HC Deb 21 June 1926 vol 197 cc136-8

"Schedule A, No. VIII of the Income Tax Act, 1918, shall he amended by the insertion therein after Rule 2 of the following Rule: 2a. The landlord or persons receiving the rent shall be entitled to production of the receipt for the tax before allowing any reduction."—[Mr. D. Reid.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

This Amendment differs, I think, from the Amendments which have been moved hitherto in so far as it does not ask for any concession by the Government. It merely deals with a small point in machinery. The Committee know that the occupier of a dwelling house is liable to pay the Income Tax, but he has the advantage of deducting the amount from his rent and the landlord is bound to make the allowance. These Rules are contained in the Schedule to the Income Tax Act of 1918. It was the general view up to about the year 1918 that a landlord, when asked to allow for file deduction, was entitled to see the receipt for the tax, but in that year a case was decided which held that when a tenant has paid the landlord's property tax the landlord was bound to allow the same in deduction or discharge of the rent, although the tenant did not produce the receipt. That leaves the landlord, or the agent who has to collect rents, in the unfortunate position that a tenant may claim to make a deduction on his rent in respect of the tax and the landlord or the agent has no means whatever of finding out whether the tax has been paid or not Rule 7 provides that A tenant occupier for the time being of any lands, tenements, or hereditaments, who has been required to pay, and has paid, any sums charged in respect thereof under this Schedule which, under the provisions of this Act, ought to have been or ought to be paid by a former tenant or occupier, may deduct and retain, out of any subsequent payment of rent to his landlord, the sum, or any part thereof, which ought to have been or ought to be so paid. That puts the landlord or agent in an unfortunate position. He may have had a tenant in the earlier part of the year who has made a deduction from rent on account of tax but has not paid the tax. A new tenant comes in, and is called upon to pay tax, and he is then entitled to make a deduction from the rent payable by him, leaving the unfortunate landlord or agent in the position of having two deductions made for the same amount of tax. It does not benefit the Government or anybody else except a rogue. Our submission is that in these circumstances some alteration should be made in the law. The alteration for which we ask is very slight. We only ask that when the tenant does pay the tax and claims a deduction from the rent, the landlord should be entitled to see the receipt. That ought to meet with the approval of the Financial Secretary to the Treasury because I think it is a safeguard to the Treasury. The tax is more likely to be paid in such circumstances than it is under the present system. I would also point out that the ordinary receipt for Income Tax has, on the face of it, a statement that the receipt should be produced when an allowance is claimed. Therefore, we only ask the right hon. Gentleman to implement his own Department's suggestion and to say that the landlord shall be entitled to see the receipt.


The point which my hon. Friend has brought forward is one which we recognise as reasonable. Apparently at present there is no means of compelling the production of this receipt, and as the payment of the money is a necessary preliminary to making the allowance, it is obviously right that the law should be amended so that in cases where any doubt arises or may arise, it should be possible to compel the production of the receipt. The form suggested by my hon. Friend is not, however, as I am advised, quite the best form in which the alteration should appear in the Finance Bill, but my right hon. Friend the Chancellor of the Exchequer authorises me to say that if my hon. Friend will withdraw the proposed New Clause now, we will bring up a Clause on the Report stage which will deal with this point in the proper way.

Motion and Clause, by leave, withdrawn.


The proposed New Clause standing in the name of the hon. Member for Windsor (Mr. Somerville) —(Easter Offerings voluntarily paid to ministers of religion to be exempt)—I shall not call, because I think the point can be more conveniently dealt with on a subsequent proposed New Clause in the name of the Noble Lord the Member for Oxford University (Lord Hugh Cecil) which covers a wider scope.


I am sorry, Sir, that I was not in my place when my name was called, but I was not aware that the preceding new Clause on the Paper would not be moved. May I proceed to move the new Clause standing in my name after the next Amendment has been disposed of?


I have called on the hon. Member. I understood the hon. Member was in the doorway when his name was called. He can proceed.


I am sorry, Sir, I have left my notes elsewhere.


It would be against precedent to allow the hon. Member to leave the Chamber to look for his papers. Is he prepared to move?