HC Deb 27 July 1944 vol 402 cc890-1
56. Sir John Mellor

asked the Chancellor of the Exchequer whether premiums, paid by a company to insure the life of a director or employee in the company's interest, are now admitted by the Inland Revenue as a trading expense in the company's accounts in view of the decision of the House of Lords in the case of D. H. William's Executors v. Inland Revenue Commissioners, that when such a policy matures by death the sum assured is a revenue receipt in the hands of the company.

Sir J. Anderson

Treatment for taxation purposes would depend upon the facts of the particular case and it rests with the assessing authorities and the Commissioners on appeal if necessary to determine the liability by reference to these facts. I am, however, advised that the general practice in dealing with insurances by employers on the lives of employees is to treat the premiums as admissible deductions, and any sums received under a policy as trading receipts, if (i) the sole relationship is that of employer and employee, (ii) the insurance is intended to meet loss of profit resulting from the loss of services of the employee and (iii) it is an annual or short term insurance. Cases of premiums paid by companies to insure the lives of Directors are dealt with on similar lines.

Sir J. Mellor

Will my right hon. Friend give an assurance that in no case will the Treasury endeavour to gain both ways and that if, in a particular case, premiums are not admitted as a trading expense, the sum assured, when received, will not be taxed as revenue?

Sir J. Anderson

I believe that is the position, but perhaps my hon. Friend will put a Question down. It is rather a different point.

Mr. Mack

Would not the effect of that be to reduce the expenses of the company in question?

Sir J. Anderson

That has nothing to do with the insurance company. It is concerned with an employer who insures the life of an employee.