Clause 37.—(APPLICATION OF INCOME TAX ACTS TO PUBLIC DEPARTMENTS.) (Hansard, 26 May 1960)

§ Sir Kenneth Pickthorn (Carlton)
I beg to move, in page 34, line 14, at the end to add: (6) (a) Any person who receives from a public office or department of the Crown a payment under deduction of tax, being a payment under the provisions of the Income Tax Acts, including the preceding provisions of this section, which is the income of that person for 804 the year in which it is received, shall be entitled to an adjustment of his liability to income tax by way of repayment and shall be entitled to an adjustment of the amount of surtax assessable upon him to the extent set forth in paragraph (b)) of this subsection: Provided that no one shall be liable to pay more tax or to lose an allowance as a consequence of the provisions of this subsection; (b) if the payment described in paragraph (a) is calculated in respect of a period which does not fall entirely within the income tax year in which it is received, the person who receives the payment may elect by notice in writing to the Commissioners of Inland Revenue to have the payment treated as his income for the period in respect of which it 805 was calculated and to have that income apportioned to him within the relevant income tax years as if it had accrued to him from day to day I hope that the Committee will bear with me on a matter, which it is not easy for a layman to explain, and very difficult indeed for me to convince myself that he is the person who has best understood. I am convinced that there is here something which has a permanent importance and which ought to be questioned at this stage. I think that retrospection, actual or apparent, in a Bill should always be challenged. I think also that anyone who looks at the language of Clause 37 will see that the language itself is extremely challenging— The foregoing provisions of this section shall be deemed always to have had effect;". Those words occur in line 44. In line 39, there is a reference to a payment or sum as being not payable or not wholly payable as aforesaid shall be construed as a reference to it as being payable wholly or in part out of a source … and so on. That I do not say is not defensible even in a court which might start with a prejudice against retrospection. The one on lines 44 and 45 must plainly be held to be provocative, and so also the lines at the top of page 34. If I may say a word, in excuse or defence of myself, I may boast that I never have noticed anything which was or looked like retrospective legislation in a Bill without making some challenge on it. I do not assert that retrospection is always intolerable. It is tolerable, perhaps, where the intention is to remove or to mitigate a manifest injustice or hardship.

§ The Chairman (Sir Gordon Touche)
I am not quite sure how this arises on this Amendment.

§ Sir K. Pickthorn
It is because this is a retrospective Clause and it was expounded in speeches in which the Chancellor of the Exchequer and the Attorney-General indicated what they regarded as being tolerable in the way of retrospection.

§ The Chairman
But this is not a retrospective Amendment.

§ Sir K. Pickthorn
But surely it must be in order, with every respect, Sir Gordon, to indicate why retrospection is 806 objectionable in this Clause as well as in other Clauses, although there might be some Clauses in which it was not.

§ The Chairman
The hon. Member should deal only with the Amendment.

§ Sir K. Pickthorn
I do not see how I can deal with the Amendment without dealing with the Clause, but I shall proceed directly upon that instruction to the story of what produced this Amendment. The Revenue won a case in the House of Lords, of which the essence was two points. The judgment decided two things, that by paying interim income under the nationalisation Acts in irregular, unequal and delayed portions the Crown, the majority of the Lords held, made such uneven payments taxable as payment of the year in which they were paid and thereby made the taxation, the Income Tax or Surtax, greater than it would have been if the payments had been spread. Secondly, the Lords held that the method by which the Revenue had got this money was illegal at the time when the money was got; and what we are now legislating to do is to say that it shall be deemed to have been legal all the time.
The Committee will observe that there were two effects of the House of Lords judgment. One of them was manifestly unjust and was indicated by the Lords at the time to be manifestly unfair. It was so plainly stated by the minority judgment, and it was hardly less plainly indicated in the majority judgment, where it said it was argued that, although payments of tax should not have been demanded before the sum had been received, now they had been received they could be spread back over the years: the three Lordships who agreed in the majority went on to say: I would willingly accede to that argument if I saw anything in the Income Tax Acts which I thought would warrant it". A little later they said: A debtor — the debtor in this case being the Crown— ought not to be able to alter his creditor's liability to Surtax by delaying payment of his debt. So, of the two things the Lords decided, that one was manifestly unfair.
The second one could be held to be unjust because it might enable the 807 people who had paid this Surtax to claim back what they had paid in a misunderstanding of the law. It could be argued that it would be equitable to let them do so, but I agree that it could also be argued that it would be unfair to let them do so. It would be to let them do it on what admittedly, in a sense, was a technicality, in that by the time the judgment was given more than six years had elapsed and therefore the Crown could not have gone back and claimed the money in the proper way.
There was, therefore, one manifest unfairness and one result of which it could reasonably be argued that it was unfair because it would cause the Revenue to disgorge. The House is at the moment invited retrospectively to legislate to put right the arguable unfairness in the interests of the Revenue but to do nothing about the manifest and indisputable unfairness.
I do not want to be longer about this than I must, or I could make many quotations, but the short point I wish to put is this: as I understand it, it has always been good law that tax statutes should be strictly construed and it was accepted of Income Tax Law that it admitted of no equitable consideration. If that were so, the Crown could not get what it is now asking us retrospectively to give it.
It has always, I believe, also been good law that a man who goes into the Lord Chancellor's Court to ask for more fairness than the common or statutory law would permit him, must come in with his hands clean. How much more must they have their hands clean who come to the High Court of Parliament to ask fiat for machinery which did not exist at the time when, in their interest, they used it—I admit they used it to take money which was due to them legally, but not by this machinery; this machinery did not exist at the time when they used nonexistent machinery to enable them to take what all the Lords who gave the decisive judgment held to have been an unfair amount, because the Crown had lumped payments, which may have arisen over five, six, seven or eight years, arising out of the Coal Nationalisation Act, in such a way as to put up the rates of taxation.
808 That is the short point, and I cannot see that in the short point, so put, there is anything to make one doubt that that is a serious matter. I am sorry that I had not more effectively explained beforehand this Amendment and the point of it to more people. It has not been easy, because the technique of getting an Amendment which would be in order is not very simple, and I got it on the Notice Paper only at the very last possible moment. I hope that I have put the short point fairly and I hope that I have put it so that it is plain.
There could be a great deal of elaboration to it. May I repeat myself for just one minute? Nobody said that these people ought not to have paid something like this amount of money. Everybody now says that these people ought not to have been made to pay the money as they were made to pay. Common sense, I think, says, and all the learned Lords indicated that in equity they ought not to have been made to pay so much.
When it comes to other things, taxation under other Schedules than this, and so on, different considerations apply—for instance, when doctors or railwaymen get pay back. A long time ago I very foolishly sold a book for £250, and as my entire income at the time was very little it bumped up my rate of taxation to an exceedingly considerable degree. That position no longer obtains, because the Lord Privy Seal when he was Chancellor of the Exchequer arranged that such earnings might be spread. This is not only the case of Surtax payers who were wicked enough to have had an interest in coal-mines.
What I am trying to do is not retrospective. I am trying to stop it happening in the future, and it is no use telling me that it is very unlikely to happen in the future. The Treasury Bench and their very intelligent and expert advisers cannot guess what the "wide boys" in the City will do tomorrow. Therefore, we have to legislate in all sorts of ways—sometimes to me disagreeable—in order to give the Treasury some hope of catching the wide boys.
I cannot tell what the Government are going to do in three or five years' time. I want to make sure that this effect does not arise when the Government owe considerable sums of money, which need 809 not be large. They need only be considerable in relation to the amount of money of the individual concerned, and in relation to his great disappointment because he finds that, though he gets the considerable sum of money, he gets it minus an unexpectedly high rate of tax. I want to make sure that in future, when a Government have considerable amounts of money to pay to persons of any sort, this bunching effect does not happen.
I am bound to say that I am very much strengthened in my view that this ought to be done by a note I received today from the Treasury. If legislation cannot be clone today or this year, Her Majesty's Ministers ought to promise us the earliest and most careful consideration of it. The note said: … the grievance which you mention as arising in these colliery company cases has been dealt with in practice by an administrative arrangement for spreading 'interim income'". That gives my case. We cannot be told that Ministers are extremely regretful about the extension of administrative discretion, but it is absolutely necessary in order to catch City tax sinners, and also be told that Parliament cannot do what is supported by common sense, and certainly by the highest judges in the highest court in the land, who gave the Government the decision they asked for. The Government won that case. It is not a case of putting right something which went wrong in the law courts. I cannot believe that, where it is a matter of seeing that in such things there are not hardships on the subject, it ought to be left to administrative discretion. I cannot believe that we ought not to find a way of legislating to prevent that happening in the future.

§ The Attorney-General
My hon. Friend the Member for Carlton (Sir K. Pickthorn) has dealt partly with the retrospective element of the Clause, partly with the Whitworth Park decision, and slightly with the Amendment. I want, without going outside the bounds of order on an Amendment, to reply to him. It is necessary, first, to remind the Committee of what the Whitworth Park decision was about and what it decided. It was of course, in relation to payments of interim income on coal nationalisation. Those payments were made for various reasons at varying 810 times, and when they were made it is true that it was disclosed that they were made in relation to certain periods.
The case arose on an issue whether those payments were chargeable under Case III of Schedule D or under Case VI. If they were charged under Case VI, Section 170 could not have applied. That is the Section which prescribes that one should deduct from annual payments—I deal with it quite generally—tax at the standard rate at the time of receipt; and there is no option about it when it comes within Section 170, which was formerly Rule 21—

§ Mr. Houghton
The right hon. and learned Gentleman talks about tax at the time of receipt, but I suggest that it would be clearer were he to talk of deducting tax at the time of payment.

§ The Attorney-General
I do not mind. I should have thought that in this context payment and receipt would be contemporaneous, but let us say that tax should be deducted at the time of payment by the Minister of Fuel and Power and the time of receipt by the colliery companies.
The case went forward on that issue. If the company had been successful, the result would have been to have pushed, I think, a 15-month proportion of payment for the eighteenth months to June, 1948, into the 1946, 1947 and 1948 tax years for which Surtax assessment could no longer be raised. That was the issue, and the Crown, of course, succeeded in that case—

§ Sir K. Pickthorn
Not—of course.

§ The Attorney-General
I used the expression "of course" because everyone knows that the Crown succeeded in that case—

Major W. Hicks Beach (Cheltenham)
Surely, if the Revenue had had any doubt in the matter it could have served what is called a dual assessment, and there would have been no necessity to go further. It could have served an assessment under Schedule D and under the other Schedule under which, in fact, the case was brought. In other words, the Revenue made a mistake.

§ The Attorney-General
No, the Revenue served the proper notices, it was held to have served them rightly, and it succeeded—

Major Hicks Beach
But it was out of time.

§ The Attorney-General
I fear that my hon. and gallant Friend, who has just come in, has not been following me. I was dealing with the Whitworth Park case, in which the Crown succeeded. In the course of the decision, their Lordships observed that the Crown had no right to make the deduction under Section 170, and that is really what has led to this particular provision.
I would remind the Committee that this provision does not seek to make unlawful something that was lawful at the time when it was done. It has not that element of retrospection about it aft all. It seeks only to validate what everyone at the time thought was the right practice, namely, to deduct tax from this kind of payment—and that practice has been followed for very many years.
The consequence of that decision can be extremely serious to the Revenue. I shall not develop that at this stage, because I might be getting out of order were I to do so—particularly when it comes to tax under Schedule A—but the colliery companies were in this position. They received these interim payments from time to time, and there was, as my hon. Friend has said, some comment on the fact that for Surtax purposes there was no provision in the law that enabled these collieries to spread the Surtax back over a period of years.
There is a provision in the Income Tax Act, 1952, Section 238, to the effect that, Where the income from any assets which is chargeable to Surtax in any year by reason of the provisions of Section 170 is more than that which would have been attributable to one year if the income had accrued from day to day, and the taxpayer shows that his Surtax figure for that year is more than 5 per cent. above the amount which he would have paid if the income had accrued from day to day, there shall be such relief as may be just. The difficulty is that that has been held in the courts not to apply to one-man companies.
What was not known when this case was heard in the courts, although the col- 812 liery companies knew it, was that the Revenue was prepared to agree that for Surtax purposes this income which was related to a period could be spread. That affects the decision a great deal and really negatives my hon. Friend's statements about manifest and indisputable unfairness.
The Amendment is concerned only with the future because it cannot operate retrospectively to affect past payments; it is not so drafted. As regards the future, there are these considerations to be borne in mind. The requirement for deduction of tax is a general requirement. If the Clause is passed by the Committee, it will in future apply to the Crown. Payments made by the Crown are usually referable to a certain period, made quarterly or half-yearly, and they are usually made on the due dates. Indeed, it is only in very exceptional circumstances that an amount of interest or an annual payment made by a Government Department in a particular tax year would be greater than the amount attributable to the year concerned.

§ Sir K. Pickthorn
What does the revenue do? Why not spread?

§ The Attorney-General
I did not interrupt my hon. Friend. I wish he would let me try to deal with this as shortly as I can. I wish to cover the points he made and deal with them. I want first of all to satisfy the Committee, if I can, that there was no injustice here suffered by the colliery companies by reason of the fact that the Ministry of Fuel and Power in making the payments followed a practice which had been followed for years, deducting tax at the standard rate when making the payments. It is true that there was no statutory provision which applied to these companies enabling that income to be spread for the purposes of Surtax like the provisions such as I referred to in regard to the ordinary individual; but that has been dealt with by means of a concession.
The question, therefore, arises in relation to the Amendment: should we deal with this matter in relation to the Crown in the future? The difficulty about that is, first, that it is extremely unlikely that the same situation will arise. It can arise only in exceptional circumstances. Secondly, if it is to be applied in the future in spheres where 813 it does not apply today, the Amendment ought to be one of general application. To take the example of payment of mortgage interest in arrears, here again, under Section 170, deduction must be made at the standard rate at the time it is paid even though it is paid in relation to a period longer than a year. There can be other instances of that.
I must say that I do not myself see the reason for differentiating between payments made by the Crown in this respect and payments made by other people which may conceivably relate to a period longer than a year. There is a provision for adjusting Surtax which, in a great number of cases, will apply. There is no provision for spreading in relation to Income Tax such as there is for Surtax. The question of what year a particular item of interest is to be allocated to for Income Tax purposes is material, of course, if the rate of tax changes and if in one year the taxpayer would not be chargeable at the full standard rate on the whole payment by reason of personal allowances and other reliefs. But I am advised that it is not likely that spreading for Income Tax purposes would have given any colliery company title to any substantial repayment of Income Tax.
In general, the colliery company would not, even if the suggested provisions had been made retrospective, gain appreciatively by comparison with the treatment that they have been given. Under Section 170, which applies to everyone else except the Crown as the law now stands, it is the practice that the payment, whenever it is made—no matter to how long a period that payment may relate—still suffers tax at the standard rate in force at the time of payment.
I have endeavoured to deal as shortly as I could with the point raised by my hon. Friend, and I hope—I may not have succeeded—that I have been able to satisfy him that, because these payments had to be made at irregular intervals, because the Ministry of Fuel and Power complied with the law as it was generally thought to be, and because provision was made for spreading the liability for Surtax, there was no injustice here which is either indisputable or manifest. I would therefore ask the Committee to reject the Amendment.

Major Hicks Beach
In my right hon. and learned Friend's view, is this retrospective legislation or not?

§ The Attorney-General
I have said before, and I will say it again, that in one sense the word "retrospective" can be applied to it. But the word "retrospective" could be applied to many forms of legislation. My hon. Friend the Member for Carlton—and I agree with him—would not go so far as to suggest that all forms of retrospective legislation are always intolerable. They are not. We have had retrospective legislation in this House to indemnify Members for their conduct. The last case that I can remember was, I think, one in 1956. We had retrospective legislation to deal with charities after the Baddeley case, in which I was engaged in the House of Lords, in which it was held, to many people's surprise, that a great many village halls and that sort of thing could not be properly treated as charities. We passed legislation validating trust deeds retrospectively and with regard to deduction from royalties, when it was held to be wrong when those deductions were made by mining companies, legislation was passed to validate their conduct.
There is nothing unusual or wrong, in my submission, in making the law accord with what everyone has for years thought it to be and in accordance with which people have acted without the slightest complaint. The colliery companies knew perfectly well that tax was being deducted at source. They never complained about that. At that time it made no difference to their liability. If it was not deducted at source they could have been assessed on it and they would have had to pay. The only advantage which may arise for the colliery companies if the Clause is not passed is that they have issued writs, which may or may not succeed, depending among other things on whether their claims are time barred, to recover sums which cannot be levied upon by way of assessment. I suggest that there is no ground for running that risk.
I have dealt with the matter as narrowly as I could because the Amendment is wider than the Clause which stems from the Whitworth Park case. If one uses the word "retrospective" in its narrow sense, that is, that it has effect in relation to things which have been 815 done before, it is retrospective [Interruption.] I am glad that the hon. Member thinks that that is a remarkable statement with which he can agree.
It has none of the objectionable features of retrospective legislation. My hon. Friend, with his knowledge of the law, may think that the use of "retrospective" should condemn all forms of retrospective legislation. If he does. I do not agree with him. There are many instances when the House of Commons has thought it right to legislate retrospectively. Certainly, in my submission, it is right to do so where everyone has acted in the belief that the law was one way when, in fact, it has been held not to be that way and when nobody suffers any prejudice of which complaint can legitimately be made because of the actions being validated.

§ Mr. Houghton
In the interests of good fellowship between the Attorney-General and his hon. Friends behind him, we had better drop the word "retrospection" right now. I prefer, in this context, the word "validation". The right hon. and learned Gentleman has right on his side in the approach to this sticky situation, although I wonder what the Government would have done if the Revenue had lost the Hinchy case in the House of Lords. Would they have come to the House of Commons and asked for the validation of the law as everybody thought it was for a hundred years?
It is true that none of the colliery companies or the Whitworth Park Colliery Company expected to escape tax on these interim payments made under the Coal Industry Nationalisation Act, 1946, and the Coal Industry (No. 2) Act, 1949. They fully expected to bear tax. In the course of these proceedings and challenges to the basis upon which the assessment should be made, however, the discovery seemed to have been made that the Crown had no right to make the deductions of tax from these payments under Section 170 of the Income Tax Act. That started something.
Of all the judicial seesaws, that case takes the biscuit. The Special Commissioners decided that the payments were assessable under Case 6 and that, therefore, the deductions could not be made under Section 170 and that the basis of assessment would be the spread of these 816 payments over the period that they covered. Then, the High Court decided that these payments were assessable under Case 3, which validated the deductions under Section 170 of the Income Tax Act. At least, if that was not the case, it decided that the basis of assessment should be the year of payment.
Then, the matter went to the Court of Appeal, which decided that it should be Case 6 but that it would not affect the final result, because the assessment should still be made on the year of payment. Then, the House of Lords finally decided that they were assessable under Case 3. That is a judicial seesaw—Case 6, Case 3, Case 6 and then Case 3 again. We cannot have it more evenly balanced than that. There is nowhere else to go for final answer as to which it should be. That is why we have to deal with it now.
I have sympathy with the Amendment of the hon. Member for Carlton (Sir K. Pickthorn) in this case, because after having gone through the hoop like this it would have been very hard on the company if the concession had not been made to give it the benefit of the more favourable arrangement. The flaw having been discovered, the Clause now not only proposes to validate the payments which may be made under Section 170 of the Income Tax Act, but also validates the deduction of tax by the Crown from payments it makes whether under Clause 3 of Schedule D or under Schedule A.
The Amendment is substantially met by what we have heard from the Attorney-General about what is happening in the Whitworth Park case. As regards the future and the general question of spread, it cannot be dealt with by the Amendment. It is a much too fundamental question affecting other Schedules, also. If there is anything to be done about that, it has to be done substantively in a different way. We are content with the Attorney-General's explanation and I think that my remarks will cover not only the Amendment, but most likely the Clause itself.

Major Hicks Beach
I support the Amendment. We had a reply from the Attorney-General, for whose views I have great respect, but there is only one really important observation which he made, and that was in reply to my intervention. He took a long time replying to it.
817 My intervention was: is this retrospective legislation or not? My right hon. and learned Friend took three minutes to explain that it was not. He finally conceded that it was retrospective legislation. We want to get the facts straight in this case. The facts are that in the case of these colliery owners—I hold no brief for them, because everyone thought that they should be assessed for tax and, I think, very properly so—the Revenue made a blunder. It could have given them a dual assessment if it were doubtful on the point under both these cases. It did not do so and it got out of time. Now it finds itself in the position in which it cannot go back and assess them under the proper Schedule because it did not give a dual assessment. The whole point of this Clause is a cover up for the Revenue. Let us be frank about it.

§ Mr. Houghton
The hon. and gallant Member for Cheltenham (Major Hicks Beach) says that the Inland Revenue made a blunder; it trespassed in error. It thought that it had the right to deduct tax and it had no reason to think otherwise. In those circumstances, I think that it can be excused for not taking precautions which did not appear to be necessary.

Major Hicks Beach
The Inland Revenue had five attempts before making up its mind that it was wrong. This is a point which the Front Bench should consider very seriously. Suppose this happens to the taxpayer. All of us who deal in practical taxation know of a number of cases in which, through a mistake like this, the taxpayer fails to put in a claim. If he does not do so within six years his claim cannot be supported.
I am glad to see the Chancellor here. I want to know whether, if we in this Committee can produce genuine cases of taxpayers in similar circumstances to this, where the Revenue has made a mistake or the taxpayers have made a mistake, and we can substantiate them as genuine cases, he will be prepared to introduce retrospective legislation so that the taxpayer has a right in exactly the same way as the Revenue has. That is what I ask for. It is quite a simple point.

Mr. Amory
In reply to my hon. and gallant Friend, may I say that there have been cases.The Attorney-General 818 referred to two where Parliament has validated procedure in the interests of the taxpayer and not in the interests of the Revenue.

Major Hicks Beach
Retrospectively'?

Mr. Amory
Yes, retrospectively.

Major Hicks Beach
Perhaps the Attorney-General will give me an example.

§ The Attorney-General
I gave an example in relation to the legislation which followed the Baddeley case. There are other instances which I could have given, is should have thought that they would have been within my hon. and gallant Friend's own knowledge.

Major Hicks Beach
The Attorney-General may remember a case which was put right a year or two years ago by the Government, in which, in certain circumstances where an estate had been wound up, it had to pay Estate Duty and Surtax, which meant that it paid more in taxation than the amount it received. That was not made retrospective. I should be happy to give the Attorney-General and the Chancellor many examples where the taxpayer has not been treated as well as the Revenue is in this case. That is my chief grumble against this.
I am against retrospective legislation, because I believe in the rule of law. I believe that the taxpayer is entitled to expect, certainly so long as a Conservative Government are in power, that this country will be governed under the rule of law. In this case —I will be quite frank—there is not a very strong case against retrospective legislation because everyone thought that the law was as the Revenue thought, but the fact remains that the legislation is retrospective, and this is a very bad precedent.
Do not let it be thought that I am against the Revenue. After all, my father was, if I may say so, a fairly distinguished civil servant for a great number of years. However, once we give the Revenue and the Treasury a precedent to think that the Conservative Pasty believes in retrospective legislation, we shall have it every time. We all know what has happened about retrospective legislation. Neville Chamberlain did it, I think in 1937, and Sir John Simon a year earlier.
819 I want it put on the record, and I believe that a number of my hon. Friends want it put on the record, too, that the Conservative Party is against retrospective legislation and believe it to be absolutely wrong. I shall certainly oppose it whenever it is introduced again, though I must confess that in this instance the Revenue has a fairly good case because the Revenue and the taxpayers thought alike what the law was. However, I hope we shall get an undertaking about retrospective legislation in answer to this debate tonight, that if we produce hard cases on behalf of the taxpayer they will be received with consideration.

§ Mr. Crosland
Retrospectively?

Major Hicks Beach
Certainly, the same as with the Revenue. I entirely accept that. What is good for the Revenue should be good for the taxpayer. Surely that must be right? We cannot have it both ways. If it is good for the Revenue, it is good for the taxpayer. The Chancellor must learn and the learned Attorney-General ought to learn that each has a duty to the taxpayer. He is not only a tax maker; he has a duty to the taxpayer.
I fully support the Amendment. I did not propose to move my own Amendment on the Paper because I thought my hon. Friend's was more comprehensive. I support it. Let it be put on the record that, as far as I am concerned, I am against retrospective legislation, as, I believe, a number of Members on this side of the Committee are. Do not let the Treasury and the Revenue think that this can be a precedent.

§ Mr. Powell
Sir Gordon, I had intended to address a few remarks to you on the Question, "That the Clause stand part of the Bill", but from the scope of the debate on this Amendment I hope that what I have to say will be in order now, and it will be, perhaps, to the convenience of the Committee if I make a few observations now.
In the situation which was disclosed by the judgment in the House of Lords in the Whitworth colliery case, which showed that the Revenue had obtained tax in the wrong way and at the wrong time, I do not believe there was any practicable alternative to the introduc- 820 tion of legislation of the kind which is before the Committee in this Clause, and, indeed, it is only when retrospective legislation damnifies a subject that it could possibly attract the displeasure of this Committee. In this case there is, however, a respect in which the subject is damnified by the validation retrospectively under this Clause of what was done by the Ministry of Power, and I wish to submit to my right hon. and learned Friend that, just as, administratively, a potential wrong, to which my hon. Friend the Member for Carlton (Sir K. Pickthorn) has drawn attention, has in fact been put right. so it should be considered whether this admittedly minor but nevertheless real damnification through the retrospective validation which we are now undertaking should not administratively be corrected.
When it was known, through the judgment of the Court of Appeal and subsequently of the House of Lords in this case that there was a claim against the Ministry of Power for having wrongfully withheld tax due in making the payments in question, it was not only the right but it was the duty of a large number of persons to take certain action.
10.15 p.m.
It was, for example, undoubtedly the duty of the liquidators of certain companies to take steps to re-instate those companies for the purpose of issuing writs and obtaining re-payment. I have no doubt that there were certain other persons who not only rightfully but dutifully issued writs or took steps to issue writs against the Ministry of Power in order to give effect to what was ascertained to be a legal right.
I submit that there is a strong case, since we are now frustrating that action and rendering that expenditure abortive, that administratively right should be done by that expenditure being met by the Ministry against which but for the action of this Committee the writs would he. This is a small matter and it is a matter which can be and probably should be dealt with administratively. If full right is to be done consideration should be given to that.

§ Mr. Green
I want briefly to support my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), because he has put the plea in equity in 821 this particular case very much better than I could have done. But I want to go a little further and say that I agreed with my right hon. and learned Friend the Attorney-General when he remarked in referring to the Amendment—and I noted his actual words—"perhaps it ought to be of general application." That was a phrase and a sentiment which I fancied was picked up and agreed with by the hon. Member for Sowerby (Mr. Houghton).
Although we heard a very great deal about retrospection, with which the Clause deals, the Amendment is not in itself of retrospective application. I sometimes wondered at the mental ingenuity with which some hon. Members stayed in order in discussing the Amendment when they discussed retrospection. In view of my right hon. and learned Friend's statement that "perhaps"—and do not deny that he used only the word "perhaps"—this Amendment ought to be of general application, and in view of the apparent agreement of both sides of the Committee with that suggestion, I invite my right hon. and learned Friend seriously to consider making it of general application. I should like to hear from him that he will give that serious consideration.

§ The Attorney-General
I am glad that my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) raised this point about the small particulars in which as he said these companies might be damnified. The position on that—and I touch on it lightly—is that some of them have issued writs, but I stress that it is by no means certain that if these actions were proceeded with they would succeed. They might succeed in some, but the Crown has been advised that it would have more than an even chance of success in defending the actions.
One does not want to damnify incidentally by legislation of this sort, and it has been decided that in all the circumstances it would not be unreasonable to pay the costs incurred in this litigation up to Budget day by the companies concerned—costs which had they been successful they might have been expected to recover under the head of costs. The Treasury Solicitor, in due course, on receiving the necessary particulars from the solicitors for the 822 companies, will pay their costs on a party and party basis so far as incurred up to and including Budget day. I hope the Committee will think that, bearing in mind the possibility that these actions would not have been successful, that this is really very fair treatment on the part of the Crown.
The question raised by my hon. Friend the Member for Preston, South (Mr. Green) is a very big one, and really I do not think that this narrow Amendment could possibly form a peg for making what would be a very drastic change in the whole sphere of Income Tax, and the whole application of Section 170, which, of course, applies to many people who make these payments and who make payments which may be, as I indicated, for periods which relate to more than a year.
That is a very big question, and before I could give any assurance about what might or might not be done on that it would have to be very carefully and fully considered. I cannot say more than that now.

§ Sir K. Pickthorn
I do not want to carry this on much further, but I think I might say one word to my right hon. and learned Friend if I am not already out of time, like the Inland Revenue. He should not restrict his learning to Halsbury's Laws of England. He might remember that the great Shakespeare made it clear that slight is a fighting word and I am bound to say that I did not find his argument any less slight than mine.
I did not say that there was an effect of injustice on the colliery companies. I said that there were two decisions, of which one was plainly of an unfair effect, and the other was arguably of an unfair effect, and that it was unfair for the House to be putting right one and not touching the other.
I had intended to say something, but I will not weary the Committee with it now, about people who incurred expenses on the strength of the Lords' judgment. I can now say only one thing. I see no relevance in the question whether they are going to win their suits or not. They were entitled to take the preliminary steps they took by the due course of lay, up to that moment, and it must clearly be necessary, in fairness, that the expense so incurred should be put right.
823 About this business of acquiescing in what everybody thought the law was, that one really will not do. I had not known until this afternoon that there was an attempt on foot to put down an Amendment which might affect—I am sure my right hon. and learned Friend knows it better than I do—the Kenmare case, where for twenty years the law was thought to be something, for about three years it was known by a judgment to be the opposite, and the House then put it back to where it was thought to have been, but the Revenue is doing its best to get every drop it can out of the three years during which the law was the wrong way round.
If that one can be put right by retrospective legislation, this stuff about our Clause not being retrospective—although I know some of my hon. Friends take the same view—will not do, because it is quite true that it is not retrospectively punishing somebody or forbidding something, but what it is retrospectively doing is taking away from some the legal right they had to have claims of theirs considered.
That is what it is doing, and if anything which does that as from a long previous date is not retrospective then it is no use our thinking that we can 824 continue with democracy, or Parliamentary Government, or any other kind of Government by discussion. It used to be said when I was in the Army: They can do anything to you except kick you up the backside or put you in the family way. The equivalent of such unbearable assault is the arbitrary mayhem of words so that debate becomes impossible.
I think that perhaps we have carried this far enough to make it plain that there are many of us who think that this sort of thing should be looked at a great deal more carefully. I am sorry that the Treasury Bench cannot tell us that it thinks so, is not content here to rest on administrative discretion as where conditions it desires to guard against are claimed to be indefinable. I very much regret in these circumstances that the Government do not find it possible to say that they will legislate in a definite way so that this shall not happen again.
With those words, if I may claim your attention from I cannot see whom, Sir Gordon—I was slightly dazzled by the back of the head of the hon. and learned Gentleman—I beg leave to withdraw.