HC Deb 03 August 1888 vol 329 cc1384-7

, in rising to call the attention of the House to the action of the Inland Revenue in refusing to refund to charitable societies the Income Tax previously levied, and from the payment of which they had been always exempt; and to move for (1) correspondence in 1863 between the Inland Revenue and the Treasury (reprint from "Charities," 1865); (2) statement of amounts on which Income Tax was refunded in 1886–87, specifying the various classes, as educational, religious, hospitals, doles, &c.; (3) statement of claims for restitution of Income Tax rejected since August, 1887, specifying the nature of the charity and the reason for the rejection, said, that one of the prominent features of Mr. Gladstone's Budget in 1663 was a proposition to levy taxation on charities. That proposition was very widely discussed, and most of the Members of Her Majesty's Government sitting near him, particularly the present Prime Minister, took an active part in the debates, The proposal was in the end withdrawn, scarcely a voice having been raised in its favour. Although Mr. Gladstone signally failed in his crusade against charities in 1863, the Inland Revenue Department was now endeavouring to attain the same object by a coup de main, and without any legislative sanction whatever. He would endeavour to describe the operation by taking a particular instance. Many Members of that House were connected with the Church Building Society. In October last the secretary of that society brought word to him that, after having made the usual application for a return of the tax which had been levied, the application was refused. He made no objection to the Inland Revenue requiring a renewal of claims for exemption, and that those claims be scrutinized, for he was prepared to admit that there might have been abuses. But he did object to the Inland Revenue acting upon its own interpretation, and making a rule of action which involved a breach of a practice which had been observed for 45 years. He made representations to the Department and claimed indulgence on this ground, but the Secretary of the Inland Revenue wrote to the Church Building Society declining to return the Income Tax. He was utterly unable to appreciate the principles of interpretation applied by the Department to the Exemption Clauses of the Income Tax Act, 1842, and he found it especially difficult to understand why there should be special exemption in the case of repair and not in the building and enlargement of churches. Instructive Correspondence on this question passed between the Inland Revenue and the Treasury in 1863 and 1865, and a Minute was prepared by Mr. Gladstone on the question in 1863. He strongly objected to a Government Department like the Inland Revenue taking upon itself to make new rules of interpretation of an Act of Parliament, and to constitute itself the dispenser or non-dispenser of Income Tax. The question was raised for judicial decision in Scotland in the case of the Baird Trustees; but the decisions of a Scotch Court did not govern the judgment of an English Court, nor were the decisions adverse to the Baird Trustees applicable to the case of the "Incorporated Society for Building, Enlarging and Repairing Churches." He concluded by formally submitting his Motion.

Moved, That there be laid before this House—

  1. 1. "Correspondence in 1863 between the Inland Revenue and the Treasury (reprint from 'Charities,' 1865).
  2. 2. Statement of amounts on which income tax was refunded in 1886–87, specifying the various classes, as educational, religious, hospitals, doles, &c.
  3. 3. Statement of claims for restitution of income tax rejected since August, 1887, specifying the nature of the charity and the reason for the rejection.
  4. 4. Any correspondence between the Inland Revenue and trustees of charities and the Charity Commissioners bearing on the new procedure of the Inland Revenue."—(The Lord Addington.)


The question which my noble Friend has brought forward he has illustrated by a wealth of sentiment and exhortation in a spirit in which we must all very heartily agree, and I am sure everyone who has listened to my noble Friend has not only done justice to his motives, but has seen the great advantages of the objects which he is pursuing. But the matter in respect to which his speech is delivered is truly nothing but a question of dry law. By the Income Tax Act the property of charitable institutions is exempt from Income Tax, but the question is what does "charitable" mean? One definition was given and prevailed for a great number of years. It was never challenged in a Court of Law, and the Inland Revenue was guided, as it is bound to be guided, by the decision of its official superiors. One day it was taken to a Court of Law—a Scotch Court—and it has been submitted not only to the Court of First Instance, but to the Court of Appeal, and the decision of the Scotch Judges, I think four in number, has been to the effect that the word "charitable" has hitherto been too widely interpreted, and that for the future it must be interpreted more narrowly. My noble Friend criticized that judgment of the Scotch Judges with great severity. It is not my business to defend them, but when Judges pronounce a decree, what we have to do is not to criticize, but to obey. We have no power to refuse to obey the decision which the Judges have given; and the Inland Revenue Department was not only within its right, but it was acting within the bare lines of its absolute duty, when, having got an Act of Parliament interpreted by a Court of competent jurisdiction, it henceforward acted upon that interpretation, and not upon the interpretation which it had previously given. That decision of the Courts of Scotland is not final. It can be taken up to this House. It never has been. If it is, it will be submitted to the judicial action of this House, and we should know finally what the law is upon the point. If the societies are unwilling or unable to procure the appeal of the Scotch case to this House, they can raise the matter in the English Courts, and have the opinion of the English Courts of Appeal, and, if necessary, can come by that road to the final judgment of this House; but there is no way of disturbing or overruling a judgment of a Court of competent jurisdiction, except by the judgment of a Superior Court of Appeal, and no amount of exhortation to the Government, no criticism, however acute or severe, can have the faintest effect in disturbing the judgment which the Court below has given. My noble Friend proposed that the Government should give facilities for the trying of this cause. I cannot answer that question offhand. I do not know enough of the technical circumstances of one of these fiscal suits to say how far it would be in our power to meet my noble Friend on that point, but I beg him not to run away with the idea that this is any question of policy, or that it argues any opinion on questions of policy on the part of Her Majesty's Government. It is a question of bare law which the Judges have pronounced, and, until the Judges are overruled, we must obey the law.

In reply to Lord ADDINGTON,


said, he had no objection to give the Correspondence and statements for which the noble Lord moved.

Motion agreed to.