§ 57. Mr. Peyton
asked the Minister of Agriculture, Fisheries and Food if he will take steps to ensure that payments of compensation to farmers whose herds are slaughtered because of foot-and-mouth disease are made in such a way that they do not become subject to tax.
§ Mr. Soames
No, Sir. It is difficult to see how a different system of making these payments could affect tax liability. Livestock are properly to be considered, in most instances, as revenue assets, both when they are bought and when they are disposed of, but the charging of tax on compensation receipts is matched by treating the cost of replacing the herd as an allowable expense. As regards permanent stock, such as a dairy herd, for which this may not be the full answer, I would refer my hon. Friend to Section 23 of the Finance Act, 1953. This is summarised on page 13 of "Farmers' Bookkeeping and Income Tax", published by my Department in conjunction with the Inland Revenue Department.
§ Mr. Peyton
Could my right hon. Friend consider the situation which arises if a herd is slaughtered and compensation paid in one financial year and replacement of stock takes place the following year? It is quite ridiculous, and fantastic results follow, and the compensation is taxed? Surely that is not what compensation is given for? Will he not use his influence to keep the rapacious hawks of the Inland Revenue authorities away from this compensation?
§ Mr. Soames
If a herd is slaughtered, that has an effect on the valuation of the property at the end of the financial year and that affects the tax situation. This is a complicated issue in which the Inland Revenue is primarily interested, but much of it is set out in this booklet which I recommend my hon. Friend to read.