HC Deb 31 January 1957 vol 563 cc1162-3
42. Mr. H. Wilson

asked the Chancellor of the Exchequer if he is aware that a national newspaper is offering as a prize in a competition to pay the Income Tax liability of the winner for life; to what extent such payments will be assessable for tax in respect of the recipient; and to what extent the newspaper concerned will be entitled to charge such payments as a deductible expense in the calculation of its own liability for Income Tax and Profits Tax.

Mr. Powell

I have seen particulars of what I assume to be the competition in question. The prize offered is a lump sum calculated by reference to the winner's Income Tax liability for a past year, and to his age. Such a prize would not be liable to Income Tax in the hands of the recipient. The winner has, however, the option of taking a life annuity, and if he exercised this option would be liable to tax on either the full amount or the interest element, according to the circumstances.

Mr. Wilson

I am sorry that a Question of mine should have enabled the winner of this prize to find a way of dodging the tax; but will not the hon. Member reconsider the matter? Does not he think that it is fantastic that a newspaper should be allowed to offer to pay a taxpayer's tax liability for life without the income which comes for that purpose from the newspaper being regarded as a taxable liability? Is not this one more example of the need for a thorough review of the whole question of liability to Income Tax in this country?

Mr. Powell

These lump sum prizes are in no different category from any other lump sum prizes which do not attract Income Tax. The description of the prize as a payment of Income Tax is only a somewhat incorrect paraphrase of the calculation of that lump sum upon the basis of a particular figure paid in Income Tax in the past.

Mr. Wilson

Will the hon. Gentleman answer the second part of my Question more clearly? Is the Board of Inland Revenue going to allow this newspaper to state that the cost of prizes like this—as in a similar case, when a public house was offered as a prize in some competition—can be regarded as expenses wholly laid out for the purposes of the trade of that newspaper?

Mr. Powell

I should like to see that question in its actual terms.

Mr. Osborne

Would the recipient of this prize be in any different position, from a tax point of view, from the winner of a large football pool? If this kind of prize is to be taxed, does the right hon. Gentleman opposite want football pool prizes to be taxed?