A merchant sends his return, and values it at £10,000. The collector says to him, if he chooses to do so: 'Your return cannot be right. I will charge you on £20,000. Of course, you can appeal.'
The merchant is obliged to lose a whole day to attend the Court of Appeal, taking all his books with him, in order to prove that the return he sent is exact.
Very often he pays double what he owes, so as not to have to let everybody know that his business is not as flourishing as people think. But the most amusing side of the whole thing is yet to be told.
If you sell meat in one shop and groceries in another, and you make £5,000 in the first shop and lose £3,000 in the second, you must not suppose that you will be charged on £2,000, the difference between your profit in the first business and the loss in the second. Not a bit of it. The two businesses being distinct, you will have to pay on the £5,000 profit made in the first, and bear your loss in the other as best you can.
As an illustration, I will give you a somewhat piquant reminiscence. Many years ago I undertook to give lectures in England under my own management. My manager proved to be an incompetent idiot, and I lost money.
When I declared my yearly income, I said to the income-tax collector: 'My books brought me an income of so much, but I lost so much on my lecture tour; my income is the difference—that is, so much.'
'No,' he said; 'your books and your lectures are two perfectly different things, and I must charge you on the whole income you derived from the sale of your books.'
Then I was struck with a luminous idea, which proved to me that I was better fitted to deal with the English tax-collector than to manage a lecture tour.
'The two things are not at all distinct,' I replied; 'they are one and the same thing. I gave lectures for the sole purpose of keeping my name before the public and pushing the sale of my books.'
'Ah!' he exclaimed, 'you are right. In that case you are entitled to deduct your loss from the profit.'