CLAUSE 8.—(Interest on unpaid Income tax, profits tax and excess profits tax.) (Hansard, 8 December 1947)

§ Mr. David Eccles (Chippenham)
I beg to move, in page 5, line 16, to leave out from "date," to the end of the line, and to insert: when the assessment or direction becomes final and conclusive. When we discussed this Amendment upon the Committee stage we were left in doubt about when the tax would be payable. The Financial Secretary promised to look at the matter again, and I think there is nothing I need do now other than to say that we want a clear definition of when the tax becomes payable. We think the words we propose would put the matter beyond all doubt, and we should be grateful if the situation could now be cleared up.

§ Mr. Selwyn Lloyd (Wirral)
I beg to second the Amendment.
I am rather disappointed that the Financial Secretary has not seen fit to attempt to clarify the Clause at this stage. In the Debate in Committee he 805 said that the effect of the Amendment would be: that the date at which interest on unpaid tax becomes chargeable would be that at which the assessment of tax becomes final and conclusive. A little later on, he said that he would give an assurance: that if an appeal is lodged, the time will not begin to run until that appeal has been settled and agreement has been reached between the Inland Revenue authorities and the individual concerned."—[OFFICIAL REPORT, 3rd December, 1947; Vol. 445, c. 447.] I submit that neither of those two statements appears in the Clause as it stands. If what the right hon. Gentleman said is a sort of administrative undertaking and is the way the Inland Revenue authorities will view the Clause, that is one thing, but the taxpayer has not the protection of the wording of the Clause, as it stands.

§ Mr. Glenvil Hall
I cannot help thinking that hon. and right hon. Gentlemen opposite are under some misapprehension in this matter. My right hon. and learned Friend wishes to be fair to the individual taxpayer, who, under Schedule D, may find himself liable to pay interest on arrears which have been outstanding for mare than three months and are more than £1,000 at that time. Believe me, there is nothing which I said on the Committee Stage that I have to retract. The difference between "final and conclusive" and "due and payable" is clear. When an assessment is raised, 21 days are given for an appeal to be lodged. If no appeal is lodged at the end of that period, that assessment becomes, in law, final and conclusive, but that does not necessarily mean that it then becomes due and payable.
These demands are normally levied as at 1st January and 1st July and are split into two instalments. If we accepted the Amendment, it would mean that, more often than not, the amount would become due directly it became final and conclusive. If the tax is overdue, obviously the final and conclusive date might well coincide with the due and payable date, but normally the two are different, and the due and payable date is later than the final and conclusive date. I hope I have made that point clear. I would add that my right hon. and learned Friend has no desire to harry people who have not had their assessments made final and conclusive. If appeals are lodged, the time will not begin to run against them 806 until agreement has been come to between the individual or company concerned and the inspector of taxes in whose district that individual or company is situated. I hope that, with that assurance, the Amendment will not be pressed.

§ Mr. Stanley
I am not sure that the Financial Secretary to the Treasury quite appreciates the reasons for which we have put down the Amendment again. It all depends upon a point which was raised later in the Debate by my hon. Friend the Member for Chichester (Mr. Joynson-Hicks). The Solicitor-General gave an assurance as to the way in which this matter would operate, and the assurance fully satisfied the desires of hon. Members on this side. My hon. Friend the Member for Chichester raised the simple point whether the legal effect of the words "due and payable" in the Bill was such that it might exclude the administrative interpretation which the Solicitor-General, to the satisfaction of all of us, was going to put upon them. The Solicitor-General promised to look into the matter before the Report stage. We have put the Amendment down in order that he might have this opportunity either to give us that assurance or to suggest other words.

§ The Solicitor-General (Sir Frank Soskice)
I am sorry that I was not in the House when the Debate started on this point, as to which I have given an assurance. Since giving that assurance I have considered whether, within the wording in the present form, we can do —and I am satisfied that we can—what I said. I said that we have this arrangement for, in effect, a provisional set off, within which the tax will operate—

§ Mr. Stanley
I fancy that the Solicitor-General is speaking to the wrong Amendment. We are on the "due and payable" Amendment.

§ The Solicitor-General
That is right. I was asked by an hon. Friend of the right hon. Gentleman whether I was quite clear in my mind that we could operate this arrangement within the wording of the Clause. I am quite satisfied that we can, and my reason for saying so is that if there had been an arrangement for a provisional set-off of that kind the tax debt in question cannot be said to be payable within the meaning of the words "due and payable." It may be "due" 807 but it has not yet become "payable" because there has been an arrangement for a provisional set-off. [Interruption.] If I am talking about the same Amendment, I am quite clear that we can implement the arrangement I said would be implemented. If I have butted into the middle of another Debate and have misunderstood what is going on, I am extremely sorry.

§ Mr. Stanley
I would refer the hon. and learned Gentleman to column 447 of the OFFICIAL REPORT. That is the point we are now discussing. It does not seem to me to raise this question of a set-off; that is raised in the next Amendment.

§ Mr. Selwyn Lloyd
With regard to this Amendment which deals with the words "due and payable," the Financial Secretary suggested a moment ago that if there was an appeal, interest would not begin to run until there had been agreement with regard to the assessment. Does that also include the case where there has not been agreement and the matter has gone right up through the normal channels of appeal? Is it correct that interest will not run until the date of the final decision, which may be that of the House of Lords?

§ The Solicitor-General
In the case of an appeal, interest will not run until the appeal has been finally disposed of.

§ Mr. Joynson-Hicks (Chichester)
That does not quite clear up the point of the undertaking given by the Financial Secretary on the Committee stage. When the Financial Secretary was speaking on the Second Reading I interjected a question to him to ask for greater clarification as to the interpretation of the time from which interest would begin to run. The right hon. Gentleman then said words to the effect that it would not begin to run until the assessment had been agreed between the Inland Revenue and the taxpayer. My right hon. Friend the Member for West Bristol (Mr. Stanley) confirmed that by an interjection at that moment. The Financial Secretary will see it in HANSARD. He said: When it is agreed? The Financial Secretary replied: Yes."—[OFFICIAL REPORT, 25th November, 1947; Vol. 444, c. 1821.] He referred to the matter again on the Committee stage, and again the Financial 808 Secretary gave his interpretation to the effect that the words "due and payable" were synonymous with the intention of the Government that interest should not begin to run until the assessment and its pay-ability had been agreed between the parties. Our point was to obtain confirmation from the Solicitor-General that to the legal as well as the lay mind the words "due and payable" could be interpreted by the courts, and would be interpreted, as meaning when agreement was reached between the parties. To me, at any rate, the words "due and payable" do not necessarily connote the necessity of waiting until the parties have agreed as to the amount of the assessment.

§ The Solicitor-General
With the leave of the House I will reply to that. We were at cross purposes. The Amendment on which I was speaking is a subsequent Amendment put down by the hon. and gallant Member for Antrim (Major Haughton) which is designed to bring about, as it were, an inter-tax inter-year set-off. When I intervened I had in mind that Amendment. I am sorry that I spoke to the wrong Amendment; it was because I did not hear the earlier course of the Debate.
4.15 p.m.
The words "due and payable" quite clearly provide for this. Where there is no appeal, we must have a final assessment which in the ordinary course would be when the parties had agreed what the amount should be. Only when they have agreed and in consequence a final assessment has been made, will the interest begin to run. In cases where there is an appeal, the interest will not run in relation to any part of the tax which is disputed —which is the subject of the appeal—until the appeal has been finally disposed of. In other words, before any interest begins to run we must have a final assessment. In the event of there being any difference of opinion as to what the amount will be, the final assessment can obviously only be arrived at after the parties have come to agreement. If they cannot come to an agreement and a final assessment cannot be obtained and an appeal is begun, the interest will not begin to run until the appeal has been disposed of.
I think that answers the hon. Gentleman. I am quite clear in my mind that before money can be "due" or "pay- 809 able" there must be either a final assessment or a final appeal. If, therefore, any amount is still subject to an appeal it is not "due and payable." If it is subject to discussion and there has been no final assessment, it is not "payable," and it there is discussion between the parties and they cannot agree, obviously the assessment is subject to appeal and, therefore, the interest does not begin to run until the amount has been finally settled on appeal. What I said when I first rose was wholly inapposite as it was directed to a subsequent Amendment.

§ Major Haughton
This is rather a technical point. I think I am right in saying that the definition of "final appeal" will have to be made more clear. Any district inspector furnishes the taxpayer with a final appeal with the words "final appeal" written across it, although there may be a dispute going on between the parties.

§ The Solicitor-General
The hon. and gallant Member for Antrim (Major Haughton) is confusing the words "final notice" and "final appeal."

§ Mr. Eccles
In view of the Solicitor-General's reply, which appears to interpret the words precisely as my hon. Friends desire, I beg to ask leave to withdraw the Amendment.

§ Mr. Stanley
I beg to move, in page 6, to leave out lines 14 to 31.
This is a case where we slightly reverse the usual process. I am now moving an Amendment to which the Solicitor-General has already given an answer. This Amendment has been put down for the same purpose as the last one, to give the Solicitor-General an opportunity of reporting to the House a matter he promised to consider. He gave to us on this question of the "set-off" what appeared to be a perfectly satisfactory definition of how it was going to be used, but some of us, including myself, had considerable doubts whether lines 14 to 31 would not prevent him putting that reasonable interpretation into operation. He promised to consider the matter before the Report stage, and I gather from the answer he has already given that having considered it, he feels that these words are not contradicted by the interpretation that has been given and the assurances, which we were glad to receive.

§ The Solicitor-General
As I intimated earlier, I have carefully considered that point and am quite satisfied that it may be done within the meaning of the Clause as it is at present drafted. I can give a quite categorical assurance that the scheme which I outlined will be implemented by the Revenue authorities.

§ Mr. Stanley
I beg to ask leave to withdraw the Amendment.

§ Major Haughton
I beg to move, in page 7, line 12, at the end, to insert: (8) The Commissioners of Inland Revenue may withdraw any claim in respect of interest on proof by the person by whom the tax is payable that non-payment of the tax or delay in payment of the tax was due to delays which were beyond the control of that person. This Amendment is a simple and, I hope, desirable one. It merely suggests that there shall be a measure of discretion given to the Commissioners to waive interest in those cases where they are satisfied that the delay is caused because of reasons for which the taxpayer cannot be responsible.

§ The Solicitor-General
This is an Amendment which I think was put down previously in exactly similar terms—

§ Mr. Stanley
No.

§ The Solicitor-General
But there is a slight alteration, and I would repeat what I said then. If, and in so far as the tax is not assessed owing to causes which the taxpayer cannot control, or if for any other causes, whether he can control them or not, it is not assessed, no interest begins to run. The Amendment would appear to include the case of non-payment owing to any causes which were beyond the control of the person who is assessed. That is going a great deal too far. It would include the case of the taxpayer who, owing to circumstances which he cannot control, has not the money to pay, and that is a concession we could not possibly consider giving. In so far as there is delay in assessment, and whether or not that is the fault of the taxpayer or anybody else, the interest does not begin to run, but if the hon. and gallant Gentleman seeks by this Amendment to ask for something more extensive than that, we must watch carefully how we go, and we could not accept the Amendment in the general terms in which it is proposed.

§ Mr. Stanley
I would point out to the Solicitor-General that this does not impose a duty on the Commissioners to make such a concession; it only gives them the right to do it if they so wish. Therefore, the Commissioners of Inland Revenue would remain fully masters of the position. As the learned Solicitor-General recognises, of course, this is a different Amendment from that to which he gave an answer on the Committee stage. In fact, it has been altered to meet the point he made and to cover a point which was made by my hon. Friend the Member for Bath (Mr. Pitman) but which the Solicitor-General pointed out would be outside the scope of the Amendment. The hon. Member for Bath instanced the case where a cheque or money order had been despatched, but had been stolen in transit, and asked whether that was not a case where the Commissioners might well say that this was beyond the control of the man who was to be charged with interest and they might, therefore, waive the claim. This is not mandatory, it imposes no obligation on the Commissioners; it merely gives them a discretion which they can use if a case arises where they think it should be exercised.

§ Mr. Glenvil Hall
As the right hon. Gentleman knows very well—he sat on this side of the House for many years—the Inland Revenue has a certain discretion and uses it, and in the view of my right hon. and learned Friend it would be unwise now to start putting discretions of that kind into a Bill of this sort.

§ Mr. Stanley
They have discretion?

§ Mr. Glenvil Hall
Oh, yes. Where obviously it is commonsense to use their discretion to waive certain rights which the Inland Revenue has, they would exercise it under the general supervision of the Chancellor of the Exchequer. They have done so in the past and will continue to do it.