§ Mr. Glenvil HallI beg to move, in page 63, line 33, at the end, to add:
§ "Part II.
§ ASCERTAINMENT OF RETAIL VALUE OF ROAD VEHICLES IN CONNECTION WITH THE TAX.
§ 1. The following provisions of this Part of this Schedule shall have effect for the purpose of ascertaining in connection with the tax whether a vehicle is of a retail value of more than a specified amount.
§ 2. The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due, on the assumption that the seller has suffered the incidence of tax at the basic rate and that the price includes the amount of such tax.
§ 3. For the purpose of computing the price which a vehicle would fetch on such a sale as is mentioned in the last preceding paragraph, the following circumstances shall be assumed. that is to say—
- (a)the like assumptions shall be made (apart from that required by the last preceding paragraph) as are required for the purpose of valuations under section twenty-one of the Finance (No. 2) Act, 1940, by the Eighth Schedule to that Act (which requires assumptions as to the seller's bearing incidental expenses and being independent
2326 of the buyer, as to patent and trade mark rights, and as to other matters), substituting therein references to the last preceding paragraph for references to the said Section twenty-one; - (b) if the purchase or importation of the vehicle in connection with which it is necessary to determine its retail value is of the vehicle without some part, accessory or other article of a kind with which it is for the time being the practice of the manufacturer of the vehicle to sell vehicles of the model in question or to advertise them for sale, or if it is shown that that purchase or importation is the subject of a transaction or of one of a series of transactions which include also a transfer of the property in, or other dealing with, some part accessory or other article suitable for use with the vehicle, it shall be assumed that the vehicle was sold as mentioned in the last preceding paragraph with that part, accessory or other article."
§ We have had a fairly comprehensive discussion covering this point, which I believe—I speak subject to correction— comes within the terms of the general agreement arrived at earlier. Therefore, I formally move the Amendment.
§ Captain CrookshankI do not know that any previous agreement was made about this Amendment. The general discussion was on the plans for taxation. I understand this is a method of ascertaining retail value. Perhaps the right hon. Gentleman would forget what he said just now and briefly tell us what the point really is. I am sorry that the right hon. Gentleman is not going to respond, because we shall have to ask a few searching questions to get an idea what it is all about.
§ Mr. Glenvil HallWe have surely discussed this.
§ Captain CrookshankWhen?
§ Mr. Glenvil HallEarlier on. This Part II of the Schedule, the principle underlying it, and the method to be adopted, have been discussed. But if the right hon. and gallant Gentleman desires to ask questions I have not the slightest doubt that my right hon. Friend, or somebody on this Bench, will be willing to answer them.
§ Mr. C. WilliamsI hope I may ask some questions, because I would like to know what this Amendment really means. Paragraph 1 says:
The following provisions…shall have effect for the purpose of ascertaining in connection with the tax whether a vehicle is of a retail value of more than a specified amount2327 That is clear, but I think we have a right to know from the Government precisely what figures they have in mind in relation to "a specified amount." Then we come to the words:The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due.…Without any offence to the Government, may I say that here, for once, they have something which is clear? It is unusual for them to be so clear, and I say that without wishing in any way to be insulting or unkind. But then they get a bit mixed up again when we come to the words:…on the assumption that the seller has suffered the incidence of tax at the basic rate and that the price includes the amount of such tax.
§ Mr. GallacherOn a point of Order. Is it in Order for the hon. Member to read his speech?
§ Mr. WilliamsI have only read extracts from something which we are being asked to pass. In my defence, lest it should be thought that I was contravening the rules of Order, may I point out to the hon. Gentleman that I do not follow the precedent of the Government Front Bench in this matter? Perhaps I can get a clear understanding of one part of this Amendment; I do not want to get the whole of it clear at once. That would be asking the Government for too much. I hope the Government will give a clear definition of what is the legal position under paragraph (b), and how it will affect us in everyday affairs. I would like some explanation on these points. If I can get it I will restrain myself from trying to explain this matter to my constituents. I do not know whether other hon. Members can explain the proposal and what it all means, but I would like to have a clear knowledge of it.
§ 9.30 p.m.
§ Mr. PeakeThere is a point of a rather simpler character than the matters raised by the hon. Member for Torquay (Mr. C. Williams), which is, I think, of some substance. This Schedule is intended to lay down rules for the assessment of the value of motor vehicles and to enable it to be decided whether or not the retail value is more than £1,280. Every one in the trade knows that at the present time a motor car has two values. The retail 2328 prices are in fact fixed by the manufacturers, and the agents are bound to sell at the prices laid down by the manufacturers, but in order to prevent a purchaser from immediately selling a car again at black market prices substantially higher than the price fixed by the manufacturers, a covenant has to be entered into by the purchaser that he will not part with the vehicle within a period of 12 months. There is a fixed price by the manufacturer of, let us say, £800, but the value in a free market between buyer and seller of that car is substantially more—it may be £1,000. When we read the words of the Schedule, we see that the rules for ascertaining what is the value of a vehicle are as follow:
The retail value of a vehicle shall be taken to be the price which it would fetch on a sale made by a person selling it by retail in the open market in the United Kingdom at the time when the tax chargeable in respect thereof becomes due.I want to know whether the value as ascertained under this Schedule will in fact be the same as the retail price fixed by the manufacturer and enforced on the retailer by him under arrangements made within the trade, or whether it will be the true value of the motor car as between a willing buyer and a willing seller, free from the restrictions of any covenant that can be imposed on the buyer by the seller at the time of the sale?
§ Mr. Glenvil HallI think that the answer to the right hon. Gentleman is that we must not read more into this than is intended. We are dealing here with ordinary car sales which go through the usual procedure that is, from the manufacturer to the man who runs the garage or the sale room and from him to the actual buyer. The paragraph to which the right hon. Gentleman has directed attention makes that clear. It lays down just how the retail value of the vehicle is to be ascertained. It is to be ascertained at the moment when it passes through the retailer to the actual person who buys the car and at the time when the tax chargeable in respect thereof becomes due. The tax usually becomes due at that time the vehicle leaves the factory and is taken by road or rail to the sale room and from there is driven away by the purchaser. Therefore, we see no difficulty either in the wording, or for those who have to find what the retail price is and what should be the value.
2329 The hon. Member for Torquay (Mr. C. Williams) asked me one or two questions, but I am sure that he will not take it amiss if I say straight away that I am not sure that I followed all of them. I understood that he was anxious to know what was the open market price, as against the closed market price. I think he was anxious to learn the meaning of paragraph (2) and to distinguish between the open market price and the closed market or privilege price. The short answer is that the open market price is in effect the ordinary advertised price as distinct from a privileged price sometimes arranged when a subsidiary is selling, for example, to another firm within the same group. In that case they get special terms. Here in Part 2 of this Schedule we lay down the method and machinery to be followed. I think the hon. Gentleman also referred to paragraph 3 (b)if I took him up correctly, though as I said I had great difficulty in following what he was saying.
§ Mr. C. WilliamsI would ask the right hon. Gentleman whether the provision he has just mentioned is entirely dealing with the sale of goods where there is a privilege price. As I understand it, what is meant by privilege price is where a person buys at a price lower than that at which the article is otherwise offered to the public, and what I want to know is, will he pay the tax on the lower price or on the price which he would have had to pay had there been no privilege.
§ Mr. Glenvil HallIt is the market price for that type of vehicle. Frankly I do not think that the Committee should waste too much time on this. The prices of cars are well known. From time to time the motor car makers alter them as conditions demand and such alteration is well advertised in the Press. What we have to do here is devise a system to prevent the passing on of a car at anything less than the public market price at that time.
§ Lieut.-Colonel Dower (Penrith and Cockermouth)Plus tax.
§ Mr. Glenvil HallYes I think that is understood and paragraph 3 (b)simply deals with the kind of manipulation which might take place if a car and its equipment are delivered not as part of the one transaction, where the car or part of it might be delivered at one time in order to keep below the limits set and the equipment or another part of it at another time. 2330 This sub-paragraph helps to provide that the transaction shall be treated as a whole and that the car and equipment shall be treated as one car. I think with that explanation the Committee may now be willing for us to have this Schedule. I am not attempting to score a party point when I say that we have in essence already discussed this at great length this evening when we dealt with the Clause to which this Schedule is an addendum.
§ Mr. C. WilliamsI thank the right hon. Gentleman for having explained paragraph (3) and I think it is quite obvious that I have done a service to the Government in this particular respect by getting information on this provision. It is well for us to know what the provision is endeavouring to do. There is a system whereby a car priced maybe at £1,000 might be sold a certain amount below the value, the buyer being willing to take a bit off—with the result that the gross amount of taxation is evaded. I think it is right that there should be something of this kind put in, but I should have thought that it would have been better had there been simpler words which stated exactly what is wanted, which is to avoid the sale of cars in different ways, planned for the purpose of avoiding taxation. I should have thought it would have been a good thing if it had been clearly put into the Bill. I am glad I raised this point because it does seem to me to be a matter on which it would be as well if we knew where we were. If it had been at a more convenient time, I should have asked quite a number of other questions on this Schedule, but I think that on the whole, having abstracted rather more than we usually do from the Government, I had better not be too ambitious in expecting to obtain any more for the time being.
§ Colonel Crosthwaite-Eyre (New Forest and Christchurch)I should like to ask the Financial Secretary one question on paragraph (b.)As I read it the object is exactly what the right hon. Gentleman said, but I suggest that it does not meet the point at all. It would be perfectly possible for a car to be delivered with two speedometers but without a spare wheel and yet be considered a complete car. If one considers the wording between line 22 and line 28 one finds that if any part is missing a certain assumption is to be made. At the end 2331 of line 28 it is stated that apart from any other part included it shall be presumed that the car is whole. I would ask the Government whether that construction is correct and, if not, what there is in this provision to show what in fact the Government mean by a whole car? Does it mean, perhaps, where one part is left out and two others inserted so that in the aggregate you have the same number of parts whether the car goes or not? If not, where is the provision in the paragraph to prove their case?
§ Mr. Glenvil HallI admit that the language may seem a little obscure, but that of course is common to most Acts of Parliament. I am advised that the phrase to which the hon. and gallant Gentleman now refers, covers equipment of a kind which is not normal on some cars—non-standard but nevertheless part of the equipment which frequently does go with the car or with a particular type of car. Here it is sought to see that the full equipment which is reasonable to a car is there and is taken as part of one transaction, even though it does not come in the same importation or at the same time on the same sale.
§ Colonel Crosthwaite-EyreI asked the Financial Secretary a specific question. After line 28 the assumption is not clear and I asked the right hon. Gentleman what connecting link there was to ensure that the part up to line 28 would be taken into consideration with the part after line 28. I should like an answer to that question.
§ Mr. C. WilliamsI was absolutely fascinated by the last explanation from the right hon. Gentleman. It savoured very much of Alice in Wonderland. I would very much like to know precisely what is his definition of equipment which is not normal in a car. Is a speedometer normal or not? I should have thought that it might be normal. I believe that some cars have little poles on them for wireless. Is that normal or not normal? I do think we ought to be told precisely where we are on this matter. Are we allowing these cars to go out with the ordinary equipment for running—that is to say, speedometers and things of that kind, and spare parts? 2332 If so, that is all to the good, but we ought to know what the Financial Secretary visualises, and what the imagination of the Treasury thinks might be put on a car to incur this penalty.
9.45 p.m.
I hope the Committee will be permitted to have this knowledge. Otherwise a car owner may have something on his car which will incur the penalty unwittingly. No one wants to have that kind of offence made possible. Any hon. Lady opposite might have a fancy for this or that on a car, something which is not normal. Suppose a driver took a vacuum flask to enable him to have a hot meal during the journey. Would that come within this definition? It would not be a new idea, but I know that anything which is new is anathema to the Government.
§ Sir Arnold Gridley (Stockport)I should like to put a point to the Committee which has not been put before, and in which I think there is some substance. [Laughter.]Hon. Members may laugh but I am not making any reflection upon any other hon. Member. It is not an uncommon practice for an industrial organisation to buy a large number of cars, say 20 or 30, at such and such a sum, and to arrange for those cars to be replaced subsequently year after year by new cars for a fixed sum. Therefore there is renewal by new cars but no actual payment for those cars within the meaning of the Schedule. I am a little in doubt how an arrangement of that kind would be dealt with, and I should like some light on this point.
§ Mr. C. WilliamsI support the point that my hon. Friend has just put, and press that we may have an answer to it. I did not expect the Government to give an answer to my question but I think we ought to have the courtesy of an answer to the question of my hon. Friend. [HON. MEMBERS:" Answer."]
§ Amendment agreed to.
§ Schedule, as amended, agreed to.
§ Bill reported, with Amendments.
§ As amended (in Committee and on recommittal), considered.