HC Deb 15 July 1946 vol 425 cc890-2

Where, by any Act passed after the beginning of the present Session which embodies any scheme for the carrying on of any industry or part of an industry, or of any undertaking, under national ownership or control, provision is made for the transfer of any property, constituting the assets of a trade, as part of the initial putting into force of the scheme, to the Crown or to a body corporate constituted for the purposes of that scheme or any previous scheme for such national ownership or control as aforesaid and, in consequence of the transfer, the trade is permanently discontinued in 1946–47 or any subsequent year of assessment, no additional assessment shall be made under paragraph (b) of Subsection (1) of Section thirty-one of the Finance Act, 1926, in consequence of that discontinuance for the year preceding the year of assessment in which that discontinuance occurs.—[The Solicitor-General.]

Brought up, and read the First time.

The Solicitor-General (Major Sir Frank Soskice)

I beg to move, "That the Clause be read a Second time."

This also represents a concession to arguments adduced in Committee by hon. Members opposite, in particular by the hon. Member for Twickenham (Mr. Keeling). Under the Finance Act, 1926, Section 31 (b), where a trade is discontinued, it is taxed in relation to the penultimate year, either upon the takings of the previous year or of that year, whichever is the higher. In a case where an undertaking is nationalised, it was represented by the hon. Member for Twickenham that it would not be fair to impose that upon an undertaking, which, after all, is not nationalised by its own will. In those circumstances, in the case of undertakings which are nationlised compulsorily, the provisions of the Finance Act, 1926, Section 31 (b), are by this new Clause excluded. That means, that supposing an undertaking is discontinued in year three, apart from this Clause, even if it were discontinued owing to nationalisation, in year two, it would be assessed to Schedule D either on the takings of year one or on the takings of year two, whichever is the higher. The effect of this Clause is that where an undertaking is nationalised, it will now not be assessed under Schedule D in respect of year two on the takings of year two, but always on the takings of the preceding year, even though the takings of year two may be higher than the takings of the preceding year. It represents a concession to assist industry to get on its feet again. It is a concession which was asked for, and it meets an undertaking given by the Chancellor of the Exchequer on the Committee stage. I ask the House to say that this is a concession of which they approve.

Mr. Keeling (Twickenham)

May I ask the learned Solicitor-General two questions which are, in fact, explained by the Amendment to the proposed new Clause in the name of my hon. Friend the Member for Stockport (Sir A. Gridley)—in line 8, after "discontinued," insert: or is deemed to be discontinued in whole or in part —which. I understand, will not be called? When the mining industry, for example, is nationalised, the business carried on by a colliery company will probably not be discontinued, but will be continued under the new owners of the colliery. Will it be deemed to be discontinued within the meaning of the rules contained in Schedule D of the Income Tax Acts, 1918? The second question is this: The colliery company, or any company which is nationalised, may be carrying on more than one activity, and, under nationalisation, it may lose only part of its business. What would be the position then? Will it be covered by the new Clause?

The Solicitor-General

The answer to the first question is that the effect of the Finance Act, 1926, Section 32, is that, in the circumstances indicated, the undertaking would be deemed to have come to an end. The answer to the second question is that, where two undertakings were carried on, one being a colliery undertaking and the other being a different undertaking which did not fall within the scope of the nationalisation scheme, the owners would be assessed separately in relation to each of the undertakings, that is to say, under the terms of this Clause, in respect of the colliery undertaking, and in respect of the other undertaking under the terms of the Finance Act, 1926, Section 31 (b), as it at present stands. It raises a question of fact, in each case, as to whether there are two undertakings or whether they are in substance the same undertaking. Where there are two undertakings, that would apply, and an assurance has already been given by the Board of Inland Revenue that that rule would be strictly observed.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.