HC Deb 24 March 1983 vol 39 cc1010-1
13. Mr. Nicholas Baker

asked the Chancellor of the Exchequer what recent representations he has received about the tax treatment of individuals who invest in theatrical enterprises.

Mr. Wakeham

I am aware that the report of the Select Committee on public and private funding of the arts has recommended that a loss from casual investment in the theatre by an individual should be allowed for tax against his other income.

The Government are considering the report, but it would be difficult to justify a special tax rule for that particular type of investment activity.

Mr. Baker

Is my hon. Friend aware of the critical state of the British theatre? Rather than changing VAT rules, does he agree that there would be a substantial incentive for people to invest if losses from investments in theatrical enterprises could be offset against other income and if profits were treated as earned rather than unearned?

Mr. Wakeham

My hon. Friend's proposition would not assist the subsidised theatre, because charitable trusts are not able to attract private investment, as they cannot distribute the profits. I recommend that the commercial theatre carefully examines my right hon. and learned Friend's recent Budget, which provides considerable assistance to small businesses which, I believe, could be used well by the theatre.

Mr. Skinner

Will the Minister confirm that if he introduces any measures to grant tax relief to people who invest in theatrical enterprises he will not include the latest developments of those who are engaged in breakfast television, such as his hon. Friend the Member for Thanet, East (Mr. Aitken) who is now the boss of TV-AM? But then again, that is not theatre, but has turned out to be farce.

Mr. Wakeham

The hon. Gentleman asks a hypothetical question.

Mr. Montgomery

Has my hon. Friend noticed the number of empty theatres in the west end of London? Does that not show the problem that producers are having in raising the necessary money? Does he agree that a more helpful policy, allowing losses to be offset, would be of enormous benefit to west end theatres?

Mr. Wakeham

I understand my hon. Friend's point, but the fact remains that the investor is not carrying on a trade but simply advancing money in the hope of obtaining a return. Any loss is therefore from investment, not trading. To widen that would cause a substantial problem.

Mr. Arnold

Is it not high time that that type of activity was regarded as carrying on a trade?

Mr. Wakeham

When such activity can justifiably be considered as carrying on a trade, it is treated as such. That does not apply to the "angels" as they are referred to in the theatrical world. I see no prospect of changing that.