Are Repairs a Capital or
Page 38
If you've noticed an error in this article please click here to report it so we can fix it.
Revenue Cost ?
THE main point in dispute in the appeal by Arthur J. Maggs, Ltd., Clutton. near Bristol, which came before the Transport Arbitration Tribunal in London, this week, was whether, in the computation of compensation for cessation of business on nationalization, expenditure on long"-term repairs should be reckoned as coming out of revenue or be assessed as capital expenditure.
This company, which was acquired by the Road Haulage Executive on May
I, 1949, ran 26 vehicles. A coal-merchant's business was also carried on in conjunction with the haulage undertaking.
No dispute arose with the R.H.F. over compensation for property, which was fixed at £23,437, but the company claimed payment of £19,380 for cessation of business, as against £4,155 offered by the Executive.
During the period 1946-49, over which average profits were assessed by reference to the Transport Act, the company was faced with heavy expenditure on vehicle maintenance. This cost was 'higher than in previous years. Mr. T. D. Corpe. representing Arthur J. Maggs, Ltd., contended that this cost, which would have the effect of prolonging the life of the vehicles for many years. should be counted as capital expenditure and not as coming out of revenue.
The R.H.E. had offered to multiply the average net annual profit by twoand-a-half for the purposes of compensation, but the applicant maintained that the multiplier should be five, by reason of the soundness of its business.
Mr. Corpe also held that profits tax should not be deducted when assessing the profit, but be added back. He put forward a claim for severance on the ground that the company's coal business now cost more to run after its divorce from the haulage business.
The company also claimed that it should not have to make any apportionment for the outstanding balance of holidays-with-pay money.
SUBSTITUTED PERMITS: TERMS LATER
S reported in "The Commercial 1-1. Motor" last week, the Road Haulage Executive is, next month, to advise every holder of an original permit of the action to be taken on its expiry. Where a substituted permit is to be offered, the R.H.E. now announces, the terms and conditions will be notified a littie later.
It is emphasized that any right which the holder of an original permit may have to acquisition and compensation must be exercised within three months of notice of revocation being given by the Executive.
SHOW ATTENDANCE DROPS
TT-HE Commercial Motor Show had
20,118 visitors on September 23. Total attendance for September 22. 23 and 25 was 37,253-6,386 lower than ihe corresponding 1948 figure.
B4