Clause 43.—(COMPUTATION OF PROFITS AND LOSSES FOR EXCESS PROFITS LEVY PURPOSES.) (Hansard, 17 June 1952)

§ The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maudling)

I beg to move, in page 49, line 42, at the end, to insert: 1002 or the apportionment is under subsection (5) of this section required to be made as mentioned in that subsection. It would be for the convenience of the Committee if we might also consider at the same time the following Amendment, in page 50, line 11, at the end, to insert: (5) Where part, but not the whole, of an accounting period of a body corporate—

(a) falls within a standard year and the fact that sufficient accounts are available as to that part may, under the last preceding subsection, be treated as a special circumstance affecting the apportionment of profits or a loss for that accounting period; or
(b) falls after the beginning of the period of charge to the excess profits levy and sufficient accounts are available as to that part,

the body corporate may, by notice in writing given to the Commissioners, require that the apportionment of the profits or loss for that accounting period shall be made in accordance with the accounts for that part. (6) For the purposes of this section accounts of a body corporate for any period shall not be treated as sufficient unless the body corporate has at the beginning and at the end of that period balanced its books and, if it has any stock, taken stock. The two Amendments give effect to an undertaking I gave during the Committee stage on an Amendment moved by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) to deal with the position when the accounting period of a company overlaps the calendar year which forms the E.P.L. period. A company's accounting period may run to 31st March. Normally the first three-month period would be a quarter of the profits for the whole period of 12 months, but it was our intention to provide that where adequate accounts were forthcoming from 1st January to 31st March the taxpayer might elect to be charged on his actual profits and not on the profits calculated as a quarter of the period of 12 months.

It was pointed out by the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) that, as drafted, the Clause left a discretion to the Commissioners and did not give the taxpayer the right to claim that in those circumstances he should be charged on his actual profits. The Amendments will give the taxpayer the right, in cases where the books of a company have been balanced and where stock has been taken, to claim that he shall be taxed on his actual profits for that period and not if he does not wish to be, on the profits 1003 expressed as a proportion of the period of 12 months which overlaps the E.P.L. chargeable accounting period. The Amendments are designed to meet a point put forward by the Opposition, and in those circumstances I hope the Committee will accept them.

§ Mr. Austen Albu (Edmonton)

My right hon. Friend the Member for Huyton (Mr. H. Wilson) is not present and I should like on his behalf to thank the Chancellor for accepting this Amendment, which, of course, will make a substantial difference to the particular companies which my right hon. Friend had in mind, namely, those in the textile industry, which are suffering a severe slump at the present time.

This is only another example of the valuable work done by the Committee on this Excess Profits Levy and company taxation as a whole, because as the Clause was originally drafted there is no doubt it would have fallen very heavily on companies which found that the end of the accounting period overlapped the period of charge for the Excess Profits Levy and which are suffering from the severe recession in trade. As far as I can see, the Clause as drafted now is entirely satisfactory, and I think that will be very much welcomed in Lancashire and also in industries making furniture and other consumer goods, where there is a general recession.