§ (1) Subject to the provisions of this Section, so much of the provisions of Subsection (4) of Section three of the Income Tax Act, 1945, as requires that balancing allowances to be made in the events mentioned in Subsection (I) of that Section (being sales of and other events relating to industrial buildings and structures) shall, in the cases mentioned in the said Subsection (4), be reduced by applying a certain fraction, shall not have effect.
§ (2) Where any person by notice in writing to the surveyor elects that Subsection (1) of this Section shall not have effect in relation to any of the said events, he shall, in relation to that event, be treated for all the purposes of the Income Tax Acts as he would have been treated apart from the provisions of Subsection (1) of this Section.—[Mr. Dalton.]
§ Brought up, and read the First time.
§ Mr. Dalton
I beg to move, "That the Clause be read a Second time."
This Clause is one on which my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson), my predecessor in Office, made representations to me. At present there is a restriction imposed by the Income Tax Act of 1945 upon the so called balancing allowances that may be given in cases where industrial buildings are scrapped. At present, so the argument runs—and I have accepted the argument because it is conclusive—the balancing allowances under these restrictions—I hope I shall be able to make this clear because it is complicated—fall short of the aggregate amount of the allowances which a trader would receive in respect of his building if he retained it. Consequently, the restrictions act as a deterrent to scrapping old buildings and replacing them with new. This was the point brought to my attention with great clarity by my predecessor. In view of this, and since it is far from being our wish, that we should encourage the patching up of old buildings, It has been decided to add this New Clause, which lays down that the industrialist who scraps 893 an old building and replaces it by a new one will receive by way of a balancing allowance, an amount equal to the amount he would have received if he had kept it, minus any money he receives for the amount of the scrapping. This is a complicated story but we are seeking by this provision to remove the discrimination, which I think does exist under the present law referring to balancing allowances, and which does discourage the replacement of old buildings by new. We hope if this Clause is accepted that it will be a stimulus to the modernisation of industrial buildings.
§ Sir Arnold Gridley (Stockport)
There is one point on which we are still a little doubtful. It has been raised by the pottery industry working party. Apparently this Clause does not go to the full extent to which that working party asked that it should. As I understand, in their report the working party asked that there should be no writing down at 2 per cent. on old buildings for the year when, in fact, the two per cent. was not an effective allowance. In the new Clause the Chancellor does not meet that point.
§ The Solicitor-General
The Clause as drafted, quite frankly, does not go to the full extent of the request which was made by the pottery working party. That request would, in point of fact, extend to a length to which the Chancellor of the Exchequer feels he cannot go. It would mean that the balancing allowance would be calculated by reference to the whole life of the building concerned which fell before the appointed day and after the appointed day. That is a concession which, in the view of my right hon. Friend would be quite unjustifiable, and, therefore, he feels he is not in a position to accept it.
§ Question put, and agreed to.
§ Clause read a Second time, and added to the Bill.