HC Deb 22 June 1960 vol 625 cc640-3

(1) No assessment to excess profits tax shall be made more than six years after the end of the chargeable accounting period in respect of which it is made, except where any form of fraud or wilful default has been committed in connection with or in relation to excess profits tax, and the assessment is made for the purpose of making good to the Crown any loss of tax attributable to fraud or wilful default.

(2) In this section "assessment" includes an additional assessment.—[Mr. Powell.]

Brought up, and read the First time.

Mr. Powell

I beg to move, That the Clause be read a Second time.

Two years ago, in Section 27 of the Finance Bill, 1958, it was decided that except in cases of fraud or wilful default, assessments for Profits Tax should not be raised for years of assessment lying further back than six years—the normal time of limitation in tax matters. In making fiat provision, however, the Committee omitted to include the Excess Profits Tax, with the consequence that although Excess Profits Tax is not a present charge, it is still, at any rate in theory, open to the Revenue to go back without limitation and raise assessments of Excess Profits Tax even where there is no question of fraud or wilful default. I cannot believe that this was the intention, and I suggest that it was by an oversight that this omission was made and that it ought now to be repaired.

I ought perhaps to point out that the new Clause which I am moving is necessarily imperfect, in the only form in which I can submit it, due to the fact that we are operating under the general Resolution and, therefore, have no power to propose anything which could conceivably in any way increase the charge. I am aware that for the proper carrying into effect of what I am asking for, it would be necessary to have a more extensive provision, some aspects of which could be interpreted in that light.

Therefore, I ask my hon. Friend to accept the intention of this Clause, which is to repair the omission made in 1958 and to undertake to make the necessary amendments which the Government alone can do at the next stage of this Bill.

Sir E. Boyle

I must say that the proposal of my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), that a time limit should be imposed on Excess Profits Tax assessments, cannot be regarded in principle as an unreasonable proposal. The tax was brought to an end, I think, more than thirteen years ago. There are very few Excess Profits Tax cases today still outstanding, and I imagine that many which are outstanding would be excluded from the benefit of the proposed time limit by the exception for fraud or wilful default.

However, there are two slight difficulties about this, one of which my hon. Friend did not mention. While we are about it, there are two other taxes which are likewise without time limit and which we ought to consider at the same time—the Excess Profits Levy which some of us in the 1951 Parliament will remember affectionately, which ran for the two years 1952 and 1953, and something which was before I was a Member of this House, called, I believe, the Special Contribution of Sir Stafford Cripps, which was introduced in 1948 and operated for one year only. If we are to introduce a time limit for Excess Profits Tax we ought to consider the Excess Profits Levy and the Special Contribution at the same time.

Further, it is desirable that if a time limit is introduced there should be a reasonable interval of time, say, to the end of the year, before it comes into effect, to give the taxpayer and the Revenue an opportunity to clear up any outstanding cases. This was the procedure that we followed in 1958 when a six-year time limit was introduced for Profits Tax. The time limit did not come into effect until 31st December of that year.

Finally, there is the question of drafting to which my hon. Friend referred. Obviously, the imposition of a six-year time limit in 1960 is not a very artistic way of stopping the assessment of a tax which ceased to apply as long ago as December, 1946. The best way would be to indicate that no Excess Profits Tax assessments should be made after a certain date except for cases of fraud or wilful default.

My hon. Friend asked me whether my right hon. Friend would give an undertaking to introduce a new Clause on Report. I am bound to ask my hon. Friend if he could not go a little further than that. I think that this is a matter that we want to get right, and the drafting of this may be a little complicated. I know that my right hon. Friend the Chancellor would much prefer to have longer to consider this matter, to consider it before next year's Finance Bill. If we are to do this piece of tidying up legislation, for which, in principle, there is a good case, it would be better not to do it in too much of a hurry.

Mr. Powell

May I put just one point? I fully accept that while we are doing this job we should do it properly, and I can well conceive that it may be awkward to do it legislatively at this stage. But it does seem to me a reasonable corollary of the intention expressed by my hon. Friend that he should give the Committee an assurance that there will be no assessments raised in these cases after 31st December this year, the date which we all would have written into the Bill this year if time and opportunity had served.

Sir E. Boyle

I think that my hon. Friend's suggestion in that connection is a very reasonable one.

Mr. Enoch Powell

Then I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

Seventh Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered this day and to be printed. [Bill 127.]