§ Mr. Patrick Jenkin
I beg to move Amendment No. 69, in page 12, line 38, to leave out 'Treasury' and to insert 'Commissioners of Customs and Excise'.
With this Clause we move from the recondite realm of spirit licences and spirit advice notes into the rather more familiar, but none the less complex, law of Purchase Tax, and this Clause—and I give it a welcome—extends a relief which exists to cover circumstances in respect of which it may be thought the relief ought to have existed, but so far has not.
As I understand the position, there are four categories of imported goods which are relieved, or which may be relieved, from Purchase Tax. They are contained in Section 21(4) of the Purchase Tax Act, 1963, and cover such tilings as goods which ought to be imported free of Purchase Tax by some international agreement other than a commercial one, goods which are imported for the purposes of testing or comparing with British manufactured goods, goods which are imported 834 for purposes of research, learning, art, or sport, and goods which are intended to be re-exported.
Section 21 gives the authorities power to relieve from duty such goods on importation, but this Section must be read in conjunction with Section 11 of the Act which says:Tax shall be charged, subject to and in accordance with the provisions of this Act, on the wholesale value of all chargeable goods imported into the United Kingdom except goods imported for a registered wholesale merchant as stock for his business or imported for a registered manufacturer as material.That is to say, normally imports are charged with duty on importation unless they are going to be a registered trader, if I might comprise those two categories in one phrase, a registered wholesale merchant and a registered manufacturer.
That is a broad exception to the charging of duty on imports. Section 21 adds a further narrow exception relating to the four categories, and one is therefore left with the position that there is, as it were, a lacuna in the legislation which Clause is intended to fill, namely, that if the goods on importation go to a registered wholesale merchant, or a registered manufacturer they are not charged with duty, and there is no provision for relieving them subsequently from duty if they fall into one of the four categories of the limitation exceptions contained in Section 21. Normally, Purchase Tax is paid when the goods are sold or appropriated by the wholesaler, but there is no provision in these circumstances for this narrow exception of the four categories to which I have referred, and this is what the Clause does.
This Amendment—and No. 70 which proposes to make a similar Amendment in line 43—relates to one aspect of the matter, namely, which of the Government agencies should be responsible for administering this part of the law. I recognise that this is a narrow point. Should it be the Treasury, or should it be the Commissioners of Customs and Excise? One is here referring to a division of functions between a Government Department direct and an administrative department, the Commissioners.
Under Section 21(1) of the 1963 Act it is the Treasury which has the power to direct that tax shall not be payable. 835 I concede at once that if it is right in Section 21 that the Treasury should be responsible for the administration of that provision, it follows that it is right in this Clause of the Bill, and I therefore make it quite clear that the Amendment is in the nature of a probe to find out why in the first place these powers of administration were accorded to the Treasury and not left to the Customs and Excise.
In Section 21 there is a division of function in that the Treasury directs whether tax is to be payable or not, but the Commissioners have power to waive a requirement. Normally the application must be made in writing before the goods have been released from Customs control. Under subsection (3) the Treasury may impose conditions, and the Commissioners may require security for the performance of the conditions. In subsection (4,a) it is the Treasury which decides which goods will qualify under international agreements, and so on. This seems an extraordinary dichotomy of responsibility in the administration of this provision of the Purchase Tax Act, and one is bound to ask why the Treasury should be landed with this administration.
Section 1(2) of the 1963 Act sets out the duties of the Commissioners. It says:The tax shall be under the care and management of the Commissioners of Customs and Excise, who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax …In Section 18 it is the Commissioners who give relief for exports. Under Section 19 they are responsible for avoiding a double charge. Under Section 20 it is the Commissioners who have to be satisfied that the goods are being used for charitable purposes and therefore are relieved from tax.
The Treasury comes in only when it is a question of making statutory orders. Under Section 2(3) the Treasury delimits two classes of goods as specified in that Section. Under Section 4(4) it is responsible for administering the qualifications for the registration of a trader. Under Section 15(2) it is responsible for the categories of goods to be classified as mechanically propelled vehicles. The Treasury comes in when it is subordinate legislation. The Commissioners are 836 responsible for the day-to-day administration of the Act.
It is only in Section 21—and this is repeated in this Clause—where the Treasury appears to come in with something in the nature of an administrative function. No doubt the Financial Secretary will say that this section raises questions of policy which should be within the control of a Government Department directly responsible to a Minister. If he gives that answer, I ask him to spell it out, because it is not clear from the provisions of the 1963 Act, or from this Clause, why this should be so. We all know that in the administration of this and other legislation the Commissioners have a wide discretion in many matters about how the Act should be administered, and that in general their discretion is subject to normal Parliamentary and other checks and balances. One is therefore bound to ask why it is felt necessary that the Commissioners should not have the duties under Section 21, and now under this Clause, and why they should have been kept for the Treasury to exercise. This is not clear, and I hope that the Financial Secretary will be able to offer the Committee an explanation of why this is so.
§ Mr. MacDermot
The hon. Member for Wanstead and Woodford (Mr. Patrick lenkin) has correctly stated the general purpose of the Clause, namely, to enable Section 21 claims for waiver or refund of Purchase Tax to be made in respect of goods which are cleared as untaxed stock or materials by a registered trader, as well as all cases where the Tax is paid at the time of importation.
The hon. Gentleman asks why the administrative control of this concession should lie with the Treasury rather than with the Commissioners of Customs and Excise. He correctly states that that is already the position in relation to the existing Section 21 claims, and concedes that it is logical to have the same treatment for both. In effect, he raises the question why this system was needed in the case of Section 21 claims, and why it should be perpetuated in respect of these claims.
The answer is that many of the goods on which relief from Purchase Tax may be claimed—either under this Clause or under Section 21—will also be the subject of claims for relief from import 837 duty under the provisions of the Import Duties Act, 1958. These claims for relief from import duty are by way of Treasury direction, given on the recommendation of the Board of Trade. In these cases there are clearly policy questions of national interest for which Departments and Ministers should be directly responsible. That is why the responsibility was put on the Treasury. It could not be done in any other way under that Act.
It is desirable that where relief from Purchase Tax is also claimed the claims should be made on the same document, because the considerations which prompt the recommendation by the Board of Trade in the duty field are also relevant in the consideration of the claim for waiver of Purchase Tax.
It is for that reason that these matters were married together at the time Section 21 was enacted, so as to make the decision lie with the Treasury, and for the same reason it is logical to do so now. I appreciate the point of the Amendment, but rather than simplifying administration it might confuse it, and in most cases it would need two separate application forms to two separate authorities instead of one, as at present.
In practice the three Departments—the Treasury, the Board of Trade and the Commissioners—work smoothly together in dealing with individual claims, and little difficulty or delay is encountered. For these reasons I must advise the Committee to reject the Amendment.
§ Mr. Patrick Jenkin
I am grateful to the Minister for his explanation. I can see the administrative reasons. The idea of having one form will appeal to everybody. At the same time, I must point out that the circumstances in which the Board of Trade would grant relief from import duty and the very much more limited circumstances in which the Treasury would dispense with the payment of tax under the Purchase Tax Act are entirely different. One does not necessarily follow from the other.
I am always in favour of simplification in the filling in of forms by commercial firms, and if that is what this provision achieves, although—as the Minister implied, if he did not concede it 838 expressly—it may not be wholly logical, in conformity with the rest of the pattern of legislation, it is something that we would all favour. In those circumstances I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.