Clause 15.—(AMENDMENT AS TO RELIEFS IN RESPECT OF PROPERTY BELONGING TO CHARITIES AND CERTAIN OTHER INSTITUTIONS OR OCCUPIED BY MINISTERS OF RELIGION.) (Hansard, 17 June 1958)

§ Sir F. Soskice

The Clause, I understand, is designed to give effect to recommendations contained in paragraph 920 onwards of the Royal Commission's Report. My right hon. and hon. Friends on this side of the Committee would think that that was a laudable objective and I have no more to say about it than that. There is, however, one slight drafting point that I would put before the Financial Secretary for his consideration.

Subsection (1) says that certain allowances to charities shall not be affected by reason of the occupancy by an officer of premises in respect of which the allowance is granted, never mind what his income is. The original Section of the Income Tax Act, 1952, which it purports to amend says that the allowance shall not be affected if the officer's income is not in excess of £150. If it is said that it does not matter what his income is to be, the result might be that the charity gets no allowance, simply because an officer is occupying the premises, never mind what his income is. Obviously, that is not the intention of the Government. Perhaps the Financial Secretary will be so kind as to say that he will look at this purely as a matter of drafting.

On the second subsection I simply want to put a question. It purports to repeal Section 479 (3) of the Income Tax Act, 1952. The Royal Commission said it could not understand what that repealed subsection meant. I certainly cannot understand it, and I have never met anybody who could understand it. Why a minister of religion should be empowered to ask that certain income on which he is not taxable should be treated as though it were his income in order that he can get tax relief on part of it, passes my comprehension. That is apparently what the subsection does. That is what the Royal Commission thought it did, and it is the opinion of those who have considered it that that is the intention.

I gather that the Inland Revenue has taken the bull by the horns and has 1053 interpreted it by giving the allowance to the body to which the dwelling occupied by the minister belongs. I can see the wisdom of repealing something which one does not understand, subject to the caution that one might be repealing something of inestimable but unperceived value. I trust that this has not been done by the Government's endeavours. If the Financial Secretary has been able to plumb the extraordinary depths of this subsection, which nobody else has been able to do, I am sure that the Committee will be grateful for the result of his researches.

§ The Solicitor-General (Sir Harry Hylton-Foster)

We will, of course, look into the drafting point mentioned by the right hon. and learned Member for Newport (Sir F. Soskice). I believe the Clause to be quite all right but, as a matter of courtesy and in the interest of getting it right, we will look at it and put anything right which turns out to be wrong. I hope that there is nothing.

I have some diffidence in trying to explain what has happened to Section 479 (3) of the 1952 Act. It has the great legislative advantage at the moment of being utterly valueless and obscure of meaning, and therefore it seems desirable to repeal it. In a moment, without detaining the Committee, I can explain how we believe it came about. Time was, before 1919, when the minister or the caretaker of the charity, or whatever it might be, who had rent-free use of the house was regarded invariably as the statutory occupier for the purpose of Schedule A tax. He was in worse plight than most Schedule A payers because, as there was no rent, he could not deduct the tax from his rent. His plight being miserable in this country, was rendered even more miserable by activities across the Border, because of the decision of a Scottish court that he could not treat the annual value of the house as part of his income. Therefore, he could not have it taxed on the basis of earned income at relieved rates.

Accordingly this subsection, originally a provision in the Finance Act, 1919, provided that if a minister occupied a house rent-free, by virtue of his office and the annual value of the house did not fall to be regarded as part of his income, he could claim that the annual value 1054 should be treated as earned income of his and so he had a reduced rate appropriate to that. The Scottish decision was later found to be wrong. Another court said that it did not matter whether or no he was entitled to let the house, so that the jolly position now arrived at by 11.15 tonight is that if he is a beneficial occupier he must have the annual value treated as part of income under existing law. Therefore, in any event, he is outside the subsection about which the right hon. and learned Gentleman the Member for Newport expressed his anxiety.

If, on the other hand, he is a representative occupier it is absurd to give him any concession on Schedule A tax, because he does not have to pay it. It falls on the charity. The Inland Revenue, with its customary generosity in every conceivable circumstance, by extra-statutory concession under Governments of every political complexion, has granted to the trustees of the charity a concession which enables them to deal with it as if it were earned income of the charity. But it really does not matter—the enactment we seek to remove from the Statute Book is absurd, meaningless and valueless, except for our enjoyment at this hour.