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Orders Of The Day

Volume 415: debated on Wednesday 31 October 1945

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Ways And Means

REPORT [ 23rd October]

Resolutions reported:


1. "That no allowance shall be paid—

  • (a) under Section three of the Customs and Inland Revenue Act, 1885, in respect of plain British spirits exported from or used in, or spirits in the nature of spirits of wine exported from or used or deposited in, a customs or excise warehouse; or
  • (b) under Section six of the Finance Act, 1895, in respect of spirits used for methylation which are removed from a place of methylation and exported; or
  • (c) under Section one of the Revenue Act, 1906, in respect of spirits (including methylic alcohol) used by an authorised methylator or received by any person for use in any art or manufacture under Section eight of the Finance Act, 1902; or
  • (d) under Section three of the Revenue Act, 1906, in respect of spirits of wine exported direct from the premises of a person licensed to rectify or compound spirits;
  • and Subsection (5) of Section forty-six of the Spirits Act, 1880 (which provides for an allowance for wastage of spirits in a distiller's spirit store) shall cease to have effect, and provision shall be made by regulations of the Commissioners of Customs and Excise in lieu of the provisions of Subsection(1) of Section sixty-six of the Spirits Act, 1880 (which relates to deficiencies occurring in warehouse)."


    2. "That—

  • (a) the duty of excise in respect of a mechanically propelled vehicle, being a vehicle which derives its motive power wholly from an internal combustion engine worked by a cylinder or cylinders and which is chargeable with such duty under paragraph 6 of the Second Schedule to the Finance Act, 1920, by reference to its horse-power, shall, in the case of such a vehicle registered under the Roads Act, 1920, for the first time on or after such date as may be fixed by order of the Treasury, be charged by reference to the cylinder capacity of the vehicle, calculated in accordance with regulations made by the Minister of War Transport, instead of by reference to its horse-power;
  • (b) for the purposes of this Resolution a unit of cylinder capacity shall be one hundred cubic centimetres;
  • (c) the duty to be charged in respect of such a vehicle so registered shall be charged at a rate for each unit or part of a unit of cylinder capacity equal to four-fifths of the rate fixed by the said paragraph 6 for each unit or part of a unit of horse-power, so however that, in a case in which duty so charged would be less than duty charged at the rate fixed by the said paragraph 6 for a vehicle not exceeding six horse-power, the rate of the duty in respect of the vehicle shall be the last-mentioned rate;
  • (d) it is expedient to extend references to horse-power in the Finance Act, 1920, and other enactments so as to include references to cylinder capacity."

  • 3. "That, as from the twenty-fourth day of October, nineteen hundred and forty-five, purchase tax shall cease to be chargeable in respect of goods of the classes specified in the Table set out at the end of this Resolution, subject to any subsequent order under Section twenty of the Finance (No. 2) Act, 1940.
  • Table

  • (1) Domestic cooking, space heating and water heating appliances of the following descriptions, namely,— stoves, grates, ranges and fireplaces; boiling rings, grillers and hot-plates; radiators and convectors; instantaneous water heaters, immersion water heaters and storage water heaters; wash boilers and wash coppers.
  • (2) Parts of such stoves, grates, ranges and fireplaces as aforesaid.
  • (3) Domestic refrigerators."

  • 4. "That income tax for the year 1945–46 shall be charged at rates exceeding the standard rate in the case of individuals whose total incomes exceed two thousand pounds, and those rates shall be rates in the pound which respectively exceed the standard rate for that year by the amounts specified in the second column of the Table in Subsection (1) of Section seven of the Finance (No. 2) Act, 1940."

  • 5. "That Section twenty-five of the Finance Act, 1941 (which contains provisions as to certain tax-free annuities, etc., applicable only when the standard rate is ten shillings in the pound) shall be applied, with modifications, to all years for which the standard rate of income tax exceeds five shillings and sixpence in the pound."

  • 6. "That the appointed day for the purposes of the Income Tax Act, 1945, and Part IV of the Finance Act, 1944, shall be the sixth day of April, nineteen hundred and forty-six."
  • Income Tax on Excess Profits Tax Refunds

  • 7. "That income tax for the year 1946–47 shall be charged on the full amount of all sums repaid, at whatever date, under Section twenty-eight of the Finance Act, 1941 (which provides for the repayment after the war of certain excess profits tax), and those sums shall be treated as income for all the purposes of the Income Tax Acts."

  • 8. "That, subject to the provisions of any Act of the present Session making further provision in connection with finance—
    • (a) sums received under schemes certified by the Board of Trade under Section twenty-five of the Finance Act, 1935, or under schemes for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act (whether passed before or after the passing of this Resolution) shall be treated for the purposes of income tax as if they were trading receipts;
    • (b) where any sums so received are not so treated, contributions paid under the scheme shall, to a corresponding extent, not be allowed to be deducted in computing profits,
    • (c) where a contribution paid under any such scheme as aforesaid is allowed to be deducted in computing profits and the whole or part thereof is subsequently repaid, the deduction of the contribution or of so much thereof as is repaid shall be deemed to be an unauthorised deduction; and
    • (d) where a certificate granted with respect to a scheme under the said Section is cancelled or a scheme to which effect is given as aforesaid comes to an end, any funds held for the purposes of the scheme shall be chargeable to Income Tax."


  • 9. "That—
    • (a) where any agreement has been made between His Majesty's Government in the United Kingdom and the Government of any other territory which makes provision for granting relief in cases where the same income is chargeable to United Kingdom Income Tax and to the Income Tax pay able under the laws of that territory, charges to tax may be made to give effect to any provision included in the agreement or otherwise in connection with the agreement, and where the agreement is between His Majesty's Government in the United Kingdom and the Government of a territory which is a Dominion as defined by Section twenty-seven of the Finance Act, 1920, that Section shall cease to have effect in relation to Income Tax of that Dominion except so far as the agreement otherwise provides;
    • (b) in all cases to which the said Section twenty-seven applies, the tax deductible from dividends under Rule 20 of the General Rules shall be tax at the full standard rate, and any relief given under the said section twenty-seven in respect of any profits or gains represented by the dividends shall be taken into account in determining what repayments of tax are to be made to, or charges to tax made on, the persons entitled to the dividends."


  • 10. "That it is expedient to amend the provisions of the Income Tax Acts relating to exceptional depreciation allowances, as respects all years of assessment affected by those provisions."

  • 11. "That assessments to Income Tax may be made at any time, if required in consequence of—
    • (a) any alteration of the amount which falls to be taken into account in respect of Excess Profits Tax or the national defence contribution in computing the liability of any person to Income Tax; or
    • (b) any determination as to whether any allowance is receivable by any person in respect of exceptional depreciation of buildings, machinery or plant, or as to the amount of any such allowance."


  • 12. "That where any agreement between His Majesty's Government in the United Kingdom and the Government of any other territory makes provision for granting relief from double taxation in relation to estate duty payable under the laws of the United Kingdom and any duty of a similar character payable under the laws of that territory—
    • (a) effect shall be given to any provision included in the agreement relating to the place where any property is to be treated as being situated for estate duty purposes; and
    • (b) the relief to be given under the agreement shall be in lieu of any relief under Subsection (4) of Section seven of the Finance Act, 1894, or under Section twenty of that Act, as extended by or under any other enactment."


  • 13. "That the extent and incidence of Excess Profits Tax (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments of the law relating—
    • (a) to the computation of profits;
    • (b) to the time within which assessments to Excess Profits Tax may be made;
    • (c) to relief from double taxation;
    • (d) to relief in respect of deficiencies of profits; and
    • (e) to repayments of tax under Section twenty-eight of the Finance Act, 1941."


  • 14. "That the extent and incidence of the National Defence Contribution (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments of the law relating—
    • (a) to the computation of profits;
    • (b) to the time within which assessments to the National Defence Contribution may be made; and
    • (c) to relief from double taxation."

    Spirits (Excise)

    First Resolution read a Second time.

    Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

    Are we not to have any explanation of this complicated Resolution?

    3.30 p.m.

    I will gladly give the House any explanation within our power. It is, as the right hon. and gallant Gentleman has said, a very complicated Resolution. The effect of it will be to save the Revenue about £1,000,000 in a full year. It is a Resolution which was introduced last April by the ex-Chancellor of the Exchequer in his Budget. Some considerable time ago, under the old law, a prohibition was put upon brewing and distilling at one and the same time. The result was that those engaged in brewing and distilling felt that they had a grievance because it involved them in extra expense. It was in those days felt to be essential that brewing and distilling should not take place at one and the same time, for the protection of the revenue. Times have changed, and it is now felt that it is possible to protect the revenue without having to insist on brewing and distilling taking place on different occasions. Up to now an allowance of 3d. has been made to the distillers to meet their extra charges in this direction, but as the prohibition has come to an end it is thought that the allowance also should be withdrawn. A White Paper setting forth the whole story was issued last April, and hon. Members who desire to have further information on the matter and to know exactly why the Chancellor has decided to end the allowance will find that explained in that White Paper, which is Command Paper 6622.

    I should like to say a few words about the Resolution, but before doing so I feel bound to declare my own private interest in this matter, because my family business happens to be one of the two or three independent businesses engaged in the manufacture of industrial spirit which are referred to in the Command Paper mentioned. We are independent of the combine, so I think it is important that our views should be heard. I think the withdrawal of these drawbacks is absolutely justified and ought to have been done a long time ago. The withdrawal now is consequent upon the Government's decision to repeal the Spirits Act, 1880, and to control the manufacture of spirits under regulations that will be promulgated by Order. It is an interesting commentary on the change in the business proceedings of this House that in 1880, 65 years ago, the House was prepared to spend a very long time upon the discussion of regulations that were purely technical. It is an excellent example of the great improvement brought about, of legislation, in this case by Order, as against ordinary Acts of Parliament. I wish to say something more about this Command Paper. Without going into technicalities—I must say that we did not give evidence before it, and I am not personally involved in this at all—I must say that it is disturbing to note that it seems to have been a most undignified inquiry. A number of witnesses behaved, to my mind, in a very undignified manner, and the Commissioners themselves retorted by what was, in effect, a very unfair bias in their report. I very much regret that, but I feel bound, speaking as a neutral person interested in this trade, to make these rather harsh comments on the conduct of witnesses and of the Committee itself.

    Having said that, I have said all I mean to say except that I hope the House will agree with this Resolution, because it is entirely justified and the drawbacks should have been withdrawn long ago. I would only add that I think any Government will have to make up its mind whether the manufacture of industrial alcohol in this country is of national advantage or not, because it is quite possible that it will be found that it is more economical to manufacture industrial alcohol in, say, the West Indies or other sugar producing areas, rather than import the raw molasses into this country and make it into alcohol here. I just sound this note of warning, because that is a difficulty with which this Government and every future Government will be faced. I support the Resolution.

    I am sure that the House is going to give the Government this Resolution without undue delay or debate, which would not have been the case if we had still had the pleasure of the company of the Noble Lady who used to represent the Sutton division. I imagine that this Resolution is part of the Government machinery for the protection of dollar exchange. Whisky, whatever its merits or demerits, is a very popular export to the United States of America and I am sure the Chancellor has that in mind in framing this Resolution. The stop which was put to double distillation during the war was a wartime measure, and we welcome this change as a harbinger of peace, as one of the ways in which we are ready to march forward; and as a Member representing an agricultural area which supplies some of the raw material for the distillation of whisky I wanted to say, on behalf of my constituents, that I welcome this Resolution and hope it will be passed.

    Question, "That the House doth agree with the Committee in the said Resolution," put, and agreed to.