HC Deb 06 July 1960 vol 626 cc633-6
The Solicitor-General

I beg to move, in page 41, line 35 to leave out "without reasonable excuse".

This Amendment goes with the following Amendments, which perhaps, Mr. Deputy-Speaker, you will allow me to refer to together in page 42, lines 1 and 5; page 43, line 3; page 50, lines 32 and 42; page 77, lines 5 and 32.

These Amendments are designed to remove a flaw which, on closer scrutiny, has become apparent in Clause 44 (1). The operative words of the subsection are: Where any person … has been required, by a notice … to deliver any return … and he fails, without reasonable excuse, to do so within the time limited by the notice … or such further time, if any, as may be allowed by the Commissioners or officer concerned … he shall be liable … to the penalties there set out.

Let us take the case where there has been no extension of time and a failure with reasonable excuse to deliver the information or return within the time limited by the notice, which is generally 30 days, but no reasonable excuse for failure to deliver it thereafter. It is arguable that in such a case the person is not liable to any penalty at all, and, indeed, it would be very difficult to counter such an argument. There must, of course, be many cases where a taxpayer has a reasonable excuse for not making his return within 30 days, and the provision should certainly not give permanent immunity from proceedings. Therefore, it was essential to correct that flaw.

The primary Amendments are those in page 42, line 1 and line 5 and page 50, line 42. The first two consist essentially in leaving out the words "without reasonable excuse" in two places in Clause 44 (1), and the third replaces them by an expanded provision which does not contain the flaw to which I drew attention.

With regard to the Amendment in page 43, line 3, to leave out from "commenced" to the end of line 6, those words are now unnecessary in view of the new subsection (2) added to Clause 60 by the Amendment in page 50, line 42. I think I ought to make it plain that the omission of the words by the Amendment in page 43, line 3, does not take away any protection which the taxpayer has at the moment. Anything that is taken away is amply covered by the new subsection (2) to Clause 60. Equally, the new subsection (2) renders the words "without reasonable excuse" in Clause 43 (3) and the definition of "neglect" in Clause 60 (1) unnecessary, and they are dealt with in the Amendment in page 41, line 35, and the Amendment in page 50, line 32. The remaining Amendments are similar Amendments to the Profits Tax Schedule.

12.15 a.m.

Mr. Houghton

I confess that I had not discovered the flaw in the first few lines on page 42 of the Bill to which the hon. and learned Gentleman has referred. But has he not undertaken rather a comprehensive change in order to remedy that flaw? It is a new form of dealing with failure without reasonable excuse to separate the fault of failure from the extenuating circumstance of "with reasonable excuse".

With the proposed Amendment, Clause 43 (3) will now read: If any person fails to give a notice which he is required to give under this section he shall be liable to a penalty not exceeding one hundred pounds". Clause 44 (1, b) with the proposed Amendment will read: fails to furnish any information … Then one must look elsewhere to discover what "failure" means.

I wonder if we have reached the stage when there are departmental versions of failure. The version in the Bill as it stands now is whether a person fails without reasonable excuse, but the version of the Ministry of Pensions and National Insurance in a recent Statutory Instrument is whether a person fails without reasonable cause. Ought we not to have a central authority on the question of failure and the excuses which can be given for it? It is a misfortune that the extenuating circumstance is separated from the operative word "failure". That is the only complaint I can make about it.

The Solicitor-General may say that that Amendment in page 50, line 42, puts the whole thing in intelligible form. It deals with the initial failure and with continued failure after time has been allowed by the authorities for compliance. To that extent it is certainly more satisfactory than the original form, though whether it was necessary to give the fuller explanation of "failure without reasonable excuse" is open to doubt.

Reading the authorities on this subject I find it very puzzling indeed, not being a lawyer, to know whether the word "failure" is necessary. Apparently "neglect" is enough. I understand that "neglect" connotes a state of mind of purposeful neglect of an instruction or an obligation or a statutory requirement. It also denotes failure without reasonable excuse. I have no doubt that, if one looked up the law in detail, one would find many authorities on this.

I wonder whether some of the changes made in the Bill have been imperative or whether a certain fastidiousness of draftsmanship has prevailed in the later stages. This seems to be one instance. Though I have no fundamental quarrel with what it is proposed to do, it is a weakness in a Statute when the taxpayer reading it cannot see at once what is the extent of his culpability under a particular Clause but has to look elsewhere to find whether, knowing that he has failed to render a return, there is any excuse for it or any circumstances in which his failure may be condoned, or at least not made the subject of penalty.

I content myself with those observations at this late hour. We seem to have made a nightcap of penalties on several occasions whilst dealing with the Bill, and here we are again.

Amendment agreed to.