HC Deb 06 July 1949 vol 466 cc2257-80

If an individual who receives a demand for arrears of income tax in respect of any years prior to the financial year commencing on the fifth day of April, nineteen hundred and forty-five, proves that during the relevant period he was serving in. His Majesty's Forces, and that the arrears relate solely to his Service emoluments, he shall be entitled to claim that such arrears be disregarded up to the amount of seventy-five pounds.—[Lieut.-Commander Braithwaite.]

Brought up, and read the First time.

8.30 p.m.

Lieut.-Commander Braithwaite

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

Doubtless the Chancellor of the Exchequer will have gleaned from his lieutenants that, during his absence in Paris, in the small hours of Wednesday morning last, a Debate took place on arrears of Income Tax on emoluments earned in the Fighting Services. Doubtless, also, he has studied the Debate and found that very strong feeling was exhibited on all benches and that the Debate in no sense of the word took a party line. Hon. Members on all sides exhibited disquiet on the matter. The Financial Secretary to the Treasury first met our requests with the reply that the matter would receive sympathetic administrative action. We had an example of the kind of sympathetic administrative action which might be expected when the hon. Member for Sowerby (Mr. Houghton) delivered a speech which should have appeared under the title, "Can I hinder you?"

With the exception of the hon. Member for Sowerby, hon. Members in the Committee showed themselves generally sympathetic to the idea that real hardship is incurred where Income Tax demands are being made on claims arising out of Service pay, going back, in many cases, as far as the financial year 1941–42. I ought to say that we have slightly altered the wording, which was quite properly criticised on the last occasion by one or two hon. Gentlemen opposite on the grounds of lack of clarity. We have endeavoured to word the Clause to make it quite clear that we are seeking to exempt claims arising solely out of Service emoluments. The hon. Member for Sowerby made the point that it was possible during the financial year 1939–40 for Service pay and Service remuneration to get mixed up in the Income Tax returns.

I think, Sir, that I may refer to a proposed new Clause in the name of the hon. Member for Oldham (Mr. Hale), which you did not select and which appeared to be rather narrower than the Clause now before us. What the hon. Member for Oldham sought to do was to get rid of the claims arriving after 5th April this year. We still seek, on the wider issue, to get rid of claims which are, so to speak, pending, which have been received before that date.

In view of the rather long Debate we had on the last occasion, with which hon. Members will be fully familiar, I do not propose to recapitulate the case. I would rather express pleasure that on this occasion we have with us the right hon. and learned Gentleman. On the last occasion the Financial Secretary did retreat, after considerable pressure had been put upon him, and say that the matter would be referred to the Chancellor on his return. It was on that understanding that we then withdrew our proposal with a view to putting it down again on Report. I can only hope that that delayed action will have the required effect; that we shall hear from the right hon. and learned Gentleman that this irritating anomaly is to be removed and a load of anxiety lifted from the shoulders of those who served their country during the recent war.

Mr. A. R. W. Low (Blackpool, North)

I beg to second the Motion.

I hope the right hon. and learned Gentleman and the House will forgive me if I endeavour to emphasise one or two points which I dealt with on the previous occasion in the middle of the night. I am not wholly satisfied that I dealt with them in the middle of the night as well as I might deal with them shortly after dinner. I must preface my remarks, as did my hon. and gallant Friend on the last occasion, by saying that I have an interest; I am one of those unfortunate people who recently received a claim for arrears of Income Tax supposed to be due—I say supposed to be due—between the years 1941 and 1945.

What is the position about Income Tax on the emoluments which those of us, both in the House and outside, received as serving officers during the recent war? I think it was generally understood—I hope the Chancellor agrees—that it was the duty of the Paymaster, before paying us any money or emoluments of any kind whatsoever, to deduct at source the Income Tax due on those emoluments. If I am correct, I think we all took it that the proper amount of Income Tax had been paid, or would be paid in the month immediately after the pay became due to us. Indeed, when our pay went up, or went down, the amount of Income Tax which was deducted changed, as of course it should have changed. If we were lucky enough to get back pay on promotion we noticed a large increase in the amount deducted.

Observing the pay slips—by no means all of which reached one because of the curious places to which one was from time to time forced to go—one might well be justified in assuming that all the tax which ought to have been paid had been paid; at any rate, all the tax except a minute sum. By a minute sum I mean something in the nature of shillings and pence rather than pounds. One certainly did not expect to find, eight years later, that the Inland Revenue had made a very big mistake. That is my first point: everyone was justified in assuming that proper deductions had been made.

My second point is that, even if one was not justified in that assumption, one was, in fact, in no position to check whether the right or wrong deductions had been made. That point was most ably put by the hon. Member for Nelson and Colne (Mr. S. Silverman) when we last debated this topic. Moreover, one certainly is in no position now to discover whether or not one paid the proper amount of tax, because unfortunately, in most instances, the taxpayer is not in possession of the documents which show the amount of pay and other taxable emoluments which were alleged to have been paid to him in each of the months which go to make up the years for which he is now alleged to owe a certain amount of tax. It was impossible at the time to check what tax was due, and it is now impossible to check whether the Inland Revenue or the taxpayer is right.

I am quoting from my own experience which must be similar to the experience of many others. I am sure that the House will acquit me of wanting to press my own personal interests in this matter. I can say that I really do not know whether I am right in taking one view, or whether the Inland Revenue is right in taking another. I do not see how we can solve the difficulty. We certainly cannot solve it by having an action, and I should be the last person to want to bring one. The Inland Revenue always has the upper hand because, as the Chancellor knows, if a claim is proceeded with, the money will merely be taken by means of P.A.Y.E. in due course.

My third point concerns the long time which has elapsed since the officer or man left the Forces and closed his Service account. In many cases, men released in 1945 are receiving claims now, at the beginning of 1949, three and a half years after their Service accounts have been closed. Possibly, if they had any savings or a reasonable gratuity, they have-invested the money in their homes and now have nothing left upon which they may draw to satisfy the claims of the Inland Revenue even if the claims appear to be right.

My fourth point is that I realise full well that many men have paid the amount of tax which the Inland Revenue has claimed. Many paid immediately they received the assessment. It may be said that it would now be wholly unfair to them to allow others who have challenged a claim, or who have only just received one, to be relieved in any way. It may be that in absolute fairness that is so, but if the House comes to the conclusion that it is wrong, and indeed a great hardship to ask men who have not so far paid, to pay now, four years after the war, surely they will not say, "The third conclusion which we have reached, fair in itself, is made unfair because certain people who have already paid might complain." I do not think it is in the nature of many people to complain because somebody else has got off rather better than they have. The opposite view is a wholly false reading of human nature in this country. I see hon. Gentlemen laughing, but I am glad to note that the Chancellor agrees with me and not with his hon. Friends below the Gangway.

8.45 p.m.

Having made those four points, I now want to put to the Chancellor a number of courses, one of which he might have decided to take. I do not know what he has decided to do about this Clause. He might decide, and I hope he has decided, to agree with my hon. and gallant Friend. He might have decided to agree with his hon. Friend the junior Member for Oldham (Mr. Hale). As I understood the effect of his proposal, it would be to release all who have not received claims before 5th April from any liability to pay the arrears of Income Tax on Service emoluments received during the war. The Chancellor may have decided to do either the one or the other of these two things, or he may have decided to do something very similar to what the hon. Gentleman proposed, rather than act on the lines of the proposal made by the hon. and learned Member for Northampton (Mr. Paget) during our previous discussion. That would be some remedy, though I hope he will decide to do something on the lines suggested by my hon. and gallant Friend to help those—and not just because I am one of them—who have received earlier settlements and who are probably a larger number than would be affected by the new Clause proposed by the hon. Member for Oldham but which, Mr. Deputy-Speaker, you did not call.

In any case, I hope the Chancellor will remember that if he is not able to help directly in these ways, perhaps he would extend the relief which I understand the Inland Revenue are already giving in certain cases by allowing one post-war credit to be set off against a claim. If this could be extended by allowing two or even three of these postwar credits to be set off against the amount alleged to be due, that would help a great deal. I also hope he will tell us that he has also instructed the Inland Revenue to be very reasonable in answering questions and in meeting the doubts of taxpayers who say that the demands are not correct, and who are, by the very nature of things, unable to prove their case. I gladly support the new Clause.

Mr. Hale

This matter was raised on an Amendment in the name of the hon. and gallant Member for Holdemess (Lieut.-Commander Braithwaite) during the Committee stage. As the hon. and gallant Gentleman has said, it was abundantly apparent that there was a great deal of feeling about it by Members on both sides of the Committee who felt that if some machinery could be devised to give effect to the intention that machinery ought to be devised. I am sorry that the hon. and gallant Member for Holderness should have referred as he has done to my hon. Friend the Member for Sowerby (Mr. Houghton), who made a very useful intervention, from which the hon. and gallant Gentleman has greatly profited since he is prepared to leave out the objectionable part of the Amendment to which my hon. Friend drew attention.

The hon. Member for Sowerby therefore helped the hon. and gallant Gentleman, in addition to the millions whom he has helped in other ways, and he made it quite clear that he had a great deal of sympathy with the proposal, as did most of those hon. Members who spoke. My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) then intervened, and my hon. and learned Friend the Member for Northampton (Mr. Paget) made one of those contributions which he frequently makes in this House which are of very real help to our discussions. He said "Why cannot we call it a day now? Why should soldiers still be called upon in connection with things that happened years ago? Why should they be called upon to pay back on accounts which they have forgotten, and which they have no means of checking?"

My hon. and learned Friend and I put our heads together and drafted a new Clause to put upon the Order Paper, although it escaped your notice, Mr. Deputy-Speaker. We did it in as clear terms as we could in order to express the suggestion which my hon. and learned Friend made. Though he signed it, for some reason or other his name does not appear on the Order Paper. I would like to apologise for the fact that his name does not appear, because he is the parent of the Clause which I should have moved today if I had been allowed to do so.

I express my support for the proposals of the hon. and gallant Member for Holderness, and would like to put one particular point of view about this matter. I remember very well the historic day when I advanced to the table to draw my first Army pay. At that time, quite frankly, I had no knowledge whatever of the beneficent provision that the Government had made for me in that connection. I went to the table and pushed out my hand, and the paying officer put in 6s. He did not look at me before he did so or I could have understood it, but, apparently it was the rate for the job. Being interested in higher mathematics, I afterwards made inquiries as to how this computation had been arrived at. I was told that the actual rate of pay was 2s. a day and that they knocked off 1s. a week and put it to my credit in case I got into difficulty, or so that they could help me out if I yielded to some of those temptations which afflict a soldier when he strays from the camp. Then they said I had made a voluntary allotment of 7s. a week to my wife. So, apparently, years ago there was a man in the War Office with a sense of humour who invented the term "voluntary allotment" for a compulsory deduction. No one ever consulted me at all. There was also the technical problem that I was not allowed to go on leave very often, and the fact that my wife had often spent the money before I could borrow it back.

However, I want to put the serious point about the tax which the hon. Member for Blackpool (Mr. Low) mentioned. The hon. Member referred to the fact that tax was deducted at source, generally speaking, and that that was the obligation. They could not do it with me because it was years afterwards that they told me that although I made a voluntary—i.e. compulsory—allotment to my wife that was part of my pay, and that out of the 6s. they paid me I owed them 7s. for Income Tax, quite apart from any question of Sur-tax. My pay was actually 14s., and with tax at 10s. in the £, I owed them 7s., although they had only paid me 6s. It sounds funny now, but it had its darker side.

I want to put quite seriously to the House one or two points on this matter. Nobody in the unit at that time knew what pay he was entitled to at all, and had no means of finding out. There were all sorts of Service increments, and increments one got for skill or proficiency, but no one knew what they were, not even the paying officer himself. People were given so much money; they hoped it was right and feared it was wrong.

My second point is that no noncommissioned officer or other rank would normally ask for his pay account. He had the horrible feeling that if he did he would find that he was £20 overdrawn. Those who did and defied the wrath to come usually found that they were overdrawn. Although the Army Pay Corps did a magnificent job, there was case upon case after Dunkirk where men who had never been to Dunkirk, and who could establish that fact, were charged with large sums of money. But there were those who could not establish that at all. During that period money was paid out on the train and receipts were often lost. To be told in 1949 that in 1944 one drew some money in Burma, or for a man to be told that some money was advanced to his wife on his behalf while he was in prison in Japan, and that he now owes tax, is a hardship we ought to remove.

I want to add one thing to what the hon. Member for Blackpool has said. It is all very well for the Minister to say that this means an anomaly. It means that John Jones who paid his tax the day before, is worse off than Bill Brown who did not pay his tax until the day after. That applies to every alteration that is made. When it is said that we are going to increase depreciation allowances to 40 per cent., it means that the man who got his machinery early and put it in, does not get it, whereas the man who ordered later does. It is inherent in any alteration of taxation procedure that there shall be an anomaly of some sort. One could realise quite clearly when we heard the Financial Secretary's reply the other evening that he, as indeed everybody in the Committee, shared the very considerable sympathy which we all felt for this particular class of case, and also shared a desire, as I am sure my right hon. and learned Friend does, to try to stop not merely the money claim on the discharged soldier but the insuperable nuisance, and sense of indignation and frustration, that this claim causes him when he is asked to go back all this time and try to satisfy his mind on what is the position.

The Clause of the hon. and gallant Member for Holderness has a more narrow effect than mine because it limits the payment to £75, but as we are discussing the hon. and gallant Member's Clauses I will adopt it for my purpose. I urge my right hon. and learned Friend to do his utmost to give effect to the clear will of the House in this matter, and assure the House that something will be done to meet this legitimate grievance.

Mr. Jay

As the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said, we had a lively Debate on this subject last week, and my right hon. Friend the Financial Secretary undertook to convey the feeling of the House to my right hon. and learned Friend the Chancellor of the Exchequer. That has been done, and my right hon. and learned Friend has considered this matter again.

The Clause before us is very similar to the Clause which was moved by the hon. and gallant Gentleman last week. I was asked then what would be the cost of granting this concession in that form. It is difficult to estimate, but we think it would he somewhere between £2 million and £3 million. I will not rehearse at any length the objections which the Financial Secretary and I advanced last week to the proposal in that form. They were briefly two: first, that if we were to cancel all arrears outstanding now, it might be held to be very unfair to all those who had paid in the years since the war, and that feelings might be so strong that repayments would have to be made, which would raise great practical difficulties. The second main objection was that if we went as far as that, we would be giving relief, as my hon. Friend the Member for Sowerby (Mr. Houghton) said, irrespective of need and also irrespective of ability to pay. Those objections to the course which the hon. and gallant Member is proposing seem to us insuperable.

On the other hand, as the hon. Member for North Blackpool (Mr. Low) said, there is more than one possible course which can be adopted. We have therefore considered, amongst other alternative proposals, the following possibility, that no further notifications of tax liability should be issued from today, although collection should continue in all those cases where notification has already been sent out. That would mean, in effect, shortening the period of statutory limitation during which assessments can be made from six years, at which it now stands, to four years. It need not involve us in the great difficulty of making repayments to those who have already paid.

Of course, objection can also be advanced to that alternative. It can be argued that those who have already paid will be dissatisfied if they see that no further notifications are being sent to others. It can also be argued that those who have already received their notifications, who have been assessed and will still have to pay, will also be dissatisfied; and the same would apply to those taxpayers who have been assessed in the past and who have agreed with the Inland Revenue to pay the tax due over a period which has not yet expired. But as was said, I think, both by the hon. and gallant Member for North Blackpool and by my hon. Friend the Member for Oldham (Mr. Hale), whatever we do in these cases, in curing one anomaly we are bound to some extent to create another.

9.0 p.m.

Taking that into account, and in view of the special case of these Service men's arrears and of the feeling which was expressed in the House last week, my right hon. and learned Friend has come to the conclusion, on the assumption that in that case this Clause would be withdrawn, that as from today no further notifications of tax liability shall be issued in respect of war-time service pay received up to April, 1947.

Captain Crookshank

Under what authority?

Mr. Jay

That can be done administratively by the Inland Revenue under the authority of the Chancellor, and I am advised that it does not require an alteration in the Bill. It will, of course, mean that those who have already received notifications will still have to pay tax, and that those who are in the process of paying sums which they have agreed to pay over a period will also have to pay; but it will mean that no further notifications will be sent out and, therefore, in the words of my hon. and learned Friend the Member for Northampton (Mr. Paget), in that sense we shall "call it a day."

Captain Crookshank

I am sorry to hear that the Government are not going to the length proposed by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) in this Clause. As I understand the position, it is that from today no further notifications will be made and, therefore, as from today no one who has not yet received notification will be called upon to pay these arrears. I should like to know under what authority that is done, because if it can be done in this case, does it mean that the Chancellor has full right in the case of any taxpayer to say, "As from today you need not pay any more"? Is that the legal position? If that is the law I am very surprised. If it is not the law, how does the Chancellor propose to effect what at first sight appears to be some concession to the class about which we are speaking?

Sir S. Cripps

It is done by administrative action under my authority in exactly the same way as individual taxpayers who cannot pay, are dealt with, for instance. Under these provisions, where it has been ascertained that people are unable to bear this burden, they are, in fact, discharged without any particular legal authority under any Act of Parliament but by the Inland Revenue under my authority.

Mr. Harrison (Nottingham, East)

About how many people, will be affected by the concession?

Captain Crookshank

No doubt the hon. Member for East Nottingham (Mr. Harrison) will be able to make his speech in a moment. I thought he was interrupting on the point with which I was dealing. I want to get this point cleared up, because the right hon. and learned Gentleman has now said that this is in the same category as that in which he uses: his authority in certain matters. I know, of course, that there resides in the Chancellor certain authority in certain matters, but I understood him to say that this is the same authority as is invoked in the case of the taxpayer who cannot pay. But that is not the question at all; it is not necessarily the case that all these people cannot pay and we have not entirely based our argument upon that point.

With all due respect, I hope the right hon. and learned Gentleman may say something on this point. It seems to me that one has to be very careful in dealing with the tax law, and the administrative use of concessions is obviously one which must be very much limited. That is why we put down a Clause so that this could have proper statutory authority. As I understand it, if for some reason it is quite hopeless to get a person, a particular taxpayer to pay—and I am now taking the general case—because it is obvious that he cannot pay, then to the best of my recollection, there does reside in the Chancellor power to deal with that case; but it seems to me to be stretching that authority enormously to use it in this case.

I hope the House will not misunderstand me; I am supporting the plea that something should be done. What I am trying to do is simply to clear up the position. It seems to me that this is not a power which can be extended, to tell a whole class of people that they will not receive notifications. It would be possible, perhaps, if one were able to say that none of these people could afford to pay; but that would be a big stretch of the imagination, and I hope, therefore, if the right hon. and learned Gentleman wants to make a concession—and it appears from the speech of the Economic Secretary that he is prepared to help these people—he may do what I submit is the right thing, which is to put words into the Bill to make it possible.

We have altered this new Clause, which is a variation of a previous Clause which we discussed, because we thought we would limit the proposal to Service emoluments. We thought it would be possible, when the concession was made, to distinguish between Service emoluments in wartime and other sources of income. That is why we put it in this form. I press the Chancellor to reconsider this matter. The Economic Secretary, by the administrative plan which he suggested, admitted there are bound to be some cases where possibly there would be a sense of unfairness on the part of those who have already paid. We also admit that in the terms of our Clause, although I am inclined to agree with some of my hon. Friends who have spoken in believing there would not be any grudge in the minds of most of the ex-Service men who, for some reason or another, have already paid at the fact of this concession, because the essence of the problem is the length of time that has elapsed and the hardship that arises out of that very fact.

The Economic Secretary said that it would be very difficult to say how much this would amount to. He put it somewhere between £2 and £3 million. If all the outstanding claims were as much as £75, which is very unlikely but which is the figure we put in this new Clause, that would represent somewhere about 30,000 cases, but I do not believe they would be anything as high as £75, and the estimate will cover a far larger number of men, if, in fact, £2 or £3 million is the right figure. The sum of £2 million is not very much to concede in this particular field, taking into account the vast amount collected in Income Tax and is a very minute proportion of the whole of the Budget. It would be a very useful concession if, even now, the right hon. and learned Gentleman would say that, having made an attempt to deal with it administratively—and I hope for a further explanation on that point—in view of the general opinion of the House, it would be better to adopt our proposal.

At the end of the Finance Bill we are always in a difficulty. This is the last stage. No one else can touch the Finance Bill when we have finished with it, and, of course, it is a rather difficult point of procedure at this stage for the Government to put down a new Clause, but if they can secure a better proposal than ours, it may be that a manuscript Amendment would be accepted or it might be possible, somehow or other, for a further Clause to be proposed. I ask most specifically how the proposal of the Economic Secretary can legally and lawfully be carried out. To take administrative action in such a scheme as this is, in point of fact, the question at issue, and is not necessarily the way to meet these particular cases after such a long delay. In our Clause a way is left open to anyone who so desires to meet an Income Tax demand for those years during the war, particularly if circumstances have since improved. For instance, the conditions of the hon. Member for Oldham (Mr. Hale) are better than they were formerly.

Mr. Hale

Not much.

Captain Crookshank

I can think of one or two ways in which the hon. Gentleman is better off, and if he were sent a bill for £4 2s. 6d. for 1944 Income Tax arrears, I think he would find it in his heart to make an ex gratia payment to meet the account. I would not put him to the difficulty of answering that conundrum today. I can imagine it might be possible for a man or woman concerned to be anxious and willing to pay. On the other hand, there are obviously thousands of cases, on the figures given, amounting to perhaps 20,000, 30,000 or 40,000, which may be very difficult. In view of the generally expressed opinion, I hope that the House will not be satisfied with the administrative arrangements, but will try even now to persuade the Chancellor to go a little further our way.

Sir S. Cripps

I should like to reply to the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank). What we have offered to do, if the proposed new Clause is withdrawn, is to try to deal with it by administrative measures. That is a perfectly proper and competent thing for us to do. There are provisions under which hardship cases, whether individual or group, can be dealt with by the Chancellor of the Exchequer and the Inland Revenue. After all, this is a case which it is alleged to be one of a type of mass hardship that ought not to be dealt with in the way proposed but can be dealt with perfectly well under the hardship provisions. There is nothing irregular in that proposal. Administratively, much bigger things than this have been dealt with.

As the House will remember, for four years excess payments of P.A.Y.E. were dispensed with completely, without any legislation of that act. It is true that we did legalise it last year, in its fifth year, but we had covered for four years the entire range of P.A.Y.E. This is not a matter of that kind. If we do as we have said we are prepared to do if the proposed new Clause is withdrawn, and take administrative action to see that no notifi cation is sent out after today, we shall have gone quite a long way to meet the universal view of the House. I hope the House will accept our offer.

Mr. Paget (Northampton)

I would like to express my gratitude to the Chancellor of the Exchequer and to the Financial Secretary for the proposal they have made. It is a just proposal. Most of these claims arise from mistakes made by Government officials or officials in the Pay Corps. There may even be a further mistake, but by this time it is impossible to check up on that mistake. Since this matter was raised—I am sure we are all very grateful to the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) for having raised it on the Committee stage—I have met more than one instance in which a claim of this sort was put forward. One man was in a position to employ accountants to investigate a claim. The Pay Corps turned out to be wrong again, and there was money owing by them to the man. Small people are not in a position to make an investigation. Therefore, apart from anything else, such claims are extremely unjust.

I should have thought there was a little substance in what was said by the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank), that where we are dealing with a class, it may be more convenient to put the provision into the Bill, although it may not be legally necessary. Without any disparagement, I do not very much like the drafting of the Clause. It does not seem to me quite to express the concession, but the Clause in the name of my hon. Friend the Member for Oldham (Mr. Hale)—[Liability for income tax on pay received for service in His Majesty's Forces before 14th August, 1945]—seems to express precisely the concession which the Financial Secretary has made. It puts into quite suitable drafting exactly what he has said. That Clause has not been called, but I should have thought that it was within the Rules of the House if the House and the Government desired it, for the Chair to change its mind about the Clause. It seems to do precisely what the Government want to do, and I should have thought that it would be convenient to have it in the Bill.

9.15 p.m.

As to administrative concessions, I rather hope that some administrative concession may be made in cases where notice has been given and where the man has not been able to pay in full but the payments have, through P.A.Y.E., been spread over a number of years, so that over a number of years these back assessments, which perhaps came up for the first time in 1948, have gradually to be paid off. I do not see how a general rule can be made regarding that, but I very much hope that the Treasury will have another look at old claims coming forward years after the war which are being paid off gradually by instalments, and see if those instalments can also come to an end. In many cases that would be a just thing to do. The estimate of £2 million or £3 million was, I believe, based on the form of the Clause moved by the hon. and gallant Gentleman the Member for Holderness (Lieut.-Commander Braithwaite) on the Committee stage. I believe that that Clause was not confined to Service emoluments. Confining it to Service emoluments, even if we take in the instalment payments, I am quite sure that it will come to much less than £2 million or £3 million. If the Treasury are thinking in terms of £2 million or £3 million, I hope that by executive action they will look at the instalment cases.

When one served one's country as these men did—served it in difficult conditions and often in Japanese prisoner-of-war camps—it does not seem very grateful on the part of the State, years afterwards, to be extracting payment every week in respect of the service which was given. The time has come to look at these instalments.

Mr. Mott-Raddyffe (Windsor)

I hope that the Chancellor of the Exchequer will think again and be a little less ungenerous in his attitude. He has certainly made a concession, but it is rather a niggardly one, and he has not really dealt with the main problem. What he has proposed will certainly disappoint hon. Members in all parts of the House who have supported the Clause moved by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braith-waite). It is not a question of whether or not one individual can or cannot pay the arrears of tax which are alleged to be due. The question is that in many cases it is anybody's guess whether the Inland Revenue is right or whether the individual is right, and there are cases where it is absolutely impossible to prove who is correct.

I will cite one obvious example to the right hon. and learned Gentleman. I am sure my hon. Friend the Member for North Blackpool (Mr. Low) will bear me out when I say that those of us who served in Greece are in this difficulty. Almost all the Army pay records were sunk during the evacuation, so there is no physical means of proving whether the assessment is correct. I will certainly disclose a personal interest in this, because I am in the same boat, in the financial sense, as the hon. Member for North Blackpool in that I also recently received a demand for arrears of tax going back to 1939. I sent the demand to the Financial Secretary, hoping it might melt his heart. I have not the foggiest idea of how the alleged underassessment arose, and there is no possible means of proving whether the right hon. Gentleman is right or whether I am right. That is the main burden of the argument which has been put forward by the hon. Member for Oldham (Mr. Hale) and by other hon. Members on all sides of the House.

I suggest that the individual member of His Majesty's Forces is entitled to expect, when he is serving his country overseas in wartime, that, so far as is humanly possible, the Inland Revenue should deduct the right amount from his pay at source. I agree that in certain circumstances it may not be easy for the Inland Revenue to make the right assessment—it takes some time to get the pay sheets from overseas stations; there is the difference between temporary and substantive rank—but at least it is possible for the Inland Revenue to make the correct assessment, whereas for the individual member of His Majesty's Forces, being continually shifted from one war theatre to another, it is physically impossible.

Moreover, I suggest to the right hon. and learned Gentleman that, when a member of His Majesty's Forces who has been demobilised in 1945—and this was the point made by the hon. Member for Oldham with much eloquence—thinking he is all square so far as the Army pay office is concerned, gets married, raises a family, is in a new job and if he is lucky, installs himself in a house, and then finds arrears of tax served on him going back to 1939, it really is an intolerable position. That, in our view, is an injustice which has nothing whatever to do with whether that individual is earning four, three or two figures. It is an injustice which ought not to be allowed to continue, and for that reason I beg the Chancellor to think again.

Mr. Emrys Hughes (South Ayrshire)

For the last half hour we have been listening to a great deal of special pleading by one trade union. I would like to know if the special concessions which are to be given to members of the Forces are to be given to miners, because I know of miners who have received similar demands. There has been an attempt to introduce into the Debate a false note of sentimentality in order to get a financial concession.

After all, the docker who has risked his life handling a cargo of explosives is just as much entitled to special consideration as an officer who might or might not have been in a Japanese prison camp; the miner who did not have an opportunity of going into His Majesty's Forces did as much during the war in his own way, and risked his life just as much, as a member of His Majesty's Forces. If this concession had been asked for all prisoners of war it could have been understood, but the argument that this applies only to prisoners of war captured in Burma, who spent their time in Japanese prison camps, is quite misleading. Surely the £2 million-£3 million applies not only to ex-prisoners of war but to others who are quite as well able to pay as the old age pensioner who has been a miner or a docker, or who has served his country in another way.

Mr. Paget

A miner, surely, would have been paying his tax by P.A.Y.E.

Mr. Emrys Hughes

I have had at least two cases of miners who are suffering from the same kind of grievance as has been expressed in this Debate.

Mr. Mott-Radclyffe

On a point of Order. Without in any way wishing to prejudice the case of the miner, is there anything in the Clause, Mr. Deputy-Speaker, which refers to arrears of payments for miners?

Mr. Deputy-Speaker (Major Milner)

No, but we are discussing the Second Reading of the Clause which appears on the Order Paper. I think it is competent, therefore, for hon. Members to argue on the lines followed by the hon. Member for South Ayrshire (Mr. Emrys Hughes), but not, of course, to make a proposal on the lines that other members of the community not included in the Clause should be so included.

Mr. Emrys Hughes

The hon. Member should follow the motto: Render to Caesar the things that are Caesar's, and to Cripps the things that are Cripps's. I fail to see why the brigadier should be in a specially privileged position as against the butcher.

Mr. D. Marshall

I had hoped to take part in the Debate on the Committee stage but, unfortunately, I had a severe cut on the head, and, therefore, was absent for a few days. I feel that the Chancellor has been rather rough over the Clause. The reason why I think so is that when the Economic Secretary mentioned that the cost to the Treasury, if the Clause were accepted, would be between £2 and £3 million or thereabouts, the House immediately realised the extra burden which might have to be borne. But that is not the point, because if these tax mistakes have been made over the years to that extent, it is reasonable to suppose that, equally, a like, and probably very larger, amount was actually overpaid to the Treasury during the same period. On the equation of that balance there is no reason to believe one way or the other that there would be a loss to the Exchequer—it might well be the reverse.

I cannot agree with what the hon. Member for South Ayrshire (Mr. Emrys Hughes) has just said. The Clause concerns men who have been abroad with no possibility of knowing whether the tax they have had deducted was right or wrong, and who are suddenly burdened with a demand for payment. The Chancellor now says that he will send out no further notifications. Unlike my hon. Friend the Member for Blackpool (Mr. Low), who thereby does not benefit from it, I might say that I do benefit, because so far I have not received a notification. That, however, is not the point.

The Chancellor, apart from not agreeing to wipe out this tax altogether, has not even gone so far as to say that he will take one, two or three post-war credits into consideration. That is a point which he might at least consider. One hopes for a concession and even if that concession is small one cannot consider it as nothing at all. I consider, as I said in my opening remarks, that we have had rough treatment over this matter, and I do not like it.

Mr. Frederic Harris

Just over a week ago feeling in the 'House about this matter was very strong indeed, and it is no less so tonight. This position is a very unfortunate one, and I do not think there is any hon. Member who has not experienced trouble from his constituents. We are constantly being approached on this serious issue. Tonight, we have heard a reference to the cost of £2 or £3 million. Considering that the Government have said that they themselves did not have time even to consult local authorities about dog licences, how did they manage to find out that the cost of accepting the Clause would amount to £2 or £3 million? I suggest that it is sheer guesswork, and is put out by the Government accordingly.

On Monday night a captain came to see me in my constituency. A few days ago he had a demand from the inspector of taxes for £75, outstanding from October, 1945. That was the first intimation he had of any kind whatever. The letter from the inspector was couched in very fair language, but the captain had not £75 with which to pay. It is absolutely intolerable that people should be receiving demands four or five years late. If they were individuals, people or business firms, submitting bills four or five years late, do hon. Members think that those who received them would say, "We shall be only too willing to pay"? This applies also to other Government Departments.

9.30 p.m.

Sir S. Cripps

The ordinary person has seven years in which he can present a bill.

Mr. Harris

I quite agree that he has seven years, but do hon. Members think that if businesses rendered a bill four or five years late, they would seriously expect to get the money? What about the money owed by the Revenue? They are not very quick to pay it back, but they are quick in making demands. I suggest that these issues are far too serious to be set aside, as they have been tonight. Reference has been made to this as a concession. I do not call it a concession at all. If the Revenue are so incompetent as not to have rendered bills up to now to certain people, surely it is not a concession to be so kind four or five years later as not to render accounts to those people.

In the letter which the inspector sent to the captain I have mentioned, he openly admitted that an error had been made by the paymaster. I have sent the papers to the Financial Secretary because I am sure he will view the case in a generous spirit, and decide what is to happen. The Revenue have to draw a line somewhere. The Revenue comes forward with demands when people have not the money to pay. Individuals or businesses could not get away with it. It is time the Government realised that they should draw the line here, and call it a day.

Mr. Houghton

If hon. Members go on talking like this they will imperil this concession [HON. MEMBERS: "Why?"] If hon. Members will be quiet a moment I will tell them why. The Chancellor has made a very courageous decision. He has taken a decision to remit arrears of tax for a very large number of ex-Service people without any regard to their willingness or ability to pay. He is going to remit that tax on the grounds of hardship, which is a very wide extension of the term. If hon. Members opposite press the Chancellor further, as they are doing, first to cancel the demands which have already been issued; second, to cancel the arrangements which have already been made between taxpayers and the Inland Revenue to pay off the arrears; and, third, to repay the money which taxpayers have already paid off arrears they will put him into an impossible position.

The Chancellor, by deciding to wipe the slate clean for those who receive demands after today, has, in my submission, gone as far as he can without jeopardising the whole principle of taxation and the obligation of equity as between one taxpayer and another. The hon. Member for South Ayrshire (Mr. Emrys Hughes) is quite right when he said that ex-soldiers are not the only ones receiving demands for arrears of tax. There are workers, old age pensioners who gave up work several years ago, and, in some cases, widows; I have had them come to me by the score within recent months. They all plead that owing to difficulty and delay in checking up their tax affairs while they were at work, or the tax on the previous earnings of deceased husbands, demands are only now being issued for those arrears to be paid. How can my right hon. and learned Friend justify exacting the last penny from widows and old age pensioners while he remits, on the grounds of hardship, arrears of tax due from brigadiers and major-generals? That is the issue—

Mr. Speaker

I am sorry to interrupt the hon. Member, but I think he is getting a little wide of the Motion. I believe it might have been as well to hear the mover of the Motion to see what he was proposing to do. That might have shortened the proceedings a good deal.

Mr. Houghton

I was about to conclude, Mr. Speaker, by giving hon. Gentlemen opposite a word of advice. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) referred to me in facetious terms. I shall always hinder hon. Gentlemen opposite from exploiting public sentiment in favour of ex-Service men and disregarding other members of the community. If the concession of the Chancellor is not acceptable to them, then in my humble submission he would do well to withdraw it.

Colonel Dower (Penrith and Cockermouth)

I do not intend to make a long speech, but I shall pass more than a few remarks. The hon. Member for Sowerby (Mr. Houghton), who grossly exaggerated the problem before us, referred to brigadiers and major-generals. What he said was absolute nonsense. I can assure the hon. Member that a great many officers who served in the war belonged to the humble ranks, such as second lieutenants, and were not particularly well off. I can assure him that the question of back taxation affects them very seriously. I would not have adopted that line had it not been for the speech of the hon. Member. I appreciate the concession the Chancellor has made, on a day when he has had many grave and important things to consider.

At the same time, when the Chancellor says that the claims already made will be the subject of discretion, I would ask who is to exercise that discretion? [HON. MEMBERS: "He did not say that."] In answer to a Question I put in the House on this very problem, it was said that these demands would not be pressed in cases of grave hardship. I have been told that these cases will be carefully examined, and that means exercising discretion. I am asking the Chancellor to see that the officers of the Inland Revenue who have to consider these claims will be able to exercise their discretion. I think it would be grossly unfair if any kind of regulation were made which would be applied automatically. Indeed, I do not know how he would carry out such a provision. However, I appreciate the concession. I should like the Chancellor to concentrate on choosing officers of the Inland Revenue who are capable of judging individual cases.

Lieut.-Commander Braithwaite

A short time ago, when hon. Members were good enough to indicate that they were prepared to hear me again, I intended to address myself to the advice of the right hon. and learned Gentleman. We are all prepared to accept the advice of the hon. Member for Sowerby (Mr. Houghton) on Income Tax matters, but not on Parliamentary procedure or tactics. I say at once that half a loaf is better than no bread. I should like to thank hon. Members in all parts of the House for the support which they have given to this proposition and, even more, for the manner in which they have asserted themselves over the Executive, not only last Wednesday morning but again tonight.

I understand from the Chancellor that his proposition is to deal with this position administratively under the hardship provisions. If that is the case, I urge upon the right hon. and learned Gentleman that if he intends to exert his own authority in this matter he might well extend it to claims which are still in dispute, which have not been settled, and, indeed, to unpaid instalments on the lines suggested by the hon. and learned Member for Northampton (Mr. Paget). I believe that the effect of this will be to let off those who have done the shortest service in the Forces, because those who went in earlier have probably paid their claims and had them settled.

There is a parable on this subject. Frequently, those who bear the heat and burden of the day come off worse than those who join in at the eleventh hour. It is better that something rather than nothing at all, should be done. I still think that it would be better if the right hon. and learned Gentleman were to insert a new Clause in the Bill. I should think it would be possible, if we rise tonight before consideration of the new Clauses has been completed, to put down a new Clause. I leave that to him. In view of the fact that we have got half a loaf, which is better than nothing, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.