NEW CLAUSE.—(Definition of working proprietor.) (Hansard, 15 June 1944)

§ Commander King-Hall (Ormskirk)
I beg to move, "That the Clause be read a Second time."
The main purpose of this proposal, put on the Paper by the hon. and learned Member for Ilford (Mr. Hutchinson) and myself, is to draw the attention of the Committee to the need to re-examine the definition of the phrase "working proprietor." Perhaps I ought to preface the few remarks I shall make by saying that I have had a personal interest in this matter and may conceivably have a personal interest in it in the future. The existing law says that a working proprietor is a person who has a certain proportion of the shares and, according to the formulae at present laid down, he has, during one-half of the chargeable accounting period, to work full time at the actual management and conduct of the business. There is nothing wrong in the "proprietor" part of the definition; it is the "working" part to which I am directing attention because its wording gives rise to a rather absurd and ridiculous position.
I think I can best illustrate the point by giving examples of a case which I know from my own personal experience. I happen to own a newsletter business. It is a small business, but it normally employs 50 people. It has a full-time editor. I decided to set up a branch of the business in North America and my editor went there for nine months in order to establish that branch. In his absence I took on his job and wrote the newsletter. I then put in a claim to be a working proprietor. I was asked to prove that during this period I had worked full time in that job. In fact, during that period I was acting in an 2285 honorary capacity in the Ministry of Fuel and Power, in connection with the fuel economy campaign. At the same time, it was obviously necessary that a newsletter should be written in order that it might sustain the business and thus the basis of the claim that I was a working proprietor. I was asked by the authorities to give an exact definition of all my activities, hour by hour, and separated off for each working day. I would draw attention to this point, because of the absolute impossibility of endeavouring to set out, in an absolutely mathematical manner, the number of hours of the working day, which are devoted by anybody to his particular activities. I do not think any hon. Member could possibly draw up a programme with mathematical exactness, showing how many hours each week he was wholly a Member of Parliament, and how many hours a week he was wholly looking after his business. I think that the Chancellor of the Exchequer himself would find it very difficult to define the exact number of hours which he has devoted over a given period to, say, preparing his Budget.
I searched in vain in HANSARD for any general statement, to show what idea was behind this phrase "working proprietor." When it was first brought out, it is reasonable to believe, I submit, that it meant a proprietor who takes an active and substantial part in the operations of the business. The new Clause, which I am proposing, suggests that there should be added words which would permit of a person averaging out over the whole year his working connection with the business of which he was a working proprietor. His average might come out at five hours per day, instead of, as at present, being obliged to work every day for six months while for the rest of the year he need not work at all. I suggest that this is the right way to approach the matter, and that the Treasury should consider whether a proprietor, who proved that his presence was absolutely essential to the business, should be regarded as having substantiated his claim to be a working proprietor. In that way, the present absurd anomaly would be removed, and I suggest it should be put right at the earliest possible moment.

§ The Solicitor-General
The hon. and gallant Member said he had not been able 2286 to discover a statement as to the reason for the working proprietor provisions. The idea behind these provisions was that there were businesses that were managed by owners, who gave their working day to the business, and that condition was not regarded as satisfied, where the owners had other employment occupying their normal working hours. The other requirement was that they should be interested in the business, and should be in that very ordinary—and I suggest rather extraordinarily normal for a definition in an Act of Parliament—sense be working proprietors. There is an increase in the minimum standard from £1,000 to £1,500 for each working proprietor and an extra £1,000 at the discretion of the Revenue, and I do not think my hon. and gallant Friend would consider it was right that that additional Excess Profits Tax standard and that advantage should be given to people who could ensure it for more than one business.
I do not think any Member of the Committee would like the idea of someone going round and arranging his working day contributing to business A his time between 8.3o and 12.3o to business B his time between 12.30 and 4.30, and to business C his time between 4.30 and 12 at night. I do not think that fits in with the conception, which is to give this advantage to businesses, where the proprietor has a personal interest in the business, and does a day's work at the business for more than half the accounting period. I would remind my hon. and gallant Friend, that that was the definition under the old Excess Profits Duty in the last war, and therefore is one which has stood the test of a good period of time. As I always say at this Box, the Government and the Revenue are always ready to learn, and we are grateful to my hon. and gallant Friend for giving us his point of view, and we shall give careful attention to everything he says.

§ Commander King-Hall
Before asking leave to withdraw the Clause, I hope that, in looking into this matter, the Government will recognise, what I should have thought was the considerable advantage of encouraging any person whose abilities are such that they are able to start up three different forms of economic activity, and attend to them in their working day, activities which will be for the benefit of our export trade and the general economic 2287 life of the country. I think that people like that should be very much encouraged, and I think that should be borne in mind by the right hon. Gentleman when he gives the matter his attention. I beg to ask leave to withdraw the Clause.