HC Deb 28 May 1952 vol 501 cc1457-77

Subsection (1) of section thirty-one of the Income Tax Act, 1952 (which relates to the power of the Commissioners of Inland Revenue to require the production of accounts and books) shall be amended by substituting the word "surveyor" where reference is made to the "Commissioners of Inland Revenue."—[Mr. Gaitskell.]

Brought up, and read the First time.

8.15 p.m.

Mr. Gaitskell

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

It is commonly asked nowadays how it is that with the present rate of taxation in this country there is still so much extravagance. I am sure hon. Members have had that question put to them. I certainly have had it put to me, not only in this country but even recently when I was in the United States. The answer, I think, is first of all that some people supplement any spending out of income by drawing on their capital and they may also be further assisted in that respect by capital gains. Secondly, so it is commonly believed, they are able to charge up to an expense account quite a lot of what they spend, and thirdly, there is tax avoidance and tax evasion.

At a later stage we shall be discussing the question of expense accounts. Some of my hon. Friends have put down an extremely important new Clause which I fear we shall not reach until well on into tomorrow, but I am sure it will be a very interesting debate when we get there. This Clause is designed to assist the campaign against tax evasion. It is not concerned with tax avoidance; I should like to make that plain. It, therefore, continues the good work that we began last year in trying to amend the law so as to strengthen the powers of those whose job it was to enforce it.

The Committee will agree that there is widespread anxiety about the persons who do escape the net of taxation. That is a very serious thing, because whereas high taxation is, no doubt, always regarded in itself as an unpleasant thing, nevertheless so long as people feel that it is fair as between different members of the community, the British at any rate are inclined to accept it. But if they feel that the net is drawn so loose that all sorts of people are able to evade taxation it naturally has a bearing upon their own attitude to paying taxes.

Let me give one or two examples. Where there is, in the case of some small businesses, fraudulent withdrawing, or extraction—as I believe it is called by the Inland Revenue officials—of net receipts, these, of course, being withheld and a lower profit shown, supported if necessary by fraudulent records; where there is under-valuation of assets, which again enables the firm or person concerned to show a lower profit and, therefore, pay a lower tax; where there are perhaps concealed secret reserves, sometimes even secret accounts, I am sure that we would all agree that this is something which we have to try to do our best to eliminate.

I also hope to carry the Committee with me in saying that it is clearly essential that those concerned with the enforcement of the law should be able to get access easily and quickly and without difficulty to the original records and accounts. I dare say many hon. Members may believe that tax inspectors already have all the powers that are necessary, and I must confess that I was surprised to find that this was not so. But I am afraid there is no doubt that at the moment the tax inspectorate is directly hampered by what seems to me in some respects a rather antiquated system, and this Clause is designed to make a small but useful improvement which will help the inspectorate considerably.

One reason for this is, of course, that in the legislation Income Tax inspectors are not treated as officials—not as ordinary members of a Civil Service Department acting in the name of a Minister. They are separate persons. They are surveyors, and in contrast with the various commissioners—various types of commissioners—with whom the power lies. The second point is that even these commissioners, although they certainly have the powers, are restricted or limited in certain ways.

I expect the Committee will be aware that, so far as the ordinary individual is concerned, he is required only to fill in the necessary form which is sent to him saying what his profit may be. It is on an appeal to the general commissioners that the question of powers to compel the production of accounts and records arises. They—the general commissioners—of course, have this power if they are. not satisfied with the statement that has been put in. The inspector has the right to copy any of the documents which are then produced, but each time that he wants to obtain additional information he has to go to the general commissioners and seek their permission.

I submit to the Committee that that must, in the nature of things, lead sometimes to an awkward position, because he may have information of a very indefinite character—nothing more, perhaps, than a suspicion, or something he has heard. He may not by any means wish to disclose it, and it may be, in fact, rather awkward at that stage to disclose it, until he has been able to confirm suspicions he may have had. He is rather in this position, that he has, may be, no more than a hunch based on some slightly suspicious-looking figures.

Real proof, even, one may say, a prima facie case will depend on the production of the records and accounts, and he cannot get those until he has convinced the Commissioners that there is, so to speak, a prima facie case. I must add to that that, of course, there is one other method open to him, and that is to persuade the Commissioners of Inland Revenue themselves, who also have powers in this matter. That means, however, of course, quite an elaborate business of submitting the whole case to the Commissioners, who have to be in a position where they are not satisfied with the statement delivered by the person concerned.

Now, this new Clause is a very simple one, and it simply substitutes the word "surveyor" for the words "Commissioners of Inland Revenue" in Section 31 of the 1952 Income Tax Act. That Section is, of course, the one which gives the Commissioners of Inland Revenue these powers to compel where necessary the production of the accounts and documents and so on. It would, therefore, make it possible for the inspectors, without referring the matter to headquarters, when they are suspicious to obtain these necessary documents.

I should have thought that this was a very reasonable thing to concede. Let me say at once that I think that in the overwhelming majority of cases the ordinary business would, of course, produce anything that the inspector of taxes required. But that is just the point. It is in the unusual case—of the man who is really trying to evade the law—that difficulties may arise. If hon. Members opposite are sincere in their desire to stop tax evasion, as they continually tried to maintain last year, despite their opposition to a great deal of last year's Finance Act, then they should certainly agree with us that this small step is one we should now take to strengthen the powers of the inspectorate.

Sir Richard Acland (Gravesend)

I should like to support this new Clause, which, I think, is one of several on the subject of tax evasion and avoidance, which seems to me a most important subject at this time. We are divided into two classes in many ways, but one way in which we are divided into two classes is this, that we are divided into the class of those people whose incomes are known beyond peradventure—very often perfectly well known to the neighbours because of the jobs people declare they do, but certainly well known to the Inland Revenue—beyond all difficulty of ascertaining the amount.

In that class, of course, are all wage earners and salary earners, all on pensions—and, to be perfectly fair, all who are pure rentiers, who draw their money from interest on National Savings or for dividends on shares which they hold in large companies, where, although their neighbours may not know what the income is, there is very little opportunity for deceiving the Inland Revenue inspectors.

Then in the other class, much smaller in numbers but probably, man for man, very much wealthier than the first class I have dealt with, are the people whose incomes it is extraordinarily difficult for anybody to know exactly—difficult certainly for their neighbours, and at least almost as difficult for the Commissioners of Inland Revenue. Those people are engaged in all sorts of different kinds of trade and commerce. The wholesaler in the vegetable market at Covent Garden—who knows what that man is really getting today?

People in my constituency, who try to do a decent day's work, have a shrewd idea that many people in that sort of position are getting away with a lot, and that does spread a rather discouraging atmosphere. It is perfectly obvious up and down the country that a lot of money is being spent, and one does not know where it comes from—if one simply takes the Treasury's figures of how many people there are earning incomes of the different sizes it says are being earned, and of the numbers of the incomes of the size on which Income Tax is being paid.

I remember reading a very long time ago, when the Labour Government were in power, in 1949, a piece in that admirable periodical the "Tribune" —not by one of its regular contributors, but by a gentleman named Mr. Hutchinson, now a correspondent of the "Daily Mirror," I believe. He wrote: "It is socially imperative to do something quickly to end the legalised robbery of the people by the suppliers and distributors of food, clothing, consumer goods and services. And it is precisely here that nothing is being done. What is happening is that the greatest social advance ever made by Britain is being sabotaged by the riff-raff of private enterprise, which happens to be that part of the system with which the working man and his wife come into daily contact. The average working man is being gypped—and he knows it He is being gypped by people in very obscure positions in commercial transactions who have succeeded in concealing from the Inland Revenue Department their operations.

There is among our people—I will not say hatred—but smouldering resentment against what is going on now, and if Parliament and if the Government can see their way to accept this new Clause. to take resolute action against these people, it will result—I do not say in the revolutionary effect of hundreds of millions of pounds of greater collection of tax—but in a very large increase in the collection of tax; and it will be an encouragement to the ordinary man who is paying his tax, because he will see that the Government are prepared to take action in the cases of people who persistently evade their payment of tax.

Mr. Maudling

The question of tax evasion is, of course, very important. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) moved this Clause, as we should have expected of him, in moderate and measured terms, and I would hope that we could discuss this subject apart from party or class bias, because that is quite unnecessary and quite inappropriate. It is true that there is tax evasion in this country. That tax evasion is not confined to any particular section or class of the community; nor is it confined to traders. Wage earners—of all classes of the community—are in a position to avoid tax—or rather to evade tax, because it is evasion we are discussing now. It is a general problem, and I hope we can approach it as a general problem.

Mr. Mulley

The hon. Gentleman would not mislead the Committee by suggesting that this applies to Schedule E as well as to Schedule D? This Clause is purely for Schedule D. Although the temptation, perhaps, to evade tax is widespread, as the hon. Gentleman says, the opportunity—and that is the relevant point—to evade tax is much greater under Schedule D than it is among the wage earners.

8.30 p.m.

Mr. Maudling

The hon. Gentleman is quite wrong. It is easy for a wage earner to evade tax by not declaring casual earnings. I do not want to enter that discussion; I want to point out that the question of tax evasion should be approached and dealt with as a national problem.

Though it is true that there is substantial evasion of tax and that the revenue authorities have been making a drive against it for some time, I should say that there is less tax evasion in this country than in any other country in the world. The standard of probity of the British taxpayer is exceedingly high. It is sometimes said that if anything is liable to bring this Empire down it is because we have a too efficient tax-gathering system.

We must get this matter in perspective. If we talk too much about tax evasion we may give people abroad a wrong impression about our tax morality, which I consider bears comparison with any country in the world. But the question of evasion is an important matter, and the revenue authorities have been making a drive against evasion, and that drive is continuing, because the higher the burden of tax on the people the more intolerable it is that certain people by evading their legal burdens throw an even greater burden on those who pay their taxes.

The question which arises from the proposed Clause is whether we should in this way assist the revenue authorities in their job of preventing evasion. It is the desire of the Government, as it is the desire of the Committee, that everything possible shall be done to prevent tax evasion. On the other hand, we must also bear in mind the sound principle that it is wrong to give the Executive additional powers over the individual citizen unless they are necessary. That is a general statement of principle with which all will agree.

The powers contained in Section 31 of the 1952 Act, to which the proposed Clause refers, are reproduced from Section 35 (1) of the 1942 Act, which was introduced by the coalition Government. It was made clear at that time by the then Attorney-General that those specific powers were reserved to the Commissioners themselves because it was considered, in the first place, that they should not be used lightly, and, in the second place, that they should be used consistently throughout the country. If they are used by the central authority, they will be used consistently.

It is a fact, as the right hon. Gentleman pointed out, that the overwhelming majority of traders put in their accounts in a proper and honest form and no question of evasion arises, but there is a minority of cases in which the possibility of evasion does arise. What are the powers which already exist? The additional Commissioners—they are the local unpaid assessing authority for Schedule D—have the power when they think that there is any evasion to raise an assessment on the trader at a figure which they consider to be the right figure. It is then for the taxpayer, if he thinks that it is too high, to appeal against it. That appeal goes to the local general Commissioners and they have the power in those circumstances to demand that the trader produces his account. That is a very effective sanction, and it is the sanction which is normally used.

The powers under the Act of 1942 which are reproduced in the Act of 1952 are used only in cases of wilful default or possible fraud. The powers are twofold. In the first place, there is the power to demand from the taxpayer copies of his accounts and that power is used by the Commissioners of Inland Revenue themselves in cases where a taxpayer proves recalcitrant and refuses to produce adequate accounts.

The second power, which is to demand the actual business books themselves, is used only in cases of suspected fraud. Cases of suspected fraud are dealt with not by the local inspectors but by specialist officers, and that is why those powers are not given to the local inspectors who do not deal with cases of suspected fraud.

I am advised that the Board of Inland Revenue consider the existing powers adequate and that it is right that the exercise of the powers referred to in the new Clause should be confined to themselves. Referring to the principles which I enunciated at the beginning, I suggest that while we should do everything we can to strengthen the hands of the Executive in dealing with tax evasion, we should not seek to thrust upon the Executive powers over individual citizens which they do not consider they need in pursuance of their duties

. In these circumstances, I hope the Committee will realise that in asking the Committee to reject the proposed Clause I am not attempting to protect the tax evader or to weaken the position of the Inland Revenue, but because I am convinced on the information given to me that adequate powers already exist to deal with the problem, which is a serious one and one which Her Majesty's Government are fully determined to continue pursuing in the way in which their predecessors vigorously pursued it.

Mr. Julian Snow (Lichfield and Tamworth)

I never stop admiring the facility with which the hon. Gentleman makes that sort of speech, and I congratulate him on it, but, on the other hand, there is this to be said, that when he says that the powers of the Commissioners stem from the 1942 Act he might reconsider the Clause, because what may have been apparent regarding evasion in 1942 bears no relationship at all to what happened in the post-war period.

This is not peculiar to this country by any means. I hope the hon. Gentleman will not again press the argument that the tax-paying morality of this country is of a far higher standard than that of any other country. I have heard that argument used before. My right hon. Friend the Member for South Shields (Mr. Ede) used it on one occasion when I suggested that the licensing laws of the country were out of date and should be abolished. He replied that there was less drunkenness in this country than on the Continent, and I said that I thought that was a highly Jingoistic argument, and I make the same comment about that sort of argument applied to tax evasion.

It is apparent that in the post-war period there has been substantial tax evasion, not on the part of individuals in the community who do not correctly see where their duty lies, but in certain categories of trade and commerce which lend themselves to tax evasion and where, for all I know, the people consider that they have been unsatisfactorily treated by the forms of tax.

Therefore, if the Government of the day passes a tax and the tax is maintained and sustained by the following Government—that is the position in many cases with the present Government—then, knowing that there has been substantial tax evasion, it is the duty of the House, and not the Commissioners of Inland Revenue, to decide what additional powers are necessary. Bearing in mind what has happened since the end of the war, additional powers are obviously needed.

I realise that there is a great deal of sensitivity about giving additional powers to inspectors. This is not a party matter at all, for we do not like extending these powers, but, on the other hand, when the national economy is suffering and when people in the lower income groups suffer because people in the higher income groups are not paying their taxes, it is for the House of Commons to decide that additional powers are necessary. I hope that the hon. Gentleman will consider this point.

Mr. Baker White (Canterbury)

Like all hon. Members on both sides of the Committee, I am anxious to see anything done to stop tax evasion, but it is wrong to allow to go out from here unanswered the grave and very general charge made by the hon. Baronet the Member for Gravesend (Sir R. Acland) against traders in Covent Garden Market. He may not have meant it as such, but that is how it will appear in the OFFICIAL REPORT tomorrow.

Sir R. Acland

I am sorry if I appeared to make a general charge against such traders. When my words are read, I think they will be found to be giving an example of the sort of place where some of the traders are getting away with tax evasion. I could have selected many other examples.

Mr. Baker White

I am glad to have that assurance from the hon. Member, because there does not exist in Covent Garden any more evasion than in many other places. Might I make my association with Covent garden perfectly clear? I have had an experience of Covent Garden and other markets from the selling end for over 30 years. I have no interest in the market except the sending of my goods to be sold there. One can point to cases of tax evasion in Covent Garden and other markets just as one can point to them in other trades, but my experience is that those who work in Covent Garden are a body of respectable and honest citizens.

There are three safeguards against tax evasion. The Ministry of Food have power to inspect the trader's books. If there is any doubt between a grower and the market man the National Farmers' Union have power to inspect the books. There is a further safeguard. The National Federation of Fruit and Potato Trades, Ltd., exercises a supervision and secures a proper standard of dignity. I am glad of the hon. Member's assurance, because I do not think that what he said would apply to the market or the people who are in the market. They are not a dishonest people at all.

Mr. George Benson (Chesterfield)

We on this side of the Committee welcome the speech of the hon. Member for Canterbury (Mr. Baker White) because we are asking for certain additional powers for inspectors of taxes, including the power to inspect the books. The hon. Member has told us that in the markets there are two bodies who have power to inspect the books of the traders, the Ministry of Food and apparently the National Farmers' Union. That is extremely useful knowledge which is new to me. If it is correct, I see no reason why this power to inspect the books of traders should not be given to the Board of Inland Revenue.

Hon. Members opposite have told us that the Board of Inland Revenue have quite sufficient power. Such people as local inspectors of taxes consider that they have not sufficient powers. They have very strong views on it. Why is it wrong that they should have the power? Why is it wrong to increase the powers of the Executive—I think that was the particular phrase used by the Parliamentary Secretary—in this matter? Everybody who is liable to tax is supposed to produce details of their income. Merely to inspect the books to see if those particulars are correct is surely not a very large extension of the power.

The terrific resistance on the part of hon. Gentlemen opposite to any investigation by the taxation authorities into income is a hangover from Pitt's time. When Income Tax was first introduced it was looked upon as such a tyrannical tax by this honourable House that it was thought quite outside the bounds of possibility to entrust that power to the Executive. The result was that Income Tax was first collected not by the Treasury or by the Government, but by local commissioners of taxes who were appointed by the local bench. This idea that the Executive or the Board of Inland Revenue has no right to investigate the financial affairs of a private individual is a hangover from that time.

8.45 p.m.

We know that a certain amount of tax evasion goes on, but I do not think it is a very large amount. There is a certain amount of it and, with the high rate of taxation, not merely does it throw an additional burden upon the honest taxpayer, but it gives an enormously increased incentive to tax evasion. Anybody who has talked on this matter with a local inspector of taxes knows that to find any trace of this evasion is very largely a piece of detective work. The bulk of the ordinary cases of evasion by commercial firms are generally discovered not by any suspicion that is aroused by the books of the firm, but as a result of the investigation of the books of other companies with whom the particular evading firm is trading. Certain accounts and entries may be found in the books of the honest firm with no corresponding entries in the books of the dishonest firm.

It is little hints like that which put the inspector of taxes on to the possibility that a certain firm is keeping double books or is evading taxation. For that reason the inspection of books is very valuable in the building up of a case. In order to discover evasion this power ought to be granted. The inspector of taxes might suspect that there is some jiggery-pokery going on in the case of certain firms, but before he can get access to the books he has got to convince the Additional Commissioners first and, after that, he may appeal to the Special Commissioners. He is tremendously hampered in building up his case, because he cannot get at the books themselves. I do not think the Parliamentary Secretary has made out a valid case against this new Clause.

Mr. Mulley

I am sorry to detain the Committee—some people seem to be looking at the clock—but although on paper this seems a simple and unimportant Clause, it is very important. It is consistent with the line which we have adopted all along, unlike the attitude of hon. Members opposite who, when in opposition, pursued a different line to that when they became the Government. We are consistent in this matter of tax evasion,

I agree with the general views which the Parliamentary Secretary expressed about the morality of the British taxpayer. I am quite sure that the average British workman would not wish to evade his full tax responsibility but I would suggest to the Parliamentary Secretary that before he comes to the Committee with stories about giving more powers to the Executive and the Gladstonian view of Income Tax returns, he should remember the man who pays under Schedule E, for example, the ordinary British workman. His money is being taken away before he gets his week's earnings, and in view of that it is not unreasonable to ask that Inland Revenue Inspectors should have the right to inspect the accounts of any firm.

The same is true—I do not want to present a "worker versus non-worker" issue on this point—of the man who has investments in a public company, where tax is deducted at source. His money is taken away before he knows what his in come from that source is to be. The position in regard to Schedule D is that so long as the taxpayer fills in a prescribed form he does not have to submit an account to the Inland Revenue. Neither the inspectors, the Board, nor the Commissioners, have power to make accounts be kept.

The Parliamentary Secretary said that the machinery is simple. What happened was that the Additional Commissioners, if they were not satisfied with the return, made an assessment of the amount they think proper. How can an Additional Commissioner make an assessment that he thinks proper if he has not the accounts on which to make it? Of course, by this machinery he makes an unusually high assessment and brings forth an appeal from the person assessed, and by virtue of the appeal he then has power, not to examine books but merely to examine and copy the accounts.

I used to think that hon. Gentlemen opposite were against red tape, but we have the Parliamentary Secretary tonight solemnly saying that this is a perfectly satisfactory arrangement. Three or four stages have to be gone through, with public servants at the public expense going through this rigmarole in order that accounts of a doubtful character might be examined. If the accounts do not appear to be satisfactory, the Income Tax inspector has to go to the Commissioners for permission to examine the business books.

It may be necessary to go as high as the board of Inland Revenue, to see the full business books and the records of the firm. To establish such a claim, evidence has to be produced by the Inland Revenue inspector that there is some irregularity, or that he has a prima facie case of it, in order to make it justifiable for this machinery to be set in operation, and to persuade the Commissioners on the one hand, or the board on the other hand, to give him the necessary permission.

When a great number of people are having their taxes taken away even before they know what their income is, it is not unreasonable to ask that the inspectors should have discretion in asking to see the accounts. The proposed new Clause does not go so far as asking to see the books. The Parliamentary Secretary, with his newly found enthusiasm for anti-tax evasion, may care to introduce—we could not do so—

Mr. Maudling

I do not know what anti-tax evasion is.

Mr. Mulley

I was trying to economise in the time of the Committee. I should have said "enthusiasm for taking steps to prevent or limit the possibilities for tax evasion." I am sorry that my shorthand fell on unaccustomed ears.

Finally, I should like to contrast this position with the Customs and Excise position, to show that we are not asking for any new principle. We are only asking for powers to be given to the Income Tax inspector that are already given to the officials of the Commissioners of Customs and Excise. If the Parliamentary Secretary will refer to the Finance Act (No. 2) of 1940, he will find, in Section 33, that the Commissioners of Customs and Excise may make regulations … (f) for requiring registered persons to keep accounts, and (h) for requiring any persons … to produce for inspection any books or accounts or other documents of whatever nature relating thereto. I see no logical difference for distinguishing between the Inland Revenue official and the Customs and Excise official. In inspecting for Purchase Tax —the 1940 provision was in respect of Purchase Tax—they will very largely see the same books. We have it from the hon. Member for Canterbury (Mr. Baker White) that in Covent Garden, at any rate, traders have to show their books to the representative of another Minister, the Minister of Food. They show them to other people, like officials of the National Farmers' Union. Only a small majority of traders would find any objection to the provision, and they are the small majority of traders who are evading their just dues. They would only object, because the purpose of the proposed new Clause is to bring them into line with their proper assessments.

The final point is that there are certain aspects of financial affairs, such as secret reserves and the extraction fraud to which my right hon. Friend made reference, and which can only be found —even by a qualified and enthusiastic accountant—by a full study of the original books and records. It is impossible to pick it up from accounts, and accounts are not available except after a certain amount of red tape.

I ask the Parliamentary Secretary to present a more considered view on the Clause. If he cannot accept the Clause now, can he say that by the Report stage he will come forward with something that will meet the point of view of my right hon. Friend? It is not satisfactory that he should reply early in the debate and not make any reply to later speeches.

Mr. F. Blackburn (Stalybridge and Hyde)

My intervention will be brief. I only want to put one point to the Parliamentary Secretary. I think he said that these provisions were first put into the 1942 Act. I think he will agree that there is some tax evasion, and obviously therefore the machinery which we have is not satisfactory to meet the present position. Whatever the views of the Commissioners of Inland Revenue may be, we need better machinery than we have at the present time. I ask the Parliamentary Secretary to look again at the proposed new Clause, to see whether it is not possible to accept it. It would strengthen the position by making it much more difficult to evade taxation.

Mr. Maudling

I have listened with great care to the arguments put forward, and I am afraid I am not convinced by their validity. Since 1942, powers in respect of evasion have been confined to the Commissioners of Inland Revenue. It is true that there is still tax evasion, but there has been tax evasion since the beginning of time, and it will continue.

The main difficulty about checking tax evasion is the shortage of trained and experienced staff. If I believed that these powers were necessary and desirable to assist in checking tax evasion it would be different, but in the light of the arguments put forward and of the advice I have received, I do not think that the proposed powers are necessary to check tax evasion. It is most important that we should not extend the powers of the Executive over the individual, unless it can be shown that they are necessary. I cannot possibly accept the proposed new Clause.

Mr. Mulley

Why is it possible to give these powers to the Customs and Excise officials and not to those of the Inland Revenue?

Mr. Maudling

Circumstances are entirely different with the Customs and Excise.

Mr. Gaitskell

The Parliamentary Secretary's reply is totally unsatisfactory. Once again he has accepted the general case, but shows that he was not really sincere in accepting the general case by turning down perfectly good arguments on a particular proposition.

Mr. Maudling

I do not know what the right hon. Gentleman means by "not being sincere in the general case." Does he mean that I am sincere in accepting the general case that tax evasion should stop?

Mr. Gaitskell

I certainly will not withdraw my remark I meant it in the political sense. We would not wish to give the hon. Gentleman any pain or offence in a personal way. Politically, it is very insincere when, time and again, we put up proposals based on certain principles, the principles are accepted and the arguments are regarded as very sound, but the Government simply say, "No, sorry, we could not accept the proposal."

9.0 p.m.

What are the arguments that he has brought up? To start with he says it is a bad thing for the Executive to have these powers. What does he mean by the Executive? He referred later on to the Commissioners of Inland Revenue as the Executive. If the Commissioners of Inland Revenue are the Executive, they have the powers at the moment and it is simply a minor point as to how effectively one can administer this tax as to whether the Commissioners in London should have it or the local inspectors.

He cannot get away with that argument. If, on the other hand, the Commissioners are not the Executive, then he

cannot claim that their advice is particularly sound on this. For instance, has he asked the Association of Tax Inspectors what they think about this issue? Has he asked any tax inspector? My hon. Friend is perfectly right. Of course if the hon. Gentleman were to ask a tax inspector, he would say, "We would like to have these powers, they would help us a good deal." The hon. Gentleman must understand that we are not content to leave this matter of tax evasion where it is.

Mr. Maudling

Why is it only now in 1952 that the right hon. Gentleman proposes an extension of these powers?

Mr. Gaitskell

I have already explained. I should have thought that the hon. Gentleman would have done us this credit, that we put many measures to restrict tax evasion into the Bill last year. Despite a great deal of opposition from the then Opposition, we carried them through. Had more Parliamentary time been available to us, I should have wished to go further that year, but we had every intention, if we had been sitting on those benches opposite this year, of continuing with this work, which the Government have completely failed to do.

The hon. Gentleman has given no answer at all to the relevant point of my hon. Friend about the contrast with the Customs and Excise. The powers which those officers have in respect of Purchase Tax are far more sweeping and adequate. This is a relic, a bit of an antiquated system, and the hon. Gentleman and the Chancellor should look into it properly to see if they cannot improve the system of tax inspection. It is no use their talking in general terms and saying that they are in favour of stopping tax evasion if they do nothing about it. In the circumstances, we shall certainly press this matter to a Division.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 187: Noes, 197.

Division No. 151.] AYES [9.3 p.m.
Acland, Sir Richard Benson, G. Bowles, F. G.
Albu, A. H. Bevan, Rt. Hon. A. (Ebbw Vale) Brockway, A. F.
Allen, Arthur (Bosworth) Bing, G. H. C. Brook, Dryden (Halifax)
Anderson, Frank (Whitehaven) Blackburn, F. Broughton, Dr. A. D. D.
Awbery, S. S. Blenkinsop, A. Brown, Thomas (Ince)
Bartley, P. Blyton, W. R. Burton, Miss F. E.
Bence, C. R. Boardman, H. Callaghan, L. J.
Carmichael, J. Hoy, J. H. Reeves, J.
Castle, Mrs. B. A. Hubbard, T. F. Reid, Thomas (Swindon)
Champion, A. J. Hudson, James (Ealing, N.) Rhodes, H.
Chapman, W. D. Hughes, Emrys (S. (Ayrshire) Richards, R.
Chetwynd, G. R. Hughes, Hector (Aberdeen, N.) Roberts, Albert (Normanton)
Clunie, J. Hynd, J. B. (Attercliffe) Robinson, Kenneth (St. Pancras, N.)
Cocks, F. S. Irving, W. J. (Wood Green) Royle, C.
Coldrick, W. Isaacs, Rt. Hon. G. A. Schofield, S. (Barnsley)
Collick, P. H. Jay, Rt. Hon. D. P. T. Shackleton, E. A. A.
Cove, W. G. Jeger, Dr. Santo (St. Pancras, S.) Shawcross, Rt. Hon. Sir Hartley
Craddock, George (Bradford, S.) Jenkins, R. H. (Stechford) Shinwell, Rt. Hon E
Crosland, C. A. R. Jones, David (Hartlepool) Short, E. W.
Cullen, Mrs. A. Jones, T. W. (Merioneth) Shurmer, P. L. E.
Dalton, Rt. Hon. H Keenan, W. Silverman, Julius (Erdington)
Davies, A. Edward (Stoke, N.) King, Dr. H M. Simmons, C. J. (Brierley Hill)
Davies, Ernest (Enfield, E.) Kinley, J. Slater, J.
Davies, Harold (Leek) Lee, Frederick (Newton) Smith, Ellis (Stoke, S.)
Davies, Stephen (Merthyr) Lee, Miss Jennie (Cannock) Snow, J. W.
Deer, G. Lever, Leslie (Ardwick) Soskice, Rt Hon Sir Frank
Dodds, N. N. Lindgren, G. S. Sparks, J. A.
Driberg, T. E. N. Logan, D. G. Steele, T.
Ede, Rt. Hon. J C. MacColl, J. E. Strachey, Rt. Hon. J
Edelman, M. McInnes, J. Sylvester, G. O.
Edwards, John (Brighouse) McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Evans, Albert (Islington, S.W.) McLeavy, F. Taylor, John (West Lothian)
Evans, Edward (Lowestoft) MacMillan, M. K. (Western Isles) Taylor, Rt. Hon. Robert (Morpeth)
Evans, Stanley (Wednesbury) MacPherson, Malcolm (Stirling) Thomas, David (Aberdare)
Ewart, R. Mann, Mrs. Jean Thomas, Ivor Owen (Wrekin)
Fernyhough, E. Manuel, A. C. Thurtle, Ernest
Field, W. J. Marquand, Rt. Hon. H A. Timmons, J.
Fienburgh, W. Mayhew, C. P. Tomney, F.
Fletcher, Eric (Islington, E.) Messer, F. Ungoed-Thomas, Sir Lynn
Forman, J. C. Mikardo, Ian Viant, S. P.
Fraser, Thomas (Hamilton) Mitchison, G. R. Wallace, H. W
Freeman, John (Watford) Monslow, W. Watkins, T. E
Gaitskell, Rt. Hon. H. T. N. Morgan, Dr. H. B. W. Weitzman, D.
Gibson, C. W. Morley, R. Wells, Percy (Faversham)
Greenwood, Anthony (Rossendale) Morris, Percy (Swansea, W.) Wells, William (Walsall)
Grey, C. F. Morrison, Rt. Hon. H. (Lewisham, S.) West, D. G.
Griffiths, Rt. Hon. James (Llanelly) Mort, D. L. White, Mrs. Eirene (E. Flint)
Hale, Leslie (Oldham, W.) Moyle, A. White, Henry (Derbyshire, N.E.)
Hall, Rt. Hon. Glenvil (Colne Valley) Mulley, F. W. Whiteley, Rt. Hon. W.
Hall, John (Gateshead, W.) Murray, J. D. Wigg, George
Hamilton, W. W. Neal, Harold (Bolsover) Wilkins, W. A.
Hannan, W. Oldfield, W. H Willey, Frederick (Sunderland, N.)
Hardy, E. A. Oliver, G. H. Willey, Octavius (Cleveland)
Hargreaves, A. Oswald, T. Williams, David (Neath)
Harrison, J. (Nottingham, E.) Paling, Rt. Hon. W. (Dearne Valley) Williams, Ronald (Wigan)
Hastings, S. Pannell, Charles Williams, W. R. (Droylsden)
Hayman, F. H. Pargiter, G. A Williams, W. T. (Hammersmith, S.)
Healy, Cahir (Fermanagh) Paton, J. Wilson, Rt. Hon. Harold (Huyton)
Henderson, Rt. Hon. A. (Rowley Regis) Plummer, Sir Leslie Winterbottom, Ian (Nottingham, C.)
Herbison, Miss M. Price, Joseph T. (Westhoughton) Woodburn, Rt. Hon A
Hewitson, Capt. M Price, Philips (Gloucestershire, W.) Wyatt, W. L.
Hobson, C. R. Proctor, W. T.
Holman, P. Pryde, D. J. TELLERS FOR THE NOES:
Mr. Pearson and Mr. Holmes.
NOES
Aitken, W. T. Brooman-White, R. C. Doughty, C. J. A.
Allan, R. A. (Paddington, S.) Buchan-Hepburn, Rt. Hon. P. G. T. Drayson, G. B.
Alport, C. J. M. Bullard, D. G. Drewe, G.
Amory, Heathcoat (Tiverton) Bullus, Wing Commander E. E. Duncan, Capt. J. A L
Anstruther-Gray, Major W. J Burden, F. F. A Duthie, W. S.
Arbuthnot, John Butcher, H. W. Elliot, Rt. Hon. W E
Ashton, H (Chelmsford) Butler, Rt. Hon. R. A. (Saffron Walden) Erroll, F. J.
Assheton, Rt. Hon. R. (Blackburn, W.) Carr, Robert (Mitcham) Fell, A.
Astor, Hon. W. W. (Bucks, Wycombe) Carson, Hon. E. Finlay, Graeme
Baker, P. A. D. Cary, Sir Robert Fisher, Nigel
Baldock, Lt.-Cmdr. J. M Channon, H. Fleetwood-Hesketh, R. F
Baldwin, A. E. Clarke, Col. Ralph (East Grinstead) Fletcher-Cooke, C.
Banks, Col. C. Cole, Norman Gage, C. H.
Barber, A. P L Conant, Maj. R. J. E. Galbraith, Cmdr. T. D. (Pollok)
Baxter, A. B. Craddock, Beresford (Spelthorne) Galbraith, T. G. D. (Hillhead)
Beach, Maj. Hicks Crookshank, Capt. Rt. Hon. H. F. C. Garner-Evans, E. H.
Bennett, Sir Peter (Edgbaston) Crosthwaite-Eyre, Col. O E. Godber, J. B.
Bennett, Dr. Reginald (Gosport) Crouch, R. F. Gomme-Duncan, Col. A
Bevins, J. R. (Toxteth) Crowder, John E. (Finchley) Gower, H. R.
Birch, Nigel Crowder, Petre (Ruislip—Northwood) Graham, Sir Fergus
Bishop, F. P. Darling, Sir William (Edinburgh, S.) Gridley, Sir Arnold
Black, C. W. Deedes, W. F. Grimond, J.
Boyd-Carpenter, J. A. Dodds-Parker, A. D Grimston, Hon. John (St. Albans)
Boyle, Sir Edward Donaldson, Cmdr. C. E. McA. Grimston, Sir Robert (Westbury)
Braithwaite, Lt.-Cdr. G (Bristol, N.W.) Donner, P. W. Harris, Reader (Heston)
Harrison, Col. J. H. (Eye) Macpherson, Maj Niall (Dumfries) Russell, R.S.
Harvey, Ian (Harrow, E.) Maitland, Patrick (Lanark) Ryder, Capt, R. E. D.
Harvie-Watt, Sir George Manningham Buller, Sir R. E. Salter, Rt. Hon. Sir Arthur
Heald, Sir Lionel Marshall, Douglas (Bodmin) Schofield, Lt.-Col. W. (Rechdale)
Higgs, J.M.C. Marshall, Sidney (Sutton) Scott, R. Donald
Hill, Dr. Charles (Luton) Maude, Angus Shepherd, William
Hill, Mrs. E. (Wythenshawe) Maudling, R. Simon, J. E. S. (Middelesbrough, W.)
Hinchingbrooke, Viscount Maydon, Lt.-Comdr. S L C Smithers, Peter, (Winchester>
Hirst, Geeffrey Medlicott, Brig. F. Snadden, W McN
Holland-Martin, C. J Meller, Sir John Speir, R. M.
Hernsby-Smith, Miss M. P Monckton, Rt. Hen. Sir Walter Stevens, G P.
Horobin, I. M. Nabarro, G. D. N. Storey, S.
Howard, Gerald (Cambridgeshire) Nicholls, Harmar Strauss, Henry (Norwich, S.)
Howard, Greville (St. Ives) Nicholson, Godfrey (Farnham) Studholme, H. G.
Hulbert, Wing Cmdr. N.J. Nicolson, Nigel (Beurnemouth, E.) Sutcliffe, H.
Hutchison, Lt.-Com. Clark (E'b'rgh W.) Nield, Basil (Chester> Tayler, William (Bradford, N.)
Jenkins, R. C. D. (Dulwich) Noble, Comdr, A. H. P. Thomas, Rt. Hon. J. P. L. (Hereford>
Jennings, R. Nugent, G. R. H Thomas, P. J. M. (Conway)
Johnson, Erie (Blackley) Oakshott, H. D. Thompson, Kenneth (Walton)
Johnson, Howard (Kemptown) Odey, G. W. Thompson, Lt,-Cdr, R. (Croydon, W)
Jones, A. (Hall Green O'Neill, Rt. Hen. Sir H. (Antrim, N.) Theroneycroft, Rt. Hn. Peter (Monmouth)
Jeynson-Hicks, Hon. L.W. Ormsby-Gore, Hon. W. D. Turner, H. F. L
Kaberry, D. Orr-Ewing, Charles Ian (Hendon, N.) Turton, R. H.
Keeling, Sir Edward Osberne, C Vesper, D. F.
Lambert, Hon. G. Partridge, E. Wakefield, Edward (Derbyshire, W)
Lancaster, Col. C. G. Peake, Rt. Hon. O. Ward, Miss I. (Tynemouth)
Langford-Holt, J. A. Perkins, W. R. D. Waterhouse., Capt. Rt. Hon. C.
Law, Rt. Hon. R. K. Peto, Brig. C. H. M Walkinson, H. A.
Legge-Bourke, Maj. E. A. H. Pickthorn, K. W. M. Wellwood, W.
Legh, P. R. (Petersfield) Powell, J. Enoch White, Baker (Canterbury)
Linstead, H. N. Price, Henry (Lewisham, W.) Williams, Rt. Hon. Charles (Terquay)
Lloyd, Maj. Guy (Renfrew, E.) Profumo, J. D. Williams, Gerald (Tonbridge)
Lloyd, Rt. Hon. Selwyn (Wirral) Raikes, H. V. Williams, Sir Herbert (Croydon, E.)
Longden, Gilbert (Herts, S.W.) Rayner, Brig. R. Williams, R Dudley (Exeter)
Lucas, Sir Jocelyn (Portsmouth, S.) Remnant, Hon. P. Wills, G.
Lucas, P. B. (Brentford) Renton, D. L. M Wilson, Geoffrey (Truro)
Lucas-Tooth, Sir Hugh Roberts, Peter (Heeley) Wilson, Geoffrey (Truro)
McCorquodale, Rt. Hon. M. S. Robinson, Roland (Blackpool, S.) York, C.
Macdonald, Sir Peter (I. of Wight) Robson-Brown, W.
Mackeson, Brig. H. R. Rodgers, John (Sevenoaks) TELLERS FOR THE NOES:
McKibbin, A. J. Roper, Sir Harold Mr. Heath and Mr. Redmayne.
Macleod, Rt. Hon. Iain (Enfield, W.) Ropner, Col. Sir Leonard