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Clause 34—(Nationalised Undertakings)

Volume 440: debated on Wednesday 16 July 1947

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I beg to move, in page 31, line 48, at the end, to insert:

"Provided that where immediately before the acquisition of the whole or any part of any undertaking or any of the property thereof by any such Board, Authority, Commission, corporation or other body, the capital of that undertaking consisted wholly or partly of debentures, debenture stock or other loan capital, this Subsection shall not apply to so much of any of the payments therein mentioned relating to the acquisition as in the opinion of the Commissioners may be appropriate having regard to the extent to which the capital consisted of such capital."
This Amendment seeks to bring about an alteration in Clause 34—which deals with the liability to Profits Tax of nationalised undertakings—and provides that no deduction is to be made in respect of interest paid on compensation stock issued under the nationalisation scheme, or in respect of payments which are to meet the interest charge on Government compensation stock issued under such a scheme. The Amendment seeks to modify that provision of Subsection (3) of Clause 34 by providing that so much of such interest payments can be allowed as deductions as the Commissioners of Inland Revenue consider proper, having regard to the extent to which the capital of the undertakings taken over on nationalisation consisted, immediately before the acquisition, of loan capital. All nationalised undertakings are charged on the 5 per cent. basis, as there is no distribution charge, but as a compensating factor they are not allowed in computing their profits to deduct compensation pay- ments. A slight alteration is made to that to provide that where a compensation payment takes the place of what was previously debenture interest, and, therefore, really a loan charge, the payment shall to that extent, as decided by the Commissioners of Inland Revenue, be a payment which can be deducted in computing the profits for the purposes of Profits Tax of the nationalised undertaking. We feel that that is a measure of justice.

I have no comment to make on this Amendment, except that I was surprised when I first read the Clause that this was not provided for already.

Amendment agreed to.