I will give the Minister a case. In connection with my first amendment, take the case of three persons who joined in the formation of a company in which the three of them were directors and they gave full service to the company in the trade year which ended before 31st August, 1939. Therefore, they come under the provisions of Section 13 (c). Let us say that the capital is £14,000, equally divided in ownership between the directors, and that the company made up its last accounts on the 31st January, 1944. Its profits, before providing for remuneration for any of the directors, let us say, were £5,000. Each director was paid £1,000 for his general services. Under the existing law, that £3,000 would be allowed as a charge, leaving a balance of £2,000. As that is less than the exemption limit of £2,500, the company would not pay excess corporation profits tax. But, if the Finance Bill passes in its present form, only £420 of the £3,000 paid to the directors will be allowed for. That will leave a balance of £4,580, from which £2,500 will be deducted, and the company will then have to pay excess corporation profits tax on £2,080 for the whole of the accounting period ending 31st January, 1944. That means that that company will now, under this Finance Bill, if passed, have to pay £1,040 that it did not expect to have to pay. As I say, it made up its accounts to the 31st January, 1944.
Another company, also formed by three persons with the same capital divided in the same way amongst the directors and paying the same directors' fees, which had no trade year before August, 1939, but had the good luck to make up its accounts for the year on 31st December, 1943, will not have to pay any excess corporation profits tax this year. That is as far as this year is concerned. My amendment suggests that the date, 31st December, 1943, should be taken as the date which would become operative for the actual beginning of the tax. In these circumstances, the company which made up its accounts to the 31st December, 1943, would not be affected in respect of the period back to that, but during the current year it would be; and the company that had made up its accounts to the 31st January, 1944, instead of being stuck for £1,040, which its friend and rival company, which ended up its accounts a month earlier, had to pay, would pay simply one-twelfth of the amount. In other words, it would pay in respect of January, 1944; but both companies would begin to feel the incidence of this new piece of taxation from the 1st January, 1944.
Now, let us say that these are two firms that are trying to evade taxes. Why should one escape that taxation because it makes up its accounts on a particular date, and the other firm have to pay £1,040, because it was so unlucky as to make up its accounts a month later? Again, suppose that they are both honest and bona fide firms, trying to carry on their business as best they can: one of them will be stuck in the same way as I have described; it has already distributed the assets of the firm in a way that seemed good to it, or it might have put some money aside for further development. Here, however, you have, in the case of two firms that are perfectly bona fide, one being stuck for a tax amounting to £1,040, while the other escapes that tax, merely because of a difference in the accounting period. That is the point that I really want to press on the Minister in regard to the first amendment: that it is inequitable and unjust as between two pairs of thieves on the one hand and two pairs of honest men on the other hand. I do not know really whether people in business ought to have been given notification that this thing was being given effect to, earlier than its publication through the medium of the Finance Bill.