§ 20. Mr. Houghtonasked the Chancellor of the Exchequer what steps he eposes to take to check the type of tax avoidance disclosed in the case of Petrotim Securities Limited v. Ayres (Inspector of Taxes) heard before the Court of Appeal on 12th November, 1963, and in the case of Leibigs Extract of Meat Company Limited and the Sudan Meat Products Limited, details which have been sent to him.
§ Mr. GreenI do not consider that any special steps are necessary. In the case of Petrotim Securities the Court of Appeal held that the attempted avoidance of tax failed. The hon. Member will appreciate that I cannot say anything about the other companies mentioned in the Question.
§ Mr. HoughtonHow can the hon. Gentleman be satisfied with the existing powers of the Inland Revenue to stop this kind of tax avoidance when, in case of Petrotim Securities Ltd. it took a High Court action to stop it, and in the case of Leibigs Extract Meat Co., Ltd., it took an informer to stop it?
In the former case, marketable Securities were sold by the principal company to a subsidiary. Those securities, worth £800,000, were sold for 963 £200,000 in order to make an artificial loss of £600,000. In the case of Leibigs Extract of Meat Co. a manipulation of stock valuation—[Interruption.]—I take full responsibility for what I am saying—[HON. MEMBERS: "Question."] I have the evidence here.
§ Mr. SpeakerOrder. I do not question the hon. Gentleman's responsibility but this is Question Time. May we have his question?
§ Mr. HoughtonI am pressing the point upon the hon. Gentleman as to how he can be satisfied with existing powers when this kind of tax avoidance can go unchecked unless there are special circumstances which brings it to light. The manipulation of the valuation of stocks and marketable securities—[HON. MEMBERS: "Question."]—has led to the avoidance of revenue. What has the hon. Gentleman to say about it?
§ Mr. GreenAs I told the hon. Gentleman, I quite understand his concern, which I share. But, as I have also said, in the case of Petrotim Securities the attempt to avoid tax failed. The point was taken by the inspector, and inspectors do scrutinise carefully, as the hon. Gentleman knows, any cases where an attempt is made to get relief from an artificial loss. In response to the first part of the hon. Gentleman's supplementary question, I am sure that he would not wish me to destroy or weaken the machinery of appeal which the taxpayers properly have from decisions of the inspectors.
§ Mr. HoughtonOn a point of order, Mr. Speaker. In view of the grossly unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Adjournment at the earliest possible opportunity.
§ 21. Mr. Houghtonasked the Chancellor of the Exchequer whether he proposes to institute proceedings against, or recover penalties from, Mr. Robert Frederick Soul in respect of false statements made for the purpose of avoiding income tax as disclosed in the proceedings before the Court of Appeal (Soul v. Irving (Inspector of Taxes)) on 18th November, 1963.
§ Mr. GreenThe individual in question was sentenced to two years' imprisonment in November, 1960, on charges based on the taxation matters to which the hon. Member refers.
§ Mr. HoughtonI am obliged for that information, which did not emerge in the report of the proceedings before the Court of Appeal on a dispute on tax liability. Will the hon. Gentleman ask his right hon. Friend to consider reaffirming the doctrine of a former Chancellor of the Exchequer twenty years ago, to the effect that the Board of Inland Revenue is not composed of moralists but of tax gatherers and that much delinquency, "fiddles" and "twists" could be compounded for a money price if only the culprits would learn to stop lying and begin to tell the truth? Then we may have more room in our prisons for the type of man who this week was sentenced to three months for stealing a bottle of whisky.