Sixth Schedule.—(EXTENSION OF TIME LIMITS.) (Hansard, 18 June 1958)

§ Mr. Victor Collins (Shoreditch and Finsbury)
I beg to move, in page 48, line 12, to leave out "thirty" and to insert "forty-two".
I am fully aware that at this time of night the only words hon. and right hon. Members want to hear are "Who goes home?", but I hope the Chancellor will realise that I have not selected this time to move the Amendment and will listen to the argument I wish to put forward on behalf of many thousands of people, a vastly larger number than those we were considering under Clause 18 for quite a considerable time in what the Solicitor-General referred to as a somewhat turgid discussion; indeed, I found it so.
The Chancellor will be aware that for some months prior to the Budget I had been pressing on him the great hardship imposed on many thousands of firms, especially small traders and individuals, because only 21 days were allowed to appeal against tax assessments under Schedule D. He has to some extent conceded the case because in this Bill the period for appeal has been increased to 31 days, but that is not enough. The extra 12 days I am asking for in this Amendment, making a total of six weeks, is the barest minimum required to meet the demands of justice.
It is all very well to talk about rationalisation, and I am aware the periods of 21, 28 or 10 days have now all been tidied up into 30 days, but we are not awarding fines or talking about tax evasion. We are concerned in trying to see that the majority of firms of trading taxpayers are not, as it were, defrauded through too short a time for appeal and compelled subsequently to pay tax which they are not entitled to be asked for. Even if the period is extended to 42 days, that will not give the taxpayer equal rights with the Inland Revenue, for the Inland Revenue has the right to alter assessments at any time in six years, not six weeks. I am not asking for that, but only for the right of the taxpayer to appeal against assessment during a period of six weeks. The Inland Revenue get it on the swings and also on the roundabouts.
This proposal of six weeks in which to appeal would give the taxpayer a close 1277 resemblance to justice and save him and his accountants and, I submit, the staffs of the Inland Revenue a great deal of unnecessary work which at present has to be done. As the Committee is well aware, these assessments are posted in November and December for the fiscal year ended on 5th April of the following year. They are based on income or profit up to the previous year. In the case of a large company, whose financial year ends on 31st December or even as late as 31st March, the audited accounts will usually be available when the assessment is made, but this is not the case with the majority of smaller businesses. The audited accounts are not available when the assessment is made and the Revenue has to think of a number. To protect his interests, the trader must appeal or ask his accountant to appeal, and this alone involves an enormous amount of work all round.
In addition, November and December, when the assessments are posted, are for many small firms the busiest period of the year—the period which will decide whether they will make a profit or not. There is therefore a tendency, because they are very busy, for the assessment notices to be put aside to await consideration when time allows. If they are then overlooked for a few weeks it could be disastrous, because under the Act no excuse is allowed except illness or absence. I know of cases in which assessments have been made and tax has been paid when not a penny was owing, and the greatest difficulty has been experienced in recovering tax overpaid. I know of instances in which it has not been recovered, although there was no question but that it had never been owed.
Another point about posting assessments in November and December—I know that this is unavoidable—is that they are caught up in the Christmas rush and suffer the Christmas postal delay. In any case, the period almost certainly includes the Christmas holiday. Those two factors cut the time down very much, and in many cases there is no time at all. That is why the extension to 30 days is not enough.
Let me quote a case of which the Chancellor is probably himself aware. Last year in the Taunton division notices were not posted until 10th December, which meant that they were caught up 1278 in the Christmas rush. I know of one accountant who, with his staff, had to make visits and telephone calls to 50 farmers and, in the end, had to make 20 blind appeals because he did not know whether the assessments had been received and what they were. This goes on year after year, and it must make a great deal of unnecessary work for everyone. If a notice is sent on 10th December, the 21 days' period means that it expires on 31st. It is caught up in the Christmas postal delay, there is the Christmas holiday, and the time available is inadequate. This goes on year after year.
Since my Amendment was tabled I have been informed that the National Chamber of Trade has for some time been pressing the Chancellor for an extension of the time for appeal under Section 51 (3) for precisely the reasons which I have put forward. I am advised that it asked for precisely the 42 days which this Amendment, if accepted, would provide. A resolution to that effect was unanimously endorsed at the annual conference of the Chamber of Trade last April.
May I quote from one of a number of letters which I have received? It is from a firm of accountants which is secretary to a Home Counties Chamber of Trade. It reads: My firm has the same trouble and has to chase up shopkeepers at the peak of the Christmas rush. Often it is not until after Christmas that the trader is able to pay much attention to paper work and then he brings to us his assessment notice and finds that the statutory time limit for appeal has expired. In general we find that the local inspectors of taxes agree to accept an appeal that is not more than a fortnight overdue but often ask for an explanation for the cause of the delay. This involves everyone in an unnecessary amount of correspondence. My own personal opinion is that as a matter of equity the taxpayer should have the same time limit to appeal as the Inland Revenue has to revise assessments, i.e. six years. I could quote a number of cases where there has been financial loss because appeals against earlier years of assessment have been disallowed. We did not press the Chancellor for amendment of the law to bring about equity as we felt that this would be too much to expect. We felt that an appeal to the Chancellor on purely practical grounds would be more likely to succeed and would at least obviate some of the inconvenience and unnecessary expense to which both taxpayers and the Inland Revenue is subjected around Christmas and the New Year. I particularly draw the Chancellor's attention to the statement that the local 1279 inspector of taxes does normally accept appeals which are a fortnight out of time. That is almost precisely what I am asking for in this Amendment. Give another 12 days. That would give the local inspector a chance to refuse out of date appeals with far less fear of the consequences.
I do not know whether it has been overlooked or not, but I would mention to the Chancellor that there is one type of Schedule D assessment where it is absolutely impossible for the taxpayer or the Inland Revenue official to know what the income or profit is. I refer to assessments on excess rents and on furnished lettings. Liability is based on the actual rent for the year of assessment, and when a notice is issued in November it is on income which, in many cases, cannot be ascertained until the following April and it becomes obligatory to appeal in every one of these cases.
I should like to hear how the Chancellor justifies insistence by the Revenue on payment of tax according to the assessment in cases where no appeal is made and the income is found to be less than the assessment. That would seem to me like an official fraud, if the Revenue insist on getting the cheque.
I would submit that on the facts I have put forward on behalf of the great mass of ordinary small traders there can be no valid objection to the Amendment on grounds of equity. The Inland Revenue should not, in my submission, try to get taxes to which it is not justly entitled.
There can be no possible objection on the ground of what is practical. I have been told that to extend the period to 42 days would mean delays to the Inland Revenue and would create greater difficulties. I have pointed out the Revenue already does this in some cases in practice, and I cannot see why this practice should not be made regular. I have been told that if the period for appeal were three months there would still be some people who would be out of date with their appeals. I am quite prepared to accept that, but that is all the more reason for accepting the Amendment and then telling those people they are out of date and bringing them up sharply in that way. I do not doubt, having heard many things in the last few days, that there are many experts at evasion, people 1280 who by delaying until the last moment continuously, people who, perhaps, pay a sum on account and then say they have paid too much, and who by using that kind of trick can delay things. I do not doubt such people can delay things indefinitely and perhaps never get clear with their taxes.
But they are doing that now, doing it all the time, with 21 days limit. The 42 days would not affect the position of semi-crooks like that. If one or two clever tricksters manage to continue to owe hundreds of thousands of pounds to the Revenue, I would suggest that the Revenue should get tough with them but not use that as an excuse for being unfair to hundreds of thousands of smaller traders. I therefore submit again that most of the people affected by these assessments just do not know what their profits are when they receive their notices; neither do their accountants. Therefore there is a spate of blind appeals which cause an enormous amount of work to the Inland Revenue.
If the Amendment is accepted there will not only be a fair chance of appeal but a far more reasonable chance that the figures which are submitted are final and accurate, and thus a saving of time and labour all round.
I hope, in the interests of justice and commonsense, the Chancellor will accept the Amendment.

§ Mr. Simon
The return of the hon. Member for Shoreditch and Finsbury (Mr. Collins) to our debates marks the departure from what one of my hon. and learned Friends described as some of the "esoteric provisions of the law" and what my right hon. and learned Friend described as our more turgid debates. As before, he has put the matter in a completely human way, and this is a problem which affects the taxpayer at the moment of the assessment on him.
The hon. Member compared the six weeks which he proposes for appeal against assessments with the six years which the Inland Revenue have for reopening an assessment. But there is no relationship between those two things. The taxpayer ought to be able to decide within a comparatively short time whether he wishes to appeal, because he knows what his circumstances are, whereas the Revenue may not become 1281 aware of all the facts about the taxpayer's true income until a matter of years after the time when the assessment is due.
The Royal Commission mentioned this particular fact. They said that no legal system could be expected to deal in the same way with time limits for exercising a right of appeal from a tribunal's decision or an analogous time, and in such cases the time limit would be measured in weeks, not years. They went on to recommend the adoption of a uniform period of 30 days, and in fact the Schedule as drawn in the Finance Bill precisely implements that recommendation.
The hon. Gentleman first puts his argument on the basis that the accounts in many cases are not ready when the assessments are received. I cannot imagine that the difference of a fortnight which is involved in his Amendment would really do very much to put that right, considering the time of the year at which the assessment notices are received. He says that the inspectors already accept in many cases notices of appeal which may be up to 14 days out of time, but we must remember that is 14 days out of time after 21 days, and the amendment which the Schedule effects adds another nine days to that 21.
The Royal Commission were satisfied, and my right hon. Friend endorses that, on the advice of the Inland Revenue—and, on the hon. Gentleman's own testimony, they do deal reasonably with these matters—30 days ought to be sufficient to give the taxpayer notice of appeal. The hon. Gentleman mentioned the notices arriving in one case on 10th December. I think that in this last year a number of assessments did not arrive until getting on for the middle of December, but every effort will be made this year to issue the great bulk of the notices by the middle of November. In some districts that may be postponed until the end of November, but I think if the bulk of them are issued by late November, so that then one has an appeal period of 30 days, that ought to give the taxpayer ample time to consider his circumstances and the desirability of appealing before the Christmas rush. The hon. Member said that the taxpayer may not always know what his circumstances are, and he mentioned particularly the question of excess rents. There again, adding a fortnight will not help the matter at all. 1282 One important reason why the Amendment is undesirable is that if the assessment notices are postponed until late in November, as is bound to happen in some tax districts, a six weeks' period will carry the time limit for appeal past 1st January, and it is on 1st January that the tax is normally due to be paid. It is very undesirable to have a great many assessments open on that date.
Finally, the hon. Member mentioned that it is only in absence or sickness that the strict periods of the law can be relaxed. I think that his quotations about the inspectors' practice shows that the administration is not in fact so rigid. In fact, there is power in the Appeal Commissioners to extend the time where the taxpayer is prevented from appealing within that period by absence, sickness or any reasonable cause. In view of the fact that, in accordance with the Royal Commission's recommendation, we have extended the period now to 30 days, I cannot advise the Committee to accept the Amendment.

Mr. Amory
I beg to move, That the Chairman do report Progress and ask leave to sit again.
Though early in our debate we had some slightly acrimonious exchanges, it was not long before the habitual good temper of the Committee was restored. I realise that some of the Clauses which we have been discussing today are rather abstruse and that it would have been possible to spend a great deal of time on them. We have not made quite as much progress as we had hoped but, in all the circumstances, I think that the progress we have achieved has been satisfactory. The next subject to which we have to apply ourselves is a rather broad and important one—the Profits Tax—and I think that it would be for the convenience of the Committee not to embark upon that subject tonight.