HC Deb 18 June 1952 vol 502 cc1413-6
Mr. G. P. Stevens (Portsmouth, Langstone)

I beg to move, in page 51, line 39, to leave out from "corporate," to "subsection," in line 5, page 52.

Very briefly, the effect of Clause 45 is that if, after 1st January, 1947, the business of a sole trader or partnership is transferred to a body corporate the transferee or body corporate will not succeed to the profits standard unless it is controlled by the same sole trader or partnership from which it has taken the transfer, or by the family, heirs or executors of the transferee, partnership or sole trader.

It seems to me that there is some anomaly here. If one body corporate accepts from another body corporate, even though the shareholders of one are different from those of the other, the transferee body corporate will take over the profits standard of the transferor body corporate. In the Committee stage we discussed this matter on Clause 41 of the then Bill, and the Solicitor-General, replying to a point which I had raised, said that to arrive at the profits standard of an individual it might be necessary to go into the private affairs of that individual.

The Income Tax assessments of profits in regard to partnerships are calculated on the same principles as those of limited companies, and the difficulties which the Solicitor-General suggested were more imaginary than real. I hope that he has been able to look at the point again and can now accept my Amendment.

Major Guy Lloyd (Renfrew, Eastern)

I beg to second the Amendment.

I wish to support my hon. Friend in this matter as I did on the Committee stage. I can understand why hon. Members opposite do not understand the intricate matters involved. I am certain that my right hon. Friend does, and that he is only waiting for an opportunity to make a favourable comment upon our suggestion. In "The Times Supplement" the other day I read that the only blot left on the Finance Bill was the failure of the Government to concede the point which we have put forward.

The Solicitor-General

I am sorry, but I do not understand why my hon. Friend should feel optimistic about the reception of this Amendment, because when it was moved on the Committee stage I endeavoured to give the reasons why the Government could not accept it. On that occasion I held out no hope that after further consideration this Amendment might be accepted.

In this Clause we are dealing with the acquisition of a business by a company from an individual or individuals. That raises certain difficulties, because an individual and a partnership will not have an excess profits standard. To try to arrive at the right standard on transfer means that a great deal of investigation may have to take place into the private affairs of individuals, and these private affairs might be disclosed to the acquiring company.

It is because of these difficulties that application of this Clause is limited, in cases where the transfer is to a company from individuals, to that part of the Clause which my hon. Friend is now seeking to remove. I am sorry that I cannot meet my hon. Friends upon this point, and I hope that they will now be satisfied by the repetition of the argument which I advanced on the Committee stage.

Mr. Mitchison

Will the Solicitor-General agree that what he has just said clearly indicates that his two hon. Friends, after accusing the Opposition of not understanding the matter, did not themselves understand it?

Mr. Stevens

I am sorry that my hon. and learned Friend has been unable to accept the Amendment, but, in view of the cogent reasons which he has given, and the way in which they have been received by the House, I beg to ask leave to withdraw the Amendment.

Hon. Members


Amendment negatived.

The Solicitor-General

I beg to move, in line 18, at the end, to insert: and references to an individual by whom a trade or business is carried on shall be construed, in relation to a trade or business carried on by an individual on behalf of another individual, as including references to the individual on whose behalf it is carried on. This is a drafting Amendment which seeks to implement a promise given by me during the Committee stage to my hon. Friend the Member for Langstone (Mr. Stevens). It is intended to cover the case where the individual on whose behalf the business was carried on prior to the transfer was a minor or an incapacitated person.

Amendment agreed to.