Clause 54.—(APPEALS.) (Hansard, 26 May 1952)

§ Mr. Mitchison
I beg to move, in page 57, line 43, after "thirty-five," to insert "section forty."
In one sense this is not a large point, but it is of some importance. It would be convenient to refer to the Amendment which seeks to introduce specifically reference to the Ninth Schedule. The point is that these appeals are either to the General Commissioners or to the Special Commissioners, but the proviso at the end of the Clause makes certain matters specially appealable to the Special Commissioners only and not to the General Commissioners. That, presumably is because they are matters of some complexity and difficulty and, for that reason, it was thought more appropriate that the appeal should lie in that way.
The Ninth Schedule is introduced by Clause 40. I should be out of order if I were to discuss that Schedule in detail. What it deals with appears from Clause 40 to be the complicated question of what are undistributed profits or what is over-distribution of profits for an accounting period. It is a long Schedule. In some ways it is rather unfortunate—it is the procedure which has been adopted—that I have to deal with the Clause incorporating the Schedule and not with the Schedule itself.
Clause 54 deals in this way with the whole of the Tenth and Eleventh Schedules and with part of the Eighth Schedule. I should like to know why the Ninth Schedule has been left out. All these Schedules are long and complicated. They deal with matters of considerable difficulty and importance. I should have thought that it would have been advisable to have kept, as far as possible, to a single appeals body for all of them.
I see no reason why this Schedule should be left out and this difficult question of undistributed profits and over-distribution of profits regarded as within the competence of the General Commissioners of appeal while other questions hardly more complicated are reserved for 1014 the Special Commissioners. It is an illustration of the extremely cumbersome and complicated nature of this tax that there have to be these elaborate provisions for appeal under it. I suggest that, at least, they should be similar in all these cases on this complicated point.

§ The Solicitor-General
I understand that the purpose of the Amendment is to bring appeals relating to the computation of undistributed profits and over-distribution of profits under Clause 40 and the Ninth Schedule before the Special Commissioners instead of before the General Commissioners. The hon. and learned Member for Kettering (Mr. Mitchison) expressed his concern that a provision of this sort was not already in the Bill. I can explain the principles on which the Bill is drawn in deciding whether an appeal should be to the General Commissioners or the Special Commissioners.
There are really two principles. First, the appeals to the Special Commissioners are restricted to the cases where the questions at issue involve two or more concerns whÌch may be located in different parts of the country. It is essential that the disputes should go before the same tribunal, and that one tribunal should adjudicate upon them.
The other principle is that where we have points of considerable complexity, such as the special percentages granted under Clause 47 and the spreading of profits from long-term contracts, it is thought essential to secure consistency of treatment throughout the country by having the appeal to the Special Commissioners.
With regard to the over-distribution of profits and undistributed profits, the rules laid down in the Ninth Schedule are comparatively—I emphasise the word "comparatively"—straightforward. I am advised that there is no reason to provide for them to be dealt with solely by the Special Commissioners. The rules laid down in the Schedules will involve questions of computation of profits and additions and subtractions. I regret that we are unable to accept the Amendment.

§ Mr. Mitchison
Does the Solicitor-General tell the Committee, not on advice he has received but on his own expert knowledge of these matters, that the Ninth Schedule is purely a matter of computation, when it takes four pages of type to set out what it is all about; and that the question of the over-distribution of profits or undistributed profits is as simple as that? Does he not realise the extreme inconvenience of having appeals on some of these matters to the General Commissioners, and having appeals on matters which are not very different incapable of being brought to the General Commissioners?

§ The Solicitor-General
We have given consideration to this matter. Compared with the other Schedules, the Ninth Schedule is comparatively simple. It comes to a question of applying the standards laid down there and to a matter of computation. We think that it is right that appeals in relation to these matters should go to the General Commissioners.

§ Mr. Mitchison
In the circumstances, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

§ The Solicitor-General
I beg to move, in page 57, line 44, after "forty-seven," to insert: section (Computation of profits for purposes of excess profits levy in the case of concerns producing certain metals, etc.)". This Amendment is consequential on the new Clause which the Chancellor has put down to give a measure of relief from the Excess Profits Levy to certain firms operating metal mines, oil wells or the extraction of asbestos where in the national interest it is essential to increase output. It is thought desirable for consistency of treatment that appeals should go to the Special Commissioners.
Amendment agreed to.

§ Mr. Erroll
I beg to move, in page 58, to leave out lines 6 to 11.
This Amendment seeks to leave out paragraph (ii) of the proviso to subsection (1). The paragraph makes two points, the first relating to apportionment and the second to decisions. The paragraph says: no apportionment as respects which a right of appeal is given by any other provision of this Act and no decision of the Commissioners 1016 on any matter which, under any provision of this Act, is left to their discretion, shall be balled in question on any appeal under this subsection. The point of the Amendment is that it seeks to make any apportionment or discretion of the Commissioners in regard to this particular Part of the Finance Bill subject to appeal. There is no gainsaying the fact that the E.P.L. provisions of the Bill have been drafted hurriedly and rapidly. It is quite well recognised that they are such complicated Clauses that they must have been conceived hurriedly, because the Government have only a month or two in which to do it.
Therefore, it seems quite understandable that, in other parts of the Bill, there should be arrangements made whereby the Commissioners should decide; that is quite all right. We know that the Commissioners are, by and large, fair-minded people, and, for the sake of speed, it is only proper that they should have the right to make decisions. What is surely wrong is that their decisions and apportionments under E.P.L. should be unappealable.
In effect, it means that any junior officer in a tax inspector's department may make a decision against which there is no right of appeal of any sort at all. He will, of course, make the decision to the best of his ability, but it does seem wrong that, where streamlining provisions are made whereby the Commissioners may decide, there should be no right of appeal whatever. All my Amendment would do would be to make it possible for apportionments and decisions relating to E.P.L. to be subject to appeal.

§ The Solicitor-General
My hon. Friend will, I am sure, appreciate that Clause 54 deals with appeals against assessments and the determinations of the Commissioners in respect of relief. The second part of the proviso to subsection (1) is meant to avoid the difficulty of having two separate rights of appeal. If my hon. Friend will look at Clause 35, which deals with apportionments on a minimum standard between two or more companies under common control, he will see that there is there an express right of appeal to the Special Commissioners under subsection (4). If that right is exercised and the matter is determined, it would appear to be wrong then to allow the matter to be raised again on an appeal against 1017 assessment. That deals with the first part of the matter, contained in lines 6 and 7.
I think that the part about which my hon. Friend feels most concerned is the fact that the Clause as it stands provides that there should be no appeal under this subsection in respect of matters left in the Commissioners' discretion. May I say straight away, of course, there is the right of appeal, apart from this subsection, on any question of law. There is no exclusion of that. The matters which are left to the Commissioners' discretion are really matters of machinery in dealing with the formalities of the assessment, and I have here particulars of the various instances in which they have a discretion, and I would like shortly to indicate what they are.
If we look at Clause 35 (3), which deals with the chargeable accounting periods of two or more companies, we see that the Commissioners have a discretion there so to adjust the period as to arrive at the right result. It is purely a question of assessment machinery, and the only effect of giving a company a right of appeal on that matter would be to encourage the company to waste the time of the Appellate Commissioners in order to avoid payment of its just liabilities.
Another instance is found in Clause 36 (4), which is concerned with the matter of the machinery as to deficiencies and the question whether there is a break in continuity. There, it is merely a matter of apportionment of profits for the chargeable accounting period which is left to the discretion of the Commissioners. There is a right of appeal in law, and there are also two instances in Clauses 39 and 40 of a similar character. There is another in Clause 42, where the Commissioners have a discretion in fixing the period to be taken as the chargeable accounting period where there has been a transfer of business from one company to another. There are several provisions in the Bill giving the Commissioners discretion to allow a longer period than that specified in the Bill.
That, I think, summarises the matters on which the Commissioners can exercise their discretion. From the exercise of that discretion in these machinery matters, there is, it is true, no appeal, but there is appeal on a matter of taw. Similar powers have 1018 been given to the Commissioners in the past for the purposes of the Profits Tax and the Excess Profits Tax. They are all matters of machinery, and there is really nothing new about them. In the circumstances, I hope that the justifiable anxiety of my hon. Friends as to the effect of this provision will now be dispelled.

§ Mr. P. Roberts
I am much happier now, after the Solicitor-General has spoken, than I was before, but am I not right in thinking that there are a number of these discretions in the Eighth and Ninth Schedules which the learned Solicitor-General has not actually enumerated?

§ The Solicitor-General
My hon. Friend is quite right. I ought to have mentioned that, but I thought I had covered them all. These, too, are purely machinery matters.

§ Mr. Roberts
These discretions given here are far more numerous than have in the past been included in Finance Bills. I do not think that any of my hon. Friends on this side want to suggest that opportunity should be given for frivolous litigation, but cases may arise in which people may feel that they have been genuinely aggrieved.
The question I should like him to consider whether he could not find a form of words whereby any application deemed to be frivolous could bring an order for costs, or what you will, against the applicant, in order to give the genuine cases at least a chance of the appeal being heard. I do not like a principle being incorporated in the Clause taking away the right of appeal of an individual or company.
Although I appreciate that it may really be a question of machinery, it is also a question of principle, into which I should like my hon. and learned Friend to look again to see whether he can devise some form of words to meet what we are trying to do and also the point which he made himself about frivolous applications. If he could make a short reply on those matters, I think it would help us.

§ The Solicitor-General
I do not say that the removal of the right of appeal is solely to deal with frivolous applications. I think it is right that the precedents of the past should be followed in 1019 this Bill in deliberately leaving certain matters to the discretion of the Commissioners in respect of adjustment of the chargeable accounting period of a number of companies which are grouped together.
I think one can leave that kind of machinery to arrive at the right mathematical conclusions to the discretion of the Commissioners without any anxiety at all. If they went wrong in law and applied a wrong principle there is still an appeal, and that surely should suffice. I hope I have been able to allay any anxiety over that. I do not feel confident that, with whatever ingenuity I possess, I would be able to devise an Amendment on the lines suggested to enable there to be an appeal in appropriate cases which would not also have the effect of impeding the operation of the Bill.

§ Mr. P. Roberts
I would advise my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) to withdraw the Amendment. I could see the shade of the Financial Secretary when he was sitting on the benches opposite rising on matters concerning the liberty of the individual. It was only memories of those occasions that made me rise in my place to suggest to the Front Bench that they should remember the principle that we have always maintained—that the individual should have the right of appeal in cases of hardship.

§ Mr. Erroll
My anxieties are not entirely allayed, because very important discretion is granted under Clause 39 to the Commissioners in dealing with the computation of profits or losses for any individual company. I should have thought that there should have been a right of appeal in that case but, in view of the assurances now given, I beg to ask leave to withdraw the Amendment.

Hon. Members
No.