§ Sir F. SoskiceI beg to move, in page 58, line 33, after "period," to insert:
(not being a period which expired more than ten years before the period of charge to the excess profits levy).1020 Subsection (1) of this Clause gives the surveyor power by notice in writing to require a trader to make a return of the profits or losses of his trade or business for any period during which it was carried on by him. Now, prima facie those words seem to relate to any period as from the year 1. It may be that the Solicitor-General can refer me to a provision which imports a limitation on the time backwards for which the return may be required, but, so far as I can see, in the Clause there is no limitation in time at all.I should like to make it perfectly clear that, so far as I am concerned, I think the Inland Revenue authorities should have the fullest and amplest powers to furnish themselves with the information they require for the purposes of assessing the liability of the taxpayer and exacting the tax from him when he is assessed. Indeed, the Solicitor-General may have noticed that there is a new Clause on the Order Paper which deals with entertainment expenses and that sort of thing in which we on this side of the Committee seek to give powers to the assessing authorities to furnish themselves with information which at present is beyond their reach. I am entirely in favour of that.
On the other hand, it seems to me that. whether unintentionally or not, the Government are perhaps asking for a little bit too much in this subsection. I do not know what is the earliest established trade at present being carried on in this country. I suppose that some of the insurance companies and some other companies go back many hundreds of years. On its true reading—unless I have omitted to notice some other provision either in this Bill or in some other Act to which it refers or which it incorporates—prima facie I suppose the surveyor could ask many of the great insurance companies who have been carrying on business for many years past to furnish particulars of their trade 200 years ago. I am sure that is not intended by the Government. Alternatively, if it is, I should like to hear from their spokesman that that is the case.
7.15 p.m.
In the meantime, in this Amendment, I and my hon. Friends have sought to import a limit of 10 years before the period of charge, which the hon. and learned Gentleman has defined in the 1021 Bill as the period beginning on 1st January, 1952. I should have thought the Government probably would have taken sufficient power if they had enabled themselves to ask a company whom they sought to assess for Excess Profits Levy for a return in respect of trading losses or profits for a period going back as far as 10 years ago from 1st January, 1952. If there are reasons that make it desirable to go back 20, 30, 40 or 50 years I am sure my hon. Friends and the Committee as a whole would like to know those reasons.
It may very well be that the Government can make out a case for seeking such extensive powers as they do. Sometimes the terms "snoopers" and "snooping" have been applied to some of my hon. Friends and some of the Measures we have introduced. They are terms which were misused in that connection. But I am not sure that they would be misused in this context if the reading which I suggest is the appropriate reading is, in fact, the right one. As I say, it may be the wrong one.
I and my hon. Friends have put down the Amendment with a view, in the first place, of trying to ascertain whether there is something we have overlooked; secondly, assuming there is not, to ascertain precisely what the desires of the Government are, and, if they desire to be enabled to ask for information 50 years late, why they want to know information going as far back as all that. There may be a perfect reason. If there is not, I suggest they would be adequately safeguarded in their attempts to assess the tax if they are enabled to ask for a return for a period of 10 years.
It may be that this is a precedent from other Acts and there may be some limit imported by implication from some other source. If there is, I would put to the Solicitor-General the consideration behind our Amendment that he might be content with information extending back 10 years before the period of charge. In any case, I ask him to be good enough to apply his mind to the matter, to explain the reasons for the Clause in the form in which it appears on the Order Paper, and to give his reaction to our Amendment.
§ The Solicitor-GeneralThe origin of this Clause is the precedent in the first paragraph of Part 3 of the Fifth Schedule 1022 of the Finance Act, 1927, which was extended to apply to war-time Excess Profits Tax by Section 21 (2) of the Finance (No. 2) Act, 1939. That is the precedent; but I am going to deal with what the right hon. and learned Gentleman the Member for Sheffield, Neepsend (Sir F. Soskice), has said, not basing my answer to him solely upon the precedent.
The right hon. and learned Gentleman said he is in favour—and I think all the Committee are—of commissioners and surveyors having the fullest powers to obtain all proper information for securing proper assessment of the Excess Profits Levy. I do not suppose that a surveyor will ever require information for 40 or 50 years ago. But the difficulty is in fixing a precise period for the reason that, for instance, one has to consider not only the returns of profits arising in periods comprised of, or partly included in the standard period, but returns as profits for the Excess Profits Levy period as well.
One has to consider the spreading of profits from long-term contracts. The right hon. and learned Gentleman's proposal takes us back 10 years from Ist January, 1952; that is to say, it only goes back five years before the first of the standard years. It might be that in one or two cases—though I do not suppose it would be many—one might want to go back further than that.
The difficulty is to limit it so as to enable the Revenue to get the information they are entitled to have and, at the same time, to prevent any possible abuse of their powers. In that connection I think it is worth bearing is mind that there has been no criticism of the exercise of their powers under a similar section in the 1939 Act. I am not aware of any criticism, I do not know whether the right hon. and learned Gentleman is.
I am fully apprised of the point made by the right hon. and learned Gentleman and if he will withdraw his Amendment I will certainly consider, between now and the Report stage, whether it is possible to redraft this part of the Clause so as to ensure that the Revenue have the powers they want—and which the right hon. and learned Gentleman wants them to have—and, at the same time, have not got powers to go back for 100 or 150 years. It may be that one would have to do that without any specific reference 1023 to a period of years. I think that it may be possible to do it and, in the hope that it is—though I cannot promise anything —I ask the right hon. and learned Gentleman to withdraw his Amendment so that we can make further progress.
§ Mr. Austen Albu (Edmonton)Before my right hon. and learned Friend answers the Solicitor-General, I must say that we feel that it has certainly been worth while putting down this Amendment and drawing from the Solicitor-General the statement which he has just made, because it is quite clear that these particular and possibly exaggerated precautions have been overlooked.
We are rather glad to see that the precedents for this Clause are contained in the Conservative Party Acts of 1937 and 1939. In future, when we are sitting on those benches, I hope that we shall not be accused of snooping when we put into Bills of this or any other type Clauses designed purely for the purpose of enabling necessary information to be obtained.
I hope that the Solicitor-General will bear in mind that there are good reasons for putting down this Amendment. After all, the period we have suggested goes back only five years before the standard period. It might be a little short, and I agree that we might want a rather longer period; but many things can happen in the life of a company. Documents may be lost. All companies are not very good at keeping documents, and this period includes the war period, in which a large number of documents were lost in bombing, so that it might be difficult to reconstruct the information. Another reason is that the form of computation of profits over a period of years has no doubt changed in conformity with changes in taxation legislation. To go back for a longer period might create very great difficulties for companies in trying to reconstruct their profit figures.
As the Solicitor-General has made this offer I do not suppose that my right hon. and learned Friend will want to press the matter to a Division; but I think it is a warning to hon. Members opposite—particularly the hon. Member for Heeley (Mr. P. Roberts) who made such an impassioned plea about snooping—that 1024 they must be careful not to make accusations when we require, in future legislation, enactments which are necessary purely to ensure that that legislation can be implemented.
§ Mr. JayWill the hon. and learned Gentleman assure us that, in the course of his deliberations before the Report stage, he will consult the hon. Member for Orpington (Sir W. Smithers), who has taken a great interest in the subject of snoopers?
§ Mr. MitchisonI should like to make a short appeal to the Solicitor-General. I do not think that he has any idea how mischievous and troublesome is the mere accumulation of ancient records. The effect of this kind of legislation is to make people keep documents which they' would not otherwise have kept. It is bad for them; it is bad for those who work for them, and it is bad for the waste paper merchants, who ought to be encouraged to use these documents for a better purpose.
§ The Solicitor-GeneralI have listened with interest to the hon. and learned Member for Kettering (Mr. Mitchison), but I am sure he is aware that one of the places which collects the most valuable old records is in his own constituency.
§ Mr. MitchisonIt is no good collecting records. This Government will not allow them to be shown to the public. The point is that we should be getting rid of waste paper.
§ Sir F. SoskiceI am grateful to the hon. and learned Gentleman for the answer he has given and for the undertaking that he will think further about this matter. In view of what he has said I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
§ The Solicitor-GeneralI beg to move, in page 58, line 38, at the end, to insert "trade or."
This is a purely drafting Amendment. The words "trade or" were omitted by an oversight from the original draft.
§ Mr. CallaghanI should like to ask a question for the purpose of clarification. None of us likes to put unnecessary words into Bills of this sort, and I remember 1025 the very powerful speeches which were made by the hon. and learned Gentleman in the last Parliament; but what is the difference for Income Tax purposes, between a trade and a business which necessitates the adding of these words?
§ The Solicitor-GeneralI think the hon. Member will find that in Income Tax Acts these words are nearly always in conjunction. There have been a good many legal decisions on this particular part of the Income Tax Acts and it might lead to great complications if we found "business" without "trade or." If the hon. Gentleman desires it, I will certainly draw his attention to various passages in the text-books.
Amendment agreed to.
§ The Solicitor-GeneralI beg to move, in page 59, line 21, to leave out from "Section," to "(which," and insert "five hundred and four of the Income Tax Act. 1952."
This Amendment corrects a drafting error. Section 34 of the Finance Act, 1942, was repealed, as from the year 195253, by the Income Tax Act, 1952, and it is replaced by Section 504 of that Act.
Amendment agreed to.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
§ Mr. MitchisonThere are some words here for which I believe there are abundant precedents, and they are these:
…any oath taken by any such person"—that is to say—All Commissioners and other persons employed for any purpose in connection with the assessment or collection"—of this tax—…as to secrecy with respect to Income Tax shall be deemed to extend also to secrecy with respect to the excess profits levy.7,30 p.m.I believe that there are quite a number of precedents for this iniquitous piece of legislation, but it is too much that we should go on enacting this kind of thing. I wonder how many times the Solicitor General has said to a witness in the box, "Remember, you are on oath." I wonder how many times we have had to rise on some occasion or another in due and proper respect for an oath taken. I wonder how many times we have been reminded, not only in the ordinary course 1026 of life in this country but in other ways, that there still is, or ought to be, some respect for the sanctity of an oath.
What is being done in this case is simply this: a large body of public servants, who have been duly sworn to secrecy with respect to Income Tax, suddenly find that, by an Act of this House, that solemn and personal obligation is transferred to another field and they are deemed to have sworn that they will keep secrecy on a different matter. I am not in the least objecting to the secrecy, which I think is only right and proper. I am not in the least objecting to that secrecy being enforced and giving the sanction of an oath. What I am objecting to is that, when an oath has been taken on one matter, we presume to extend that high personal obligation to something different. I suppose the reason is that it is more convenient to do it in this way.
The Government are, of course, engaged on an economy campaign, but could not they possibly spare the time and the money to swear in these gentlemen again and to maintain some kind of respect for this sort of obligation? I should have thought that the Tory Party would be the last people to sanction this practice. I know that this has been done before, but we can go on doing this kind of thing until the moment comes when we look round and say, "Look what we are doing; is it not time we stopped?" I ask the right hon. and hon. Gentlemen opposite to consider whether it is not about time that they stopped. If they do, they will maintain the individual obligation, the sanctity and the sanction of an oath at the expense of a little time and trouble—if they like, a little public time, too, in re-swearing a number of civil servants and others. Surely it is worth it.
If we are to use the oath in our courts in the way that we intend, and if in our other affairs we use it as we intend, then surely the sanctity and solemn obligation of an oath is worth something. I am sorry that an Amendment to this effect was not called, but I feel justified in asking whoever is to reply to take the opportunity of doing the right thing at long last and of removing these iniquitous words on the Report stage.
§ Mr. MaudlingI also regret that the Amendment in the name of the hon. Member for Stechford (Mr. Roy Jenkins), 1027 the speech for which has been made by the hon. and learned Member for Kettering (Mr. Mitchison) on the Question that the Clause stand part of the Bill, was not called, because it was my right hon. Friend's intention to accept it. It is quite true that the words "and any oath" are not appropriate in this context and are not necessary, and my right hon. Friend will be glad to take the appropriate steps on Report Stage to remove them.
If I am asked why they were inserted in the first place, the answer is that they were taken from the latest precedent when a new tax was introduced—Section 67 of the Finance Act of 1948, which imposed the Special Contribution.
§ Mr. Douglas Houghton (Sowerby)Does the hon. Gentleman's answer mean that it is proposed to swear the whole of the Inland Revenue Department in order that the oath may also cover secrecy on matters coming to their notice under the Excess Profits Levy?
§ Mr. MaudlingI have not the knowledge of the hon. Member for Sowerby (Mr. Houghton) on these affairs, but I am given to understand that the question of an oath does not arise. It is a question of a declaration. If the words "and any oath" are excluded from the Clause, as hon. Members wish, then the same obligation of secrecy will apply in respect of the levy as applies in connection with the Income Tax. The declaration—and it is not an oath—will be effective for the purposes of the Excess Profits Levy.
§ Mr. MitchisonMay 1 thank the hon. Gentleman for the undertaking he has so kindly given?
§ Clause, as amended, ordered to stand part of the Bill.