HC Deb 18 May 1916 vol 82 c1657W

asked the Chancellor of the Exchequer whether he is aware that Clause 35 of the Finance Bill will operate unfairly in the case of a company whose accumulating profits during the accounting period have enabled it to increase its investments, since the company is, by the Clause in question, precluded from treating the accumulating profits as additional capital, and the investments, on the other hand, will be treated as a decrease of capital; and will he consider the amendment of the Clause by providing that any increase in investments during such period shall not be treated as a reduction of the capital employed in the business except so far as it exceeds such profits?


My hon. Friend is, I think, under some misapprehension. Accumulating profits are not treated as part of the capital of a business. The investment of such profits outside the business cannot, therefore, affect the computation of the capital employed in the business.