§ The Commissioners of Inland Revenue shall, not later than the thirty-first day of March in each year, prepare and make available for public inspection a register containing a short account of all concessions of general application in any trade, business or office of employment, or in respect of any particular aspect or aspects of the law granted by them relative to income tax, surtax, national defence contribution and excess profits tax during the twelve months ending on the thirty-first day of December immediately previous.—[Commander Galbraith.]
§ Brought up, and read the First time.
2174§ Commander GalbraithI beg to move, "That the Clause be read a Second time."
The purpose of this Clause is that the public should be informed of concessions granted by the Inland Revenue authorities. As the Committee is probably aware, these concessions are a departure from the strict legal position; indeed they are a departure from the Statute as approved by Parliament, and the concessions are granted only in cases where it has been found, in practice, that a strict interpretation of the law would be harsh or inequitable. These concessions are granted, in the first instance, in an individual case, and they are not made public, SO that other taxpayers who may find themselves in identical circumstances have no knowledge of them. The concessions, in fact, would only be granted to other tax-payers if they specifically raised the point, although I must say that inspectors of taxes, from time to time, in a kind of off-hand way, tell the taxpayer that, perhaps, there is a concession on the point, arid give him the hint that he might make application. I do not think that is a very satisfactory situation. It is unfair as between one taxpayer and another, and it is also unfair to those professional persons who advise taxpayers and who, indeed, have long asked that publication of these concessions should be made.
It may be helpful to the Committee if I give two examples of the kind of concession I have in mind. Let me take in the first instance the payment of part-time directors in a director-controlled company. There, the law is absolutely clear, and is to the effect that salaries or fees paid to part-time directors are not deduct-able for Excess Profits Tax purposes. But there is a concession and it is this, that where a part-time director happens to be an accountant or a solicitor or an engineer, or someone possessing a special type of skill, then their fees or salaries will be allowed. I know of no one who has ever seen the full terms of that concession. Let me give another example, the extension of the working proprietor standard to those who have joined the Forces. Before that standard is admitted, as my right hon. and learned Friend has said, there is an almost microscopic examination on the part of the Revenue authorities, into exactly what the working proprietor is doing, so as to establish the fact that he is employed full-time. 2175 It follows, then, that when some proprietor is called up, he ceases to be a working proprietor and accordingly the standard of E.P.T. of that business would be reduced. But here again, and I think the Committee will agree rightly, a concession has been granted, so that when one of these working proprietors who is called up to the Services in so far as he is concerned the standard is continued.
Again, this is a case where no one has seen the terms of the concession which is granted, and it is not granted in every case. That means that a working proprietor who is likely to be called up has no idea as to what the Excess Profits tax position of his business may be and that, to my mind, is highly unsatisfactory. I repeat that this concession is not universally granted. There are inspectors of taxes who lay down certain conditions which they require to be satisfied. The taxpayer does not know the terms of the concession, and he is not in a position to rebut these conditions. In fact, he is left entirely in the hands of the inspector of taxes. One could give a number of other examples, for there are many of them connected with Excess Profits Tax and Income Tax, but perhaps these two will be sufficient to satisfy the Committee that the position is unsatisfactory, that indeed injustice is created when these concessions are not published and that publication would appear to be essential. I also consider that publication is desirable from the point of view of this Committee, for concessions are granted only where the provisions of the Statutes are found, in particular cases, to be harsh or inequitable. But these Statutes have been passed by Parliament and surely we should be informed when they have that effect? The point I wish to make is that where concessions are found to be necessary, either the Statutes should be amended, or concessions should be given official recognition and made public so that all concerned can benefit equally.
There is one other point in connection with this matter to which I would like to draw the attention of my right hon. Friend. These concessions are of very great importance, and quite large sums of money may well be involved. In the past, certain large firms of professional people have obtained the services of Inland Revenue officials, have actually paid them compensation for their loss of pension 2176 rights, and taken them into their employment for the sole reason that they have knowledge of concessions. Again, a great many or a certain number at least of Inland Revenue officials have set up for themselves in private practice, as tax consultants, chiefly because they can earn a very good income by the knowledge of the concessions which the authorities give. I suggest that is the kind of thing that can only be stopped by publication of the concessions.
§ The Chancellor of the Exchequer (Sir John Anderson)I think on this matter I can go, at any rate, some way in the direction desired by my hon. and gallant Friend. It is the fact that, especially under war conditions, concessions are granted which are of general interest and should be of general application. They are granted in virtue of the existence of a somewhat indefinite dispensing power, but the practice is well recognised. When such concessions are granted, the fact is brought to the notice of the Comptroller and Auditor-General so that the matter should not be withheld from the knowledge of this Committee, and if they are not acted upon generally I certainly would agree that they should be.
I think that a clear definition can be drawn here between the substantial concession, which is not merely a matter of favourable interpretation of the law, but which is a conscious departure from the strict letter of the law, and matters of interpretation which would be difficult as a matter of general practice to give out to the public with any semblance of authority. These concessions are authoritative, and as I say, should be of general application. An example of such a concession is the treatment that is given in certain circumstances to members of the Forces. One very clear extra-Statutory concession is the concession under which we refrain from levying Income Tax on the remuneration of the Dominion or Allied or American Forces who are resident in this country for more than six months. The law would require that we should collect income tax on those salaries. We do not. The country concerned may collect Income Tax but we do not collect it. I only mention that extra-statutory concession of a general nature by way of illustration, and there are a good many others, most of them relating to war-time conditions. One that occurs to me at once 2177 is the concession under which travelling expenses are allowed which are incurred by workers who have been evacuated, or whose place of employment has been removed by reason of war conditions. Their expenses would not ordinarily be admitted for Income Tax purposes but certain travelling expenses are, by a special war-time concession, allowed.
§ Mr. BensonIs that a non-statutory concession?
§ Sir J. AndersonIt began as a non-statutory concession. As my hon. Friend has mentioned the point, I ought to say that in many cases these concessions begin as non-statutory ones and when it appears that the need for them is likely to continue, or that they are of a substantial character, it has been the practice to take the first opportunity to put them into statutory form. Anyhow, there are these extra-statutory concessions and I want to tell the Committee that I shall be perfectly ready, if it will be in accordance with the general view of the Committee, to take this matter into consideration between now and Report. If my hon. and gallant Friend will withdraw his proposal, we will see how we can best deal with this matter and will make some further proposal on Report.
§ Mr. BensonThere is just one interesting point which arises here, that is the relation of the Committee to the Department, or to the Minister who gives non-statutory concessions. From time to time, on rare occasions, we have brought before us on the Public Accounts Committee the fact that some concession has been given, but I gather from what the Chancellor of the Exchequer says, that there are a fair number of these non-statutory concessions.
§ Sir J. AndersonIn war-time, not in peace-time.
§ Mr. BensonIt is rather a point of constitutional importance, and I think the Committee should take cognizance of it.
§ Commander GalbraithIn view of the statement of my right hon. Friend that he has promised to take this into consideration, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.