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Machinery Price Increase (Taxpayer's Claim)

Volume 389: debated on Tuesday 11 May 1943

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asked the Chancellor of the Exchequer whether he is aware that, owing to Government requirements and the action of a Department of His Majesty's Government, an order for a lathe given to one firm of machine toolmakers was compulsorily transferred to another; that, in consequence, a delay of many months occurred in delivery; that when the order was executed there was a substantial increase in price; and why, in this instance, the Inland Revenue Department insist that such increase must be treated as a capital outlay and cannot be admitted as chargeable against revenue as a loss arising from frustration of contract?

I am not aware of the case to which my hon. Friend refers, but the fact that the price of plant and machinery to any particular purchaser may be increased by reason of arrangements necessarily made in war conditions would not warrant any departure from the normal treatment for taxation purposes. In any case I would remind my hon. Friend that the determination of any such point does not rest with the Inland Revenue Department, for any dispute regarding the expenses allowable for taxation purposes falls to be settled by the appellate tribunal of the General Commissioners or the Special Commissioners.