HC Deb 23 June 1959 vol 607 cc999-1000
5. Mrs. Mann

asked the Chancellor of the Exchequer to what extent free gifts and coupon schemes operating over a wide range of food and household commodities are regarded by the Inland Revenue Department as business expenses and subject to Income Tax rebate; and what is the total of allowances made for such schemes and coupon reductions for 1955, 1956, 1957 and 1958.

Mr. Amory

I am advised that money spent in this way is admissible as a deduction in computing trading profits for Income Tax purposes if, not being of a capital nature, it is wholly and exclusively incurred for the purposes of the trade. I regret that the information asked for in the second part of the Question is not available.

Mrs. Mann

Is the Chancellor aware that this must be a very big item indeed? Surely, it is worth while looking into how much we are paying for something to which most of the population is opposed? Will the Chancellor do something about it? If he cannot as Chancellor, will he, when out with his shopping basket, tell the traders that all of us are opposed to it, including himself, as I am sure he is?

Mr. Amory

My difficulty is that the test that has to be applied is not a test as to the wisdom of the particular expenditure, but whether it is expenditure which has been incurred to earn profits. If it is expenditure which is incurred for that reason and it fulfils the other qualifications I have mentioned, it has to be accepted as admissible. I will bear in mind the hon. Lady's suggestion when I next go out with my shopping basket.

Mr. Gordon Walker

Is not all such expenditure partly of a capital nature in that it builds up good will, and so on? Is it not wrong that all of it is set against the expenses of making a profit? It is, and must be, in part a capital expenditure.

Mr. Amory

There is a great deal of expenditure which is incurred from the viewpoint of building up good will which would not be strictly of a capital nature. If, however, it were treated as being of a capital nature and it were still regarded as an item fairly incurred in earning profits, there would have to be some system of depreciation allowances on it and, at the end of the day, the result would be much the same.