§ Mr. TOUCHE
asked the Chancellor of the Exchequer if he is aware that surveyors of taxes in computing liability for excess profits for the second accounting period in cases where there was a loss for the first period are charging 60 per cent. of the profit for the second period before deducting the loss in the first period, and are then crediting 50 per cent. of that loss, with the result that a business whose profit in the first period was, in round figures, £20,000 below the pre-war standard, and whose profit in the second period was £19,000 over the pre-war stan- 1136W dard, is charged with 60 per cent., or £11,400, on the £19,000, and credited with 50 per cent., or £10,000, on the £20,000, and is thus required to contribute £1,400 to Excess Profits Tax, notwithstanding that over the combined periods there is no excess, but a deficiency; that this course is defended by an interpretation placed on paragraph (4), Sub-section (2) of Section 45, of the Finance Act, 1916, but is contrary to Section 38 of the principal Act, which provides that the total amount of excess duty paid during the whole period shall accord with the profits or losses during that period, and that it is also at variance with the Chancellor of the Exchequer's Parliamentary explanation of the intended restriction of the subject's liability to taxation as if his profits for the whole period had been put together; and will he consider how the inconsistency and inadvertent hardship can be removed?
§ Mr. McKENNA
As I indicated in my speech on the Third Reading of the Finance Bill, 1916, the provision in the original Act for the set-off of deficiencies of profits below the margin of liability was made in contemplation of an equal tax running through the whole period of liability. The special point to which the hon. Member alludes has already received the consideration which at that time I promised to give to it, but, in my judgment, if it be conceded on a review of all the relevant considerations, including those mentioned by the hon. Member, that some amendment of the law is called for, it should be introduced in connection with the last accounting period to which the duty applies, and should pay regard to the total amount of excess profits earned over the whole period of the tax and the total burden borne by the taxpayer.