Depreciation of Ex-WD. Vehicles: New Proposal by B.T.C.
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HONV should the depreciation of ex-W.D. vehicles taken over by the British Transport Commission from hauliers be assessed? This was one of the points which was raised when the .Transport Arbitration Tribunal, in London, last week, heard an application by Donnelly Brothers (Transport), Ltd., Hackney, London, E.8, for the determination of compensation.
Mr. Bernard Braithwaite, for the Road Haulage Executive, said that nobody except the transferor knew the date when an ex-W.D. vehicle was first pat into use. The Commission felt that by writing off the replacement cost of the vehicle from the date of first registration, justice was being done. Later, he said it was realized that to do justice to the transferor, W.D. vehicles must be treated separately. He therefore proposed that in calculating depreciation, three years should be adder:No the life of ex-W.D. vehicles from the date of first registration, except where the date of first use was known.
Mr. Richard Beddington, for Donnelly Brothers (Transport), Ltd., said he could not fully accept the concession.
Apart from allowances for the depreciation and replacement of vehicles, the questions of remuneration for management and the choice of a suitable multiplier for compensation for cessation of business were raised.
The Executive sought to deduct from
the annual profits a sum in respect of directors' remuneration. Mr. Beddington pointed out that -there were no dividends, and all payments received by the Donnelly family were in direc
tors' fees or salary. A large part of these suits, Mr. Beddington claimed, represented a share of the profits, and, therefore, should be added when calculating the average annual net profit.
Counsel claimed that the multiplier of the net annual profit should not be less than five, as the business was oldestablished, with 47 regular customers at the date of transfer, was situated in a highly industrialized area, and during the review period the profits showed an upward trend. The Commission had fixed the multiplier at .three.
Mr. Beddington criticized the Commission's. method of allowing 20 per cent. on the replacement cost or a vehicle in the first year, and then on the reducing balance, which, he said, was unfair at a time when prices were still rising. The applicant received no credit for the fact that the second-hand value of the vehicle was more than the written-down value on the books.
Mr. Braithwaite defended the method which, he said, worked justly as between the transferor and the Commission. In a period of rising costs it operated, to some extent, in favour of the transferor, who, in addition, received the benefit of the replacement cost at the date of transfer.
Decision will be announced later.