HL Deb 08 February 1982 vol 427 cc79-81WA
The Earl of Caithness

asked Her Majesty's Government:

  1. (i) Whether they will provide a complete and specific definition of the words "several" and "significantly" as contained in the Inland Revenue's statement of practice SP4 80 dated 26th March 1980;
  2. (ii) whether they will provide a complete list of uses which qualify for 100 per cent. industrial building allowance;
  3. (iii) what is the cost of industrial building allowances for units up to 2,500 square feet built for each year in the 3 years up to 26th March 1980;
  4. (iv) what is the cost or anticipated cost of industrial building allowances for units up to 2,500 square feet built since 26th March 1980 in non enterprise zone areas;
  5. (v) what is the expected cost of increasing the 100 per cent. industrial building allowance on units up to 2,500 square feet to all industries under Use Classes III, IV and X;
  6. (vi) what is the expected cost of increasing the industrial building allowances on units above 2,500 square feet to all industries under Use Classes III, IV and X;
  7. (vii) what is the cost of industrial building allowances on units over 2,500 square feet for each of the 4 years prior to 5th April 1981;
  8. (viii) what is the anticipated cost of industrial building allowances on units over 2,500 square feet for the current financial year;
  9. (ix) what was the anticipated cost of industrial building allowances on units over 2,500 square feet for the current financial year before the initial allowance was increased from 50 to 75 per cent.;
  10. (x) how many units of under 2,500 square feet have been built in each financial year since 1975, how many of these have been let to users who would qualify for 100 per cent. industrial building allowance relief and what proportion of these are in enterprise zones;
    11. 80
  11. (xi) (a) what is the average number of persons employed in units up to 2,500 square feet;
    1. (b) what is the average number of persons employed in units up to 2,500 feet and where the occupier would be entitled to 100 per cent. industrial building allowance;
    2. (c) what is the average number of persons employed in units over 2,500 square feet but less than 10,000 square feet;
    3. (d) what is the average number of persons employed in units over 2,500 square feet but less than 10,000 square feet and which would qualify for 75 per cent. industrial building allowance;
    4. (e) what is the average number of persons employed in units over 10,000 square feet;
    5. (xii) why possible revisions of industrial building allowances relating to units under 2,500 square feet are being considered in the Green Paper on Corporation Tax when most persons involved are either individuals or partnerships;
    6. (xiii) what proposals they have for altering or extending the existing provisions for industrial building allowances on units under 2,500 square feet and how they can reconcile this with the present provisions which expire on 26th March 1983.

The Minister of State, Treasury (Lord Cockfield)

(i) In his reply on 18th January in another place to my honourable friend the member for Lichfield and Tamworth (Mr. Heddle) my honourable friend the Financial Secretary to the Treasury said that the Statement of Practice outlined a simplified system of administering capital allowances for estates of small industrial workshops constructed for separate letting to small businesses and that the final sentence, to which my noble friend's question relates, explained that this arrangement will not apply where, exceptionally, several units in one estate are let to the same or connected tenants, or where the estate is to a significant extent used for trades which do not attract industrial buildings allowance. In such circumstances, inspectors of taxes have to judge on broad lines on the facts of each individual case.

(ii) Initial allowances at the rate of 100 per cent. can be claimed in respect of the construction costs of business buildings in enterprise zones and buildings which qualify as small industrial workshops within the terms of Section 75 Finance Act 1981. Section 7 Capital Allowances Act 1968 contains the definition of an industrial building or structure for capital allowance purposes.

(iii) Lack of data means that only very approximate figures can be given, and then only on the assumption that sufficient profits were available, in the years in which the expenditure was incurred, to absorb the allowances in full. The cost for each of the three years up to 26th March 1980 is estimated to be about £20 million to £25 million. The actual cost will have been below this maximum figure but cannot be more precisely estimated.

(iv) With the same provisions as in (iii) the cost in 1980–81 is estimated to be about £30 million and in 1981–82 £35 million.

(v & vi) Insufficient data are available upon which to base any estimates of cost.

(vii & viii) The estimates of cost are as follows:—

1977–78 1978–79 1979–80 1980–81 1981–82
£190m £200m £240m £320m £350m
The above figures are based upon the assumption that sufficient profits were available, in the years in which the expenditure was incurred, to absorb the allowances in full. The actual cost will have been below this maximum figure but cannot be more precisely estimated.

(ix) As stated in the 1981–82 PSBR the additional cost of raising the initial allowance from 50 per cent. to 75 per cent. was negligible in the first year. The anticipated cost is therefore £350 million, as above.

(x & xi) There are no data available from which to provide such figures.

(xii) Industrial buildings allowances, including those for small industrial workshops, are an important element of the capital allowances system. That system is relevant to the taxation of incorporated as well as unincorporated businesses. It is right, therefore, that where the capital allowances generally are being reviewed in the Green Paper, that review should cover the allowances for small workshops.

(xiii) I cannot anticipate the Budget Statement of my honourable and learned friend the Chancellor of the Exchequer.