HC Deb 17 July 1946 vol 425 cc1287-8
The Solicitor-General (Major Sir Frank Soskice)

I beg to move, in page 66, line 8, to leave out "in labour and materials."

This Amendment is designed to assist industrialists during the reconstruction period by making a slight adjustment in the provisions of Clause 34 and this Schedule. The House will remember that Clause 34 is the one which enables industrialists to claim by way of deduction against their Excess Profits Tax for the year in question, losses which they incur on the sale of stock during what is called the "sales period." The loss is that which they incur on stock which they hold on 3rst December, 1946, and the sales period is 1947 and 1948. If the amount which they receive when disposing of that stock, is less than the value or cost to them of that stock, they are entitled to claim against their Excess Profits Tax Return the amount of that loss. The Seventh Schedule contains machinery for assessing the amount of the loss. A person has to ask himself the value of the stock held at 31st December, 1946, and has then to ascertain how much is realised for it during the sales period. The balance can be set off for Excess Profits Tax purposese.

One of the provisions of the Schedule deals with the case in which the stock, which is held on 31st December, 1946, has work done upon it, and, therefore, has its value increased before it is disposed of in the sales period. If one is trying to get a true picture of the loss to the industrialist, one must reduce the amount received on disposing of the stock proportionately, by making a deduction representing the increased value, which has been embodied in the stock by work done upon it. The Schedule, as it stands, says that a deduction must be made by estimating the increased value in terms of the labour and material expended upon that stock, but sound accountancy principles lay down that to discover the real measure of the increased value there should be taken into account, not merely the labour and materials expended upon the stock, but also a fair figure to represent the overhead charges. The Amendment by leaving out the words in labour and materials. makes the words general, and in their general form they would include not merely expenditure incurred in labour and materials, but also expenditure which represents a proportion of overhead expenses. I ask the House to say that this is a fair concession in favour of the industrialist, and that it is the only way in which to get at the true estimate of the loss which he sustained.

Mr. C. Williams

I wish to thank the Solicitor-General for the concession which he has made. To those of us who have been following this concession throughout these very complicated proceedings it might appear that these words ought not to have been put in the Bill, but the intention of the Government in this Schedule is to see that the costs imposed by labour, materials and overhead charges are, purely from the accountancy point of view, divided between the two periods which the Solicitor-General has mentioned. It is a sound business proposition and a thing which most of us appreciate, because it is helpful not only to business, but also to the workers engaged in industry. For that reason I thank the Chancellor of the Exchequer for making this concession, which is fair and valuable. During the Debates on the Finance Bill, I have said many things in criticism of the right hon. Gentleman from time to time, as well as remarks to the contrary. I am glad that towards the end of proceedings on this Bill I am able to thank him for a concession which I believe will be of value to employers and employees and to the trade in general.

Amendment agreed to