§ Sir P. Bennett
I beg to move, in page 85, line 27, at the end, to insert:Provided that if a director of a company works less than full time in the actual management or conduct of the trade or business of the company, the Special Commissioners shall treat him as a working director subject to such adjustment of the standard amount as may be just having regard to the proportion of his full time that he devotes to working in the said management and conduct of the business.This is a matter of considerable importance because it is the very point which has not been dealt with in the manuscript Amendment which has just been considered. I did not raise it because I saw no way in which we could include the point in issue in the matter then being discussed. This Amendment deals with the working director who is a member of companies which are not in the same group or not in the holding company. There are companies, and I can name dozens of them in my own experience, private companies, where the working director has several interests. I submit that we do not want to do anything to prevent that happening. Suppose a man has inherited his father's business; he is complacent, he takes a working directorship, he does nothing more, he gets benefit under the provision that has been made.
But suppose he is the type we want in this country—adventurous and energetic. He is not content with carrying on his business as left to him, but promotes another business and thus increases the commerce of the country. There are many, such cases in the industry with which I am connected and I have no doubt in other industries too; cases of men who are devoting the whole of their working life to promoting businesses outside the one with which they started. Yet, according to the definition we have been given, they are not a single holding company, they are different directors. Sometimes a man is the only link between one and the others, and spends the whole of his working life in them, but he is to be treated quite differently from the man who has sat down, taken life easily, and has an interest in only one company.
1307 The Special Commissioners should have power to give proportionate reliefs to a director who spends proportions of his time in different companies. We are in safe hands and I am quite sure that the Special Commissioners are very articulate and very wide-awake. There is no fear of any discrepancy or any illegalities creeping in. In this way we could meet the position without handicapping these men by any suggestion that they should be complacent and take life too easily. We could help them to go out and do good in their working lives.
§ Colonel J. R. H. Hutchison
May I support what was said on this point by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) a few moments ago? The Chancellor of the Exchequer has seen fit to meet the point we are making where the companies are associated, but I cannot see that there is anything which justifies such a distinction between the two directors—that is, between the one who gives his whole time to a group of associated companies and the other who gives his whole time to a number of companies which are not associated. My hon. and learned Friend instanced the case of seasonal occupation where it is virtually impossible for a concern to work or be in active operation for the whole of a year—as at Blackpool—and where a director transfers his attention to a different company in the summer from the one he has attended during the winter. I think this Amendment gives very reasonable powers to the Special Commissioners to judge whether a man is in fact working whole time or not.
§ The Solicitor-General
One objection—apart from any objections on the merits of this case—is that this would be almost impossible to administer. Just imagine the difficulty, in the case of any particular person who distributed his available working time amongst various enterprises, in deciding exactly what measure of relief he will be entitled to by reference to the amount of time he gives. The Amendment would require that in the case of any person who claimed to be entitled to relief under Schedule 10, it would have to be decided exactly what percentage of his time he devoted to the particular concerns to which he was attached. That would involve an enormous amount of 1308 irksome research work and it would be irksome to the taxpayer himself. It would be really very disagreeable to him to have to establish exactly what percentage of his time he could be said to have worked in a particular undertaking.
§ The Solicitor-General
No, there will not. The proposal is that where a person works less than full time he shall be entitled to proportionate relief: that is what the Amendment asks for. Therefore, in order to determine whether he was entitled to relief or not, you would have to work out what proportion of the time he gave to the particular concern. That would involve a difficult and irksome task, particularly unpleasant to the taxpayer himself.
Quite apart from that, on the merits, I do not think this suggestion should be adopted. A person who works only part-time for a particular company, or who works whole-time for a number of companies which do not form part of a group and are completely dissociated, is not the person we had in mind in framing this Schedule. As has been repeatedly stated, the person we have in mind is the person who is a partner in a concern which has become a private company. We envisage the case of two, three or four partners who carried on a private firm and at a certain point converted that private firm into a company. These are persons who worked the whole of their time in conducting that private firm, and we afforded them this measure of relief for the reason that they were whole-time partners, and when the company was formed they became whole-time working directors.
In the manuscript Amendment I have just moved, and which the House accepted, all we have done is to say that where you have a working director who is giving his whole time, not to a single company but to a constellation of interrelated companies, a group of companies, then you may treat him as a working director for the purpose of the Schedule. I have also stated that administratively, as far as we can, we would not be too meticulous or too finicky about deciding whether in fact he was full-time or nearly full-time. We felt that we could go as far as that. This proposal is that we 1309 should go very much further. It would result in this: supposing a person only gave one-fifth or one-tenth of his time to a company, he should be entitled to say, "I am not a working director in the ordinary sense of the term, but although I do not do much work I give about one-fifth of my time to this company, and therefore I want a measure of relief proportionate to that amount of my time." That is not the sort of person we are endeavouring to relieve by this Schedule; he does not come within the category at all. For these reasons, quite apart from the fact that it would be extremely difficult to administer and extremely tiresome for all concerned, on the merits we feel that this suggestion ought not to be adopted.
§ Amendment negatived.
§ Schedule agreed to.
§ Bill reported without Amendment; to be read the Third time this day; and to be printed. [Bill 118.]