Clause 19. — (Interest Payable Abroad to Be Deductible in Computing Profits in Certain Cases.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 23 June 1949.

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Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral 12:00, 23 June 1949

I beg to move, in page 13, line 6, to leave out subsection (3), and to insert: (3) Where the trade is carried on by a partnership or by a company in which the director in question has a controlling interest, sums allowed in respect of interest payable to any partner or the director in question shall not exceed an amount which the Commissioners having jurisdiction in the matter may consider a reasonable rate of interest in all the circumstances. Subsection (3), as it stands, represents an exclusion from the concession which the Clause represents. The subsection deals with two separate matters. It says: Where the trade is carried on by a partnership, this section shall not apply to any interest which is payable to any of the partners or is payable in respect of the share of any partner in the partnership capital. On the question of interest which is payable in respect of the share of a partner in partnership capital, I am advised that it is already well-established that such interest is not deductible under any circumstances at the present time. Therefore, it would not appear to be necessary to exclude such interest from this concession.

But the main point of my Amendment is to deal with the other type of interest referred to in the subsection; that is, interest payable in respect of any loan by a partner. It seems to me quite unreasonable that such interest should be excluded from the benefit of the section. I am told that if there is a question of a loan payable to one of the partners, that is an expense which can be deducted and held against the partnership profits.