SIXTY-SEVENTH REPORT.

TO THE LORDS COMMISSIONERS OF HIS MAJESTY'S TREASURY.

MAY IT PLEASE YOUR LORDSHIPS,

1. We have the honour to submit our Report on the Revenue under our management for the year ended the 31st March, 1924. 2. The statistics in the Report are presented, for each head of duty under our management, in two divisions. One division, on a cash or accounting basis, shows the Gross Receipt of Duty, the Repayments, the Net Receipt and the Exchequer Receipt (as defined in paragraph 13 below), within the financial year under report. These figures are incorporated in the annual Finance Accounts presented to Parliament by Your Lordships. The other division comprises general statistics of an informative nature, giving, as far as possible, classified details of each duty, which vary in their scope and period with the nature of the duty. The Death Duties and the Stamp Duties are imposed not by reference to any period of time, but in respect of events or transactions; the general statistics of these duties presented in our Report for any year thus relate, on the broad grounds of convenience and comparability, to the events or transactions which yielded the actual cash receipts, &c., of revenue within that year. On the other hand, the Income Tax, Super-tax, Inhabited House Duty, Land Tax and Mineral Rights Duty are levied by reference to a period of time, viz., a year of assessment, which, though not uniform for these taxes, coincides approximately in each case with the financial year. The several stages of assessment, collection, etc., of these five taxes for any year of assessment normally commence, but are not completed, within that year. The yield of duty within any financial year does not, therefore, arise solely from the assessments of the corresponding year of assessment, but consists in part of tax collected in respect of assessments of previous years. Statistics which related to the income yielding the actual cash receipts, &c., of revenue within the financial year would not relate to any clearly marked income year, and accordingly the general statistics of these taxes, with two exceptions, are presented for the assessments made within the year of assessment preceding the year under report (that being the latest year for which we have complete statistics at the date of every Report), irrespective of the date at which the duty so assessed may reach the Exchequer. General statistics of Land Tax and Mineral Rights Duty, the two exceptions referred to, are presented for the year of assessment corresponding to the financial year under report. Corporation Profits Tax is charged on the profits arising in an accounting period, which, except in certain special circumstances, is a period of twelve months ending

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on the date up to which the accounts of the company charged are usually made up. The date at which an assessment is made depends largely upon the interval between the end of the accounting period and the date when the liability for that period can be determined; assessments are thus normally made some months after the close of the accounting period. We therefore present general statistics of this duty relating to the assessments actually made within the financial year under report.

3. The changes in the constitutional position of Ireland have restricted the area over which the duties of Inland Revenue under our management extend, and we may indicate generally the manner in which this Report is affected.

4. The Government of Ireland Act, 1920, transferred to the Government of Northern Ireland full powers over the imposition and administration of certain Inland Revenue duties in Northern Ireland. The transferred duties were Estate Duty, Legacy Duty, Succession Duty, and other Death Duties, Stamp Duties, and Mineral Rights Duty. The date from which this transfer took place was the 22nd November, 1921, and from that date the work of assessment and collection thereof devolved upon the Government of Northern Ireland, and all revenue arising therefrom was paid into the Exchequer of Northern Ireland. The other Inland Revenue duties in force in Northern Ireland, viz., Income Tax, Super-tax, Corporation Profits Tax and Excess Profits Duty, known as "reserved taxes," are outside the jurisdiction of the Government of Northern Ireland and remain under our management, and the proceeds are paid into the British Exchequer. The Northern Irish share of reserved taxes, determined in accordance with the provisions of the Government of Ireland Act, 1920, as amended by the Irish Free State (Consequential Provisions) Act, 1922 (Session 2), reaches the Exchequer of Northern Ireland through the Consolidated Fund of the United Kingdom.

5. As regards the Irish Free State, the position is that following the enactment of the Irish Free State (Agreement) Act, 1922, which gave the force of law to the Articles of Agreement for a Treaty between Great Britain and Ireland, it was provided by the Provisional Government (Transfer of Functions) Order, 1922, that from the date of the Order, viz., 1st April, 1922, the functions in connection with the assessment, levying, and collection of taxes so far as leviable in Southern Ireland should be transferred to and become exercisable by the Provisional Government of Southern Ireland. The transfer of these administrative functions to the Provisional Government did not affect the basis or amount of a taxpayer's liability to taxation or create double taxation as between Great Britain, Northern Ireland and Southern Ireland, the existing unit of taxation being in effect continued in respect of each tax, e.g., Great Britain and Ireland as a whole remained the unit of taxation as regards Income Tax and Supertax, Corporation Profits Tax and Excess Profits Duty, and Great Britain and Southern Ireland remained the unit of taxation as

regards Estate Duty, Legacy Duty, Succession Duty and other Death Duties, Stamp Duties, and Mineral Rights Duty.

6. The Irish Free State was fully established on the 6th December, 1922, and, in the absence of provisions to the contrary, separate systems of taxation would then have come into existence in the Free State and in Great Britain and Northern Ireland, e.g., the Income Tax would have ceased to be one tax imposed on a single basis, and would have become, on the one hand, a British tax with Great Britain and Northern Ireland as the unit of taxation, and, on the other hand, a Free State tax with the Irish Free State as a separate taxation unit. Double taxation would have arisen at once, and the difficulties inherent in the existence of two separate systems of taxation would in the case of Income Tax and Super-tax have been intensified by the emergence of the separate systems in the course of a financial year. Provision was accordingly made, by Section 2 of the Irish Free State Constitution Act, 1922 (Session 2), and Article 74 of the Constitution of the Irish Free State, whereby the basis and amount of liability to taxation in respect of 1922-23 and preceding years remained unaffected and the unit of taxation continued as before. The assessment, levying, and collection of taxes leviable in the Free State was carried out by the Free State Government, and the basis of division between the two countries of the total proceeds of taxation during 1922-23 was confirmed by these

enactments.

7. As from the 1st April, 1923, however, the Irish Free State became a separate independent taxation unit; accordingly our present Report contains cash or accounting statistics, for the year 1923-24, only in respect of Inland Revenue duties leviable in Great Britain and of the reserved taxes leviable in Northern Ireland. Similar statistics for Inland Revenue duties leviable in the Irish Free State and for transferred duties in Northern Ireland are no longer shown in the Report.

8. The general statistics in this Report, for the reasons given in paragraph 2, do not as regards all duties cover the same area. The general statistics of Death Duties and Stamp Duties relate to Great Britain only; those of Corporation Profits Tax and Excess Profits Duty for the year 1923-24 relate to Great Britain and Northern Ireland. By the courtesy of the Government of the Irish Free State, which has provided us with the necessary additional information, we are able to present statistics of Income Tax and Super-tax for the year 1922-23 covering the whole of Great Britain and Ireland. The comparability of the statistics has therefore been preserved up to the date (1st April, 1923) when the previous single system of taxation became two separate systems. It will be observed that we have continued to show separate figures for England, Scotland, and Ireland for Income Tax, but it should be clearly realised that this allocation is based upon the place where assessments are made, and that it does not purport to show the country by which the tax arising is contributed.

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