finance Act, 1922, are directed to prevent the avoidance of Surtax in the case of controlled private companies, and the statutory powers under the Section are vested in the Special Commissioners of Income Tax. I would remind my hon. Friend that there is a specific provision in the Section that in determining whether a company has or has not distributed a reasonable part of its income the Commissioners shall have regard not only to the current requirements of the company's business but also to such other requirements as may be necessary or advisable for the maintenance and development of that business.

Mr. Higgs

Is the Financial Secretary aware of the difficulty which companies are experiencing in obtaining permits, even for repairs to plant, and, as that money cannot be expended for the purpose for which it is acquired at the present moment, will he give further consideration to his reply?

Mr. Assheton

I understand the point my hon. Friend is making and I shall be very glad to discuss it with him.

Sir Granville Gibson

Can the Parliamentary Secretary say how a private company is to know what is a reasonable figure, because there have been cases where an amount has been placed to reserve, which is regarded as a reasonable figure, and then the authorities have come down on top of these firms and made them pay Surtax on all their profits? What is a reasonable figure?

Mr. Assheton

If my hon. Friend will study the relevant Acts, as amended by the Act of 1928, he will see.

Mr. Higgs

In view of the difficulty of dealing with this matter by question and answer, I give notice that I will raise it on the Motion for the Adjournment.

    cc194-5
  1. PERSONAL STATEMENT 347 words
    2. c195
  2. MESSAGE FROM THE LORDS 13 words
  3. BILL REPORTED
    4. c195
  4. LOUGHBOROUGH CORPORATION BILL [Lords] 28 words