Clause 83.—(INTERPRETATION OF PART IV.) (Hansard, 22 June 1965)

§ Sir Eric Fletcher
I beg to move Amendment No. 617, in page 113, line 39, at the end, to insert: (b) "preference dividend" means a dividend payable on a preferred share or preferred stock at a fixed gross rate per cent. or. where a dividend is payable on a preferred share or preferred stock partly at a fixed gross rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed gross rate per cent., but it does not include any divident or part of a dividend which is paid without deduction of income tax (and for this purpose a payment shall be treated as made without deduction of income tax unless either there is made from it the full deduction authorised by this Part of this Act or the payment is, before the passing of an Act imposing income tax for the year of assessment, made subject to deduction of tax by reference to a standard rate less than that ultimately imposed). This is, in a sense, a consequential Amendment. It introduces a definition of "preference dividend".

§ Mr. John M. Temple (City of Chester)
I beg to move Amendment No. 350, in page 114, line 10, at the end, to insert: (k) "a registered industrial and provident society "shall also include references to a co-operative type of company whose constitution conforms with regulations made under the Agricultural and Forestry Associations Act, 1962. This is a fairly readily comprehensible Amendment, and I can only hope that it is in the right place in the Bill. [Interruption.] I have been shot down on these 1625 points before. The object of the Amendment is to extend the benefits of the Corporation Tax advantages which have been given to co-operative societies which have been registered under the Industrial and Provident Societies Acts to co-operative societies which have been formed under the Agricultural and Forestry Associations Act, 1962.
My friend the President of the National Farmers' Union wrote to the Chancellor of the Exchequer about this matter on 18th May and had a rather cryptic reply saying that the Chancellor was looking into the matter and that it would be discussed on the Amendment of the hon. Member for the City of Chester. The appropriate moment has now arrived when the Amendment can be discussed.
I believe that it is an omission on the part of the Government not to have included co-operative societies formed under the Agricultural and Forestry Associations Act, 1962, in the same bracket as co-operative societies which were formed under previous legislation. Clauses 43(5) and 65, taken together, exempt from Corporation Tax a registered industrial and provident society formed under the Act of 1870.
Since that time there have been new definitions of registered provident societies for the purpose of agriculture under the 1962 Act and a convenient definition of these societies was given in S.I. 1892/62. These new forms of societies have been doing a first-class job. They have been working largely in cooperation with the Agricultural Market Development Executive Committee, normally known in agricultural circles as A.M.D.E.C. My right hon. Friend the Member for Guildford (Sir R. Nugent) is the chairman of the executive committee of that organisation. Significantly, the Government have extended the powers of A.M.D.E.C. under the Price Review for a further three years. It would, therefore, seem that the Government are in full support of all the schemes sponsored by A.M.D.E.C., many of which are sponsored by co-operative societies which have been formed under the 1962 legislation.
I would refer, only very briefly, to a pamphlet giving the objectives of A..M.D.E.C. They are to encourage with grants schemes for market research, 1626 schemes for the promotion of grading and standardisation, and better presentation of agricultural products. I know that these are matters which are very much encouraged by the present Minister of Agriculture. I have heard him speak on many occasions, and he is extraordinarily keen on promoting marketing of agricultural products of all kinds. I would just quote from this pamphlet to give some idea of the scope of the type of company to which I am referring. It says that the purposes for which grants should be payable are the promotion of business efficiency, and then, most important, it says: To be eligible for grant an existing organisation will have to provide evidence that it is in substance a co-operative association or that it is registered under the Companies Acts and is effectively under the control of its producer members, with no one member commanding more than one-tenth of the voting power and with profits shared approximately in proportion to the business done. That sets out clearly the definition of a co-operative under the 1962 definition.
I can see no case whatever in logic why these differently formed types of co-operative society, all of which are to assist agriculture, should be treated differently for Corporation Tax. That is the essence of the point, and I hope very much that the Government will accept this Amendment and be able to put the matter right more or less immediately.

§ Sir Richard Nugent (Guildford)
May I say a brief word in support of my hon. Friend the Member for the City of Chester (Mr. Temple). The point here is that these A.M.D.E.C. grants have been made equally to companies registered under the Industrial and Provident Societies Acts and to full-blooded agricultural societies, and, where we are satisfied that a company is formed in such a fashion, we have made grants exactly the same, as though they were co-operative societies. I am sure the Treasury Ministers will see that this is in the spirit of the original A.M.D.E.C. intention, which has been carried on by this Government. I hope that Treasury Ministers will be willing to accept my hon. Friend's Amendment.

§ Sir Eric Fletcher
There is no dispute between the two sides of the Committee about this matter. There has been discussion between my right hon. Friends 1627 the Chancellor and the Minister of Agriculture, and it is perfectly true that, as the hon. Member indicated, the Government fully recognise the very valuable and important work which is being done by farmers' co-operative companies in the development of agricultural co-operative activities, and we are anxious to see that no avoidable obstacle is put in the way of further development of the co-operative activity in one form or another which is going on among farmers. Therefore, I am authorised to say the Government are disposed to accept the principle of the Amendment. I can assure the hon. Member for the City of Chester (Mr. Temple) that he has chosen the right place in the Bill to make the Amendment—this Clause, the Interpretation Clause.
I cannot accept the precise form of words suggested by the hon. Member because I am not sure that it would be suitable for his purpose, and I think it may be undesirable, in the interests of both the farmers themselves and of the Revenue, to tie the special treatment proposed so closely to the Agricultural and Forestry Associations Act, 1962, but I can assure the hon. Member that if he will withdraw his Amendment my right hon. Friend undertakes to produce a suitable Amendment on Report.

§ Mr. Temple
I am sure the whole Committee is obliged to the Minister without Portfolio. I am exceedingly pleased to have made yet another dent in the Finance Bill—three out of five attempts, which means that I am scoring a high percentage. I understand that the Minister cannot accept our drafting and that he will put this matter right on Report. I beg to ask leave to withdraw the Amendment.

§ Mr. William Clark
I will not detain the Committee for any length of time, but will the Minister explain why the Government have chosen in subsection (2,e) to advance the period by five days? Normally the fiscal year starts on 5th April, but in this case it starts on 1st April, 1965. It must have been a printing error. No doubt the matter can be 1628 put right on Report—unless there is some valid reason why the financial year for 1965 should start on 1st April. It would be at variance with all other Income Tax Acts.

§ Sir Eric Fletcher
I am under the impression that it is intended to start on 1st April, 1965, but I will look into the matter and, if necessary, I will let the hon. Member for Nottingham, South (Mr. William Clark) know. My impression is that this is intentional.