§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
192§ Mr. HoughtonThis Clause will be welcomed on both sides of the Committee. It remedies a weakness in the present powers of the Inland Revenue in securing money which is held by a bankrupt and which is deducted as pay as you earn and does not rank as a preferential debt under bankruptcy proceedings. I think the Committee would like to be assured that this weakness has not had serious consequences.
All hon. Members will agree that employers who are deducting tax from the pay packets of workers are trustees for the State. They are in a special position of responsibility for the custody and safe handing over of large sums of money. I know there is a strong temptation, especially in conditions of restricted credit, for employers to use—however temporarily—the money they have deducted from the wages and salaries of their workers. This is cheaper than a bank overdraft and easier to get and the longer they can hold on to it the greater will be the convenience of the use of this money they have deducted as Income Tax from their workers.
The Clause relates to the narrow question, important nevertheless, of being able to rank with other Income Tax this liability which may be equally a preferential debt under the bankruptcy proceedings. I am sure we should be dismayed to hear that the Clause is made necessary by any widespread discovery of default in this matter by those who have gone bankrupt, whether they are alive or dead.
§ Mr. Boyd-CarpenterThe hon. Member for Sowerby (Mr. Houghton) has correctly interpreted the effect of the Clause and I need only deal with its necessity. The necessity for putting it into the Finance Bill arises in this way: the matter was formerly dealt with under Statutory Instrument 453, 1950, and some doubt arose as to the validity of that Statutory Instrument. Some months ago it was, therefore, withdrawn. This clause puts the law back on the basis on which it was thought to be under that Statutory Instrument, and puts it, of course, on a proper statutory basis.
§ Clause ordered to stand part of the Bill.