HC Deb 19 February 1953 vol 511 cc1426-8
13. Sir J. Crowder

asked the Chancellor of the Exchequer if he will cease demanding interest on unpaid Income Tax on interest credited to Post Office savings accounts, when the interest has not been withdrawn but has been allowed to accumulate with the Post Office.

Mr. Boyd-Carpenter

Under longstanding statutory provisions, where tax is lost by reason of the failure of a taxpayer to make an accurate return the taxpayer is legally liable to penalties in addition to payment of the tax due. It is only the practice to insist on some payment in respect of penalty in cases where the tax has not been paid as the result of some substantial default by the taxpayer. In such circumstances, it seems not unreasonable that the taxpayer should be required to pay to the Exchequer some sum in respect of the interest which he has enjoyed and the Exchequer lost by reason of his default.

Sir J. Crowder

Would my hon. Friend agree that it is very hard on these people to be asked for Income Tax on the interest on money which was put in the Post Office Savings Bank many years ago, and some of which was put in by wives unknown to their husbands? Could he not deal sympathetically with these people, some of whom have had money in the Post Office Savings Bank for more than 20 years?

Mr. Boyd-Carpenter

I think I made it clear in my original answer that penalties are sought to be imposed only where there has been some substantial default by the taxpayer.

14. Sir J. Crowder

asked the Chancellor of the Exchequer if he will consider exempting from Income Tax the interest credited to Post Office savings accounts provided such interest is not withdrawn for five years.

Mr. Boyd-Carpenter

My right hon. Friend regrets that he cannot accept my hon. Friend's suggestion.

Sir J. Crowder

Could not my hon. Friend consider having printed in the Post Office Savings Bank book in red ink a notice that interest on the money deposited is liable for Income Tax and arrange for the Post Office to explain the position to these depositors who are not aware that they have to pay tax on it? If they had known they could no doubt have bought Savings Certificates, but they left their money in the Savings Bank and have not drawn it out.

Mr. Boyd-Carpenter

I am inclined to think that there is a great deal in what my hon. Friend says, and I shall be happy to look into his suggestion.

Lieut.-Colonel Lipton

Could the hon. Gentleman also cause it to be printed in the Savings Bank book that only substantial evasions of tax will be provided against, and will he indicate how much "substantial" means?

Mr. Boyd-Carpenter

I am sure that is a matter on which individuals may wish to refer to their legal advisers.

Mr. G. Williams

In order to get over all these difficulties, could not the Chancellor of the Exchequer start a new series of Post Office savings which are not subject to taxation?

Mr. Boyd-Carpenter

That is another question.

Mr. D. Brook

Could the Financial Secretary also have printed in the Savings Bank book a notice that interest belonging to people whose incomes are below the Income Tax limit will not be subject to taxation?

Mr. Boyd-Carpenter

That is one of the complications that arise when one comes, with the best will in the world, to put advice to individuals into these books. That is one of the factors that one would have to consider.