§ The Attorney-GeneralI beg to move, in page 25, line 37, at the end to insert:
(the amount to be returned being chargeable under Case VI of Schedule D and recoverable accordingly)When this Clause was considered in Committee the Government accepted an Amendment moved by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). In accepting it, I said that as the Amendment was not precise enough in one or two respects from a technical point of view, there might have to be a slight tidying up by way of consequential Amendments on Report. This is now the tidying up to which I referred. Clause 27 (3) says that the tax advantage which may be secured can be nullified in various ways… by such of the following adjustments, that is to say an assessment or additional assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made …That is all right as far as it goes, but it does not go far enough because it does not indicate the way in which the return of that repayment can be obtained by the Inland Revenue. We propose by this Amendment to put in the words in brackets(the amount to be returned being chargeable under Case VI of Schedule D and recoverable accordingly)".This means that the process of collection will operate in the ordinary fashion to get the amount which should be returned. It is a tidying up Amendment.
§ Amendment agreed to.
§ 8.30 p.m.
§ The Attorney-GeneralI beg to move, in page 26, line 26, to leave out "this section may" and to insert:
subsection (3) of this section may within thirty days by notice to the clerk to the Special Commissioners".This, again, is an Amendment to tidy up the provisions in subsection (6), which, as the Committee will remember, gives a right of appeal to a person to whom notice has been given under the provisions of this Clause. As it stands, the subsection does not prescribe any time limit within which that right of appeal can be exercised by giving a notice. A time limit is clearly necessary and, in 338 accordance with the provisions of tax appeals generally, the Amendment requires the taxpayer to give notice of appeal within the standard time limit of thirty days.It was said by my hon. and learned Friend the Solicitor-General in Committee that an Amendment on these lines would be necessary. In fact, there was an Amendment on the Order Paper which would have covered the point, but we did not move that Amendment because, as the Committee may remember, we had altered the wording of the earlier provisions to delete, among other things, a reference to direction, and as the Amendment contained the word "direction", it was not apt to be moved in.
§ Amendment agreed to.
§ The Attorney-GeneralI beg to move, in page 27, line 11, at the end to insert:
(9) Without prejudice to the generality of the foregoing subsection, on an appeal under this section the Special Commissioners or the tribunal shall have power to cancel or vary a notice under subsection (3) of this section or to vary or quash an assessment made in accordance with such a notice, but the bringing of an appeal or the statement of a case shall not affect the validity of a notice given or of any other thing done in pursuance of the said subsection (3) pending the determination of the proceedings.On reflection, again, it was thought desirable that there should be no doubts as to the powers of the Special Commissioners and the Tribunals on an appeal, to whichever of them the appeal might be made. It was felt, when we went through the matter again, that doubts might arise about their powers and about the effect of the pending appeal proceedings upon the action taken, or to be taken, under the Clause.The Committee will remember that the machinery in the Clause is that a notice in writing is served by the Commissioners of Inland Revenue on the person affected and that that notice also specifies one or more of the various methods of assessment which may be necessary for counteracting the tax advantage in question.
The new subsection deals with two distinct points. The first one makes it clear that the Special Commissioners, or, in the case of a re-hearing, the Tribunal, will have authority not only to annul or revise in any way the notice given under subsection (3), but also to 339 vary or quash an assessment made in accordance with that notice. The last part of the subsection ensures that the existence of an appeal against the notice shall not affect its validity pending the determination of the appeal proceedings.
A provision on these lines is necessary because it would otherwise probably be held that an assessment needed to counteract a tax advantage could not be made until an appeal against a notice had been finally determined, and if the appeal were taken to the courts, its final determination might be delayed until the six-year time limit for making the assessment had elapsed. It is therefore necessary to make this provision and I hope that with that explanation the Committee will accept the Amendment.
§ Amendment agreed to.
§ The Attorney-GeneralI beg to move, in page 27, line 12, to leave out "If" and to insert:
The following provisions shall have effect where in pursuance of this subsection.It may be convenient with this also to discuss the Amendments in lines 15, 20, 24, 25 and 28.
§ The Deputy-Chairman (Major Sir William Anstruther-Gray)That will be convenient.
§ The Attorney-GeneralAn undertaking was given in Committee to consider setting a time limit for the disposal of applications for clearance. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) raised this issue and spoke in support of an Amendment in the name of my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) which was not entirely satisfactory and which was dealt with by my hon. and learned Friend the Solicitor-General, who explained why it could not be accepted.
These Amendments seek to provide satisfactory machinery to deal with the issue which my hon. Friends raised. The first Amendment paves the way for the second and the others are all consequential upon the second. Together the Amendments have the result that, when the Commissioners receive an application, they can, within thirty days of its receipt, ask for additional information if they think that the information given in the application is insufficient for them to 340 form a proper conclusion on the matter. That is covered by paragraph (a) in the second Amendment. It is obviously right that the Commissioners should have the power within the time limit to request further information.
Under that provision the applicant must give the required information within thirty days or such further time as the Commissioners allow, and if he does not do so the application lapses. If he provides the information the Commissioners have another thirty days in which to notify him of their decision, or to ask for any necessary further information. The Amendment makes it clear that a reply that the Commissioners are not satisfied that the case does not fall within the Clause satisfies the obligation laid down by it.
I hope that that will suffice to explain what we are seeking to do. I submit that provisions of this sort are reasonable, and constitute part of what one might call the polishing up of the Clause, which is very important and falls within the words used by the hon. Member for Gloucester (Mr. Diamond) in relation to the previous Clause.
§ Mr. PowellThe six Amendments which we are now considering are among a large number of Government Amendments on the Notice Paper which are fulfilments of undertakings given in Committee. In this case their effect is not to close an additional loophole but to create an additional protection for the benefit of the subject. The procedure under the Clause, whereby a clearance can be obtained from the Commissioner by a taxpayer, is undoubtedly a valuable one, which will give considerable reassurance as to the working of the Clause; but it could not be regarded as satisfactory if there were no time limit, and, without wishing to cast any reflection upon the expedition with which the Commissioners would endeavour to perform the duties placed upon them under the Clause, I have no doubt that the existence of a specific time limit in the Clause will be a reassurance and will greatly facilitate the intended operation of this part of the Clause.
I am grateful to my right hon. and learned Friend for the way in which he has responded to the points which were put to him.
§ Amendment agreed to.
341
§
Further Amendments made: In page 27, line 15, leave out:
and
(b)the Commissioners
and insert" that is to say—
§
In line 20, leave out from beginning to "this" in line 21 and insert:
and if the Commissioners notify him that they are so satisfied".
§
In line 24, leave out "the particulars" and insert:
if the particulars, and any further information".
§ In line 25, leave out "shall be" and insert "are not".
§ In line 28, leave out from "Commissioners" to "any" in line 30.—[The Attorney-General.]
§ Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
§ Mr. EdeWhen we were dealing with Clause 26, I was making some remarks based upon a document placed in my hand by my hon. Friend the Member for Gloucester (Mr. Diamond). I had got some way through a quotation from that document when it became clear that it related to Clause 26 of the Bill as introduced to the House, which Clause has now become Clause 27. It would be a gross imposition on my part to read again such of the document as I have already read, and I therefore hope that I may be allowed to go on from the point that I had reached. Anyone who is sufficiently interested will find that the two quotations are sufficiently close together to enable him to have the whole of the document in front of him.
I had got as far as the words, "such as Clause 26", when it became clear 342 that I had made an error. The document goes on:
which affect the taxpayer's long established right to arrange his affairs to advantage within the framework of the Income Tax Acts.As I understand it, after the Bill becomes law he will still retain that privilege, although it may require a little more ingenuity on his part to be able to take advantage of it. It goes on:(b) believes that legislation which ignores the fundamental principle that income tax is a tax on income sets a bad example to other countries.I understand that one of the problems elsewhere is that it is more difficult to collect Income Tax outside this country than inside, even now, and I can only hope that the good example set in this country will become infectious in the few other countries where the payment of Income Tax appears to be regarded as one of the cardinal sins.
§ Question put and agreed to.
§ Clause, as amended, ordered to stand part of the Bill.