§ 4. Mr. Hayasked the Chancellor of the Exchequer whether he will give guidance to trading companies as to the amount of profits they should distribute to ensure that action will not be taken against them under Section 245 of the Income Tax Act, 1952.
§ Mr. R. A. ButlerThe question whether a company has made a reasonable distribution of income must depend on the facts of the particular case and is not one on which I could give general guidance. I am, however, sending my 1024 hon. Friend a copy of a statement made by the late Sir Stafford Cripps on 22nd July, 1948, which sets out the present practice in relation to one-man trading companies whose dividends for periods ended before June, 1947, were accepted by the Special Commissioners as reasonable. If after my hon. Friend has read the statement, he has any other point to raise, perhaps he would write to me.
§ Mr. HayI have already seen the statement, and I can save my right hon. Friend the trouble of sending me a copy. Does not the fact that that statement was made as long ago as 1948, and that developments have since taken place, including the policy of dividend limitation, make it necessary now for some fresh guidance to be given, especially to what are called one-man trading companies? Will my right hon. Friend consider making such a statement?
§ Mr. ButlerI am ready to consider any new aspect of this matter arising under Section 245. If my hon. Friend or his colleagues have any further information to send me, they had better send it.