§ Major Guy Lloyd (Renfrew, Eastern)
I beg to move, in page 56, line 8, at the end, to add:Provided that—The object of the Amendment is to give the Government an opportunity to rectify one of the many anomalies—some of them small, but all of them real—and injustices which may have been overlooked when the Bill was drafted. On Clause 41 we pointed out a number of very similar anomalies, and some of our Amendments were accepted.
- (a) where a change occurs in the partnership in such circumstances that thereafter a body corporate, which until that time was engaged in the trade or business as a partner therein, continues to be engaged therein but on its own account alone, the share of that body corporate in the profits and losses of the trade or business arising at any time before the end of the standard period shall be deemed to be the whole amount of the profits or losses of the trade or business arising during that period; and
- (b) where a change has taken place at any time after the beginning of a standard period in the proportion in which the profits are to be divided between the partners, the share of the body corporate in the profits and losses arising before the end of the standard period shall be computed by reference to the proportion in which it is entitled to share in the profits during the chargeable accounting period.
Here is another in connection with a partnership. I hope the Chancellor and his advisers will see their way to rectify the anomaly by conceding my point. Admittedly, the words I suggest in my Amendment are rather complicated, but they could doubtless be improved, and I should be more than willing to yield to the Chancellor and his advisers the opportunity of improving the words provided they accept the principle of my Amendment.
Under the Clause as drafted a change in partnership means that the surviving partners can succeed only in proportion to the share of the profits previously accruing to them. That is not right. If a man retires from a partnership with a firm, why should the firm suffer through that because their share is based on the standard of profits of the standard year although it is exactly the same business as it was? Indeed, it may now even be making a loss after the retirement of the other partner, but although there might be a fall in the profits the Excess Profits Levy would still have to be paid. That is 992 a grotesque state of affairs, as I am sure my right hon. Friend will agree.
§ Mr. Maudling
The Clause deals with the position of a business being carried on by two or more persons in partnership when one of the partners is a body corporate. My hon. and gallant Friend has pointed out that there may have been a change of circumstances since the end of the standard period. For example, a company may become entitled to two-thirds of the profits of the business instead of one-half. My right hon. Friend the Chancellor of the Exchequer considers that the substance of the Amendment is valid and that there should clearly be an adjustment of the company's standard profit in those circumstances to reflect the change that has taken place in the circumstances of the partnership.
The wording of the Amendment is not entirely suitable. There may be cases where a company has paid away a large sum to the outgoing partner, and it would not be fair to ignore the fact that the company's funds had thereby been reduced. However, I can give my hon. and gallant Friend an assurance that if he will withdraw the Amendment the Chancellor will put down an Amendment on the Report stage to cover the point and to cover the case, which also needs to be covered, where there has been an introduction of a new partner.
§ Major Lloyd
I am very grateful to my hon. Friend for those remarks. I am very glad that the wording should be in accordance with the Chancellor's wishes and not mine. I am delighted to think that the Chancellor has conceded the point because after all it merely reverts to the position under the Excess Profits Tax during the war. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause ordered to stand part of the Bill.