HC Deb 05 July 1960 vol 626 cc363-5
Mr. Barber

I beg to move, in page 33, in line 14, at the end to insert: (3) This section applies and applies only to a release effected after the fifth day of April, nineteen hundred and sixty. This Amendment is similar to the previous one. Clause 35 provides for the charging to tax where a person carrying on a business has had a deduction in computing his profits for tax purposes for a debt due from him, and his creditors subsequently release him. As the Clause is drafted it is not clear whether this applies only to debts released after the Bill becomes an Act, or to debts released, whether or not before the 5th April, 1960, in a period on which the assessment for 1960–61 fell to be based. It is desirable to remove this uncertainty. The Amendment specifies that the Clause applies only to debts released after 5th April, 1960.

Mr. Diamond

I repeat the same comment which I made before—that this does not, I suspect, do anything new but merely underlines what the Government's intentions are, and makes their views about retrospection painfully clear.

Mr. Houghton

My anxiety in the matter is to know why two successive Amendments were necessary to repair an omission from the original Clauses. Is it the assumption that this would have been effective from the date of the passing of the Bill but that it is now desired to make it effective from Budget day? It is a strange omission. How did it come about that no effective date was given in either of these two Clauses?

Mr. Barber

This is clearly an omission in these two Clauses, and quite frankly, it would have been better if these two Amendments had been inserted originally. So far as I am aware—and I dealt with these Clauses earlier in the Committee—these were not points that were raised then. But they have been brought to our attention and we thought it right and proper to provide this Amendment and the last one. They go to the root of the matter and make it clear when these provisions become operative and will help to avoid litigation.

Mr. Mitchison

Is it not the case that these two Clauses could have had effect only from the passing of the Bill, whether or not that effect related to the action taken or to the occurrence upon which action was taken? Accordingly, the effect of this Amendment and the last one is to vary what would have been the result of these two Clauses without them. I believe that this is introducing retrospective legislation in a mild form, because if these Clauses were not introduced, then the provisions in question would take effect as from the passing of the Act instead of from 5th April.

Mr. Barber

With respect to the hon. and learned Member for Kettering (Mr. Mitchison), that is not so. To confine myself to the Amendment to Clause 35, there is considerable doubt as to whether it would apply after the coming into force of the Bill, which was a point which the hon. and learned Gentleman made, or whether it would apply to an assessment for the fiscal year 1960–61, even though the debt was released in a previous period. That was something which we felt had to be resolved, but it is not as simple as merely saying that there was some doubt as to whether it should apply after or before the coming into force of the Bill. In any event, the very fact that there has been some doubt on this point shows that the doubt should be resolved.

Mr. Glenvil Hall

Am I right in thinking that in most cases, whether these words are included or not, the Clause would bite on most assessments for the year 1960–61, because, unless an organisation or a company has a tax year different from the ordinary Inland Revenue year, it is bound to come somewhere in the year 1960–61, whether it bites from August or from 5th April? Is that not so?

Mr. Barber

It is not quite that, because the year of assessment is always from April to April whatever the accounting period of the company or individual is. What is certainly open to argument is when, without the Amendment, the Clause becomes effective for the year of assessment 1960–61. That could mean that a debt which is set off and subsequently released and covered by Clause 35, the whole of which operation had been completed before my right hon. Friend introduced his Budget and certainly before the First Reading of the Finance Bill, could have been brought into account in this year of assessment, and I think that the Committee will agree that that would be unfair and that the fairest date is 5th April.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.