HC Deb 25 February 1960 vol 618 cc565-6
32. Mr. Stevens

asked the Chancellor of the Exchequer if the review of the penalty sections of the Income Tax Acts has been finished; and if he will make a statement.

Sir E. Boyle

My right hon. Friend has this matter well in mind, but we must reserve any comment on it until our annual review of financial matters.

Mr. Stevens

Is my hon. Friend aware, as I am sure he is, that my Question derives from the recent Hinchy case, the result of which in the House of Lords has caused grave uneasiness to many people? Does he agree that the House of Commons would never pass such savage penalty legislation today and will he urge our right hon. Friend the Chancellor to take steps to introduce amending legislation without delay?

Sir E. Boyle

Of course, I will bear in mind the points made by my hon. Friend. I must, however, say that the decision of the House of Lords in the Hinchy cas confirmed the interpretation of the law on which the Board of Inland Revenue has consistently based its practice. I assure my hon. Friend that there is no question of the Board claiming higher penalties than in the past.

Mr. H. Wilson

While the Financial Secretary will realise that we on this side have persistently asked for the most effective action against tax avoidance and evasion in all forms, will he recognise that there is considerable concern in all parts of the House about the interpretation which finally has been put upon this law and which, as the hon. Gentleman said, has been the custom of the Board of Inland Revenue for many years? Is he aware that the interpretation which has now been clearly defined means that there is something arbitrary and capricious about the amount and size of the penalty which can be levied by the Board of Inland Revenue for, perhaps, a quite small act of inadvertence in forgetting to return one's Post Office Savings Bank interest or something similar and that there is a case for the law to be looked at again?

Sir E. Boyle

Of course, when any authoritative interepretation of the law is given, that is just the time when one wants to review the matter again. I must, however, reserve any comment upon it until the review of financial matters has been completed.

Sir H. Butcher

Will my hon. Friend bear in mind that while the judgment may have confirmed the existing practice, it also contained severe strictures upon that practice?

36. Mr. Foot

asked the Chancellor of the Exchequer whether his attention has been drawn to the observations in the judgment given in the House of Lords in the case of Hinchy v. Inland Revenue Commissioners; and whether he will consider introducing legislation to amend Section 25 (3) of the Income Tax Act, 1952.

Sir E. Boyle

Yes. As my hon. and learned Friend the Solicitor-General informed the House on 30th July last, my right hon. Friend is making a full review of the penalty provisions of the Income Tax Acts.

Mr. Foot

Does the hon. Gentleman appreciate that as the Section now stands, although the Board of Inland Revenue has discretion to remit the penalties, the court has no such discretion? Will that aspect of the matter be borne in mind when amending legislation is considered?

Sir E. Boyle

That, obviously, is the kind of matter which we will review—certainly.