Oxford University Press's failed 1944 application for exemption from wartime E.P.T. (Excess Profits Tax)

Letter from Sir Cornelius Gregg (Inland Revenue Board Chairman) to Deputy Chairman of Claims Department, 13th July 1944

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Reference: P.S.1496/44

Oxford University Press

Deputy Chairman,

1. Expecting to find that the "Charity" issue had already been fully gone into I first asked Mr Batty to report on the Memorandum enclosed in the Vice-Chancellor's letter to Sir Alan Barlow. It subsequently proved necessary to get a report on the "charity" aspect from Mr Booth. Both reports are annexed.

2. Charity exemption. I agree generally with Mr Booth's submission but it may be questioned whether it is necessary to deal so fully in the reply with the question of relief from Income Tax on trading profits under Section 30, Finance Act 1921, as amended. Such a claim has not been pressed in the past and the Memorandum does not suggest that the University authorities have much faith in one now. We do not want I think to go so far as to invite a claim for the following reasons:-

(a) The University authorities have apparently no faith in such a claim.

(b) When the Press is almost entirely engaged in ordinary printing for the Government it is a bad time to consider a claim that the trade carries out a primary purpose of the charity.

(c) The Press competes with other printing and publishing establishments so far as concerns its profitable work and we should be cautious in inviting a claim to charitable exemption where this feature exists. I understand that there are already signs of trouble in the musical and theatrical world as a result of the application of the principle of the Royal Choral Society decision.

It might be sufficient to say that, as the Memorandum states, exemption from Income Tax on the trading profits of the Press has not been claimed under Section 30, Finance Act 1921 as amended. In the circumstances outlined in the Memorandum it is, indeed, difficult to see that it could be successfully contended that "the trade is exercised in the course of the actual carrying out of a primary purpose of the charity".

3. E.P.T. I agree with Mr Batty's submission. As regards the point made in the Memorandum concerning the depletion of stocks of learned books during the war and the future necessity for replacement at enhanced prices, this is cited as an Income Tax as well as an E.P.T. hardship. This question was fully discussed on E.P.T. 2/762/41 when raised by the Publishers' Association and has since been raised with the Chairman by Mr Stanley Unwin (P.S. 276/1944). We could not make any concession to the University without prejudice to the general issue.

As Mr Batty points out, the hardship element is capable of exaggeration having regard to the substantial standard profits, the post-war credit and the fact that there was no E.P.T. liability up to 31st March, 1942. It is possible, however, that an alleviation of the situation may be possible on the lines of a sympathetic examination of the capital position and I agree that we should offer to co-operate with the Accountants with a view to determining the true capital employed in the business.

13th July, 1944

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