INCOME AND CORPORATION TAXES BILL [Lords] (Hansard, 9 March 1970)

§ The Solicitor-General (Sir Arthur Irvine)
I beg to move, That the Bill be now read a Second time.
The last general consolidation of the Income Tax Acts was made in 1952 and no one with any experience in the difficult work of applying this branch of our law to the facts of life will doubt that it has become very necessary to start again with a clean sheet—

§ The Solicitor-General
Hon. Members will appreciate, from the size of the Bill, even forgetting the complications of the subject matter, that the work which was done was not done lightly. In fact, the present consolidation—I include in that term the Taxes Management Bill which 1052 is to be taken next—has occupied the draftsmen and the small committee in Somerset House which was set up to do the necessary work at that end, for over two-and-a-half years. I am sure that hon. Members will wish to join me in paying tribute to the skill and endurance of those who have carried through this very daunting task.
In income tax and corporation tax, this consolidation completes the work begun with the Capital Allowances Act of 1968. The present Bill, together with the 1968 Act, which remains separate, will now present the whole of the substantive law of income tax and corporation tax. The machinery provisions, relating to the making of returns and assessments of appeals and claims, have been hived off into the Taxes Management Bill. This is thought to be a convenient division, not only because it helps to keep this Bill down to a more manageable size, but also because the machinery provisions which apply for income tax are also largely shared by capital gains tax. In this field, therefore, it is possible to deal in one Act with all three taxes.
The Joint Committee has made a few small Amendments to the Bill as it was introduced in another place. It has reported that the Bill as amended, is pure consolidation and represents the existing law. It also records that its task was greatly lightened by the Amendments with a view to consolidation in Schedule 20 of last year's Finance Act. It will be agreed that that Parliamentary stage of weeding out minor doubts and anomalies was well worth while. I am assured that, in many small ways, it has contributed to a cleaner and more logical presentation than would otherwise have been possible. The Joint Committee has reported, as I said, that the Bill is pure consolidation. It has passed through all its stages in another place and I hope that the House will now give it a Second Reading.

§ Mr. Graham Page (Crosby)
I should like to add my congratulations to those of the Solicitor-General to those who were concerned in the drafting of the Bill. I think that it is a magnificent achievement to have got a consolidation of income tax and corporation tax into one Bill in this way. It will be of great 1053 assistance to those who practise in this way in the law or in accountancy, or even to laymen looking up their taxes.
As I understand it, the consolidation does not include capital gains tax. Without going too far out of order, could the Solicitor-General say what the intentions are over consolidation of that part of the law? One wonders whether it is the right time to consolidate income tax and corporation tax without doing a consolidation of capital gains tax at the same time.
The consolidation Bill consolidates a number of Statutory Instruments. We have become used to this in consolidation Bills, and it is a great help that the Joint Committee mentioned this and in its report drew attention to the fact that a number of Statutory Instruments had been incorporated in the consolidation and that there was a saving clause—it appears in Schedule 12—saving the right to challenge these Statutory Instruments, even though they are now embodied in the consolidation. This has now been recognised as the correct way in which to carry out consolidation which includes Statutory Instruments.
I wonder whether the time has now come for that saving provision, after it has lasted perhaps a short time, to be removed so that the Statutory Instrument becomes part of the Statute Law and does not remain open to challenge. If it became something of a tradition or a convention that in the next Finance Bill after a consolidation Bill of this sort the Statutory Instruments embodied in the sonsolidation became substantive law by some proper enactment in the Finance Bill, it would be a great help to practitioners in this branch of the law. I would have thought that after a period of time one could do away with the saving clause and bring it into substantive law.
There are great difficulties in consolidating the law relating to any tax, because partly the consolidation must come into force for all periods and partly it must be reserved as a consolidation for the current tax period; that is to say, one has to keep alive the old Statutes because one has to keep alive the rate of tax for past years, for example. I think that I am right in saying that in this consolidation Bill we are in a way preserving some of the Acts which are at 1054 the same time repealed. That sounds rather contradictory, but we preserve them for the past, for the assessment of tax in past years, while consolidating the law as it now stands.
If this consolidation of income tax and corporation tax in the one Statute is to be of any real use not only for us in the House but for the public outside, we must keep it up to date in a reasonable way. I hope that when Amendments are made in future Finance Bills, they will not be word Amendments which one has to fit into an existing provision in a consolidation Bill, but will be Amendments to whole Clauses, so that whole Clauses are rewritten so that they may be inserted, as it were, in the right place in the consolidation Measure. Otherwise in a year's time we shall be in just the same difficulty all over again trying to fit a word in here and a word in there in the normal way which one has with Amendments in Finance Bills.
If we adopt some form of loose-leaf consolidation Acts so that when an Amendment is made to a consolidation Act it is made by rewriting the whole provision, the whole Clause will be able to be slipped into place in the consolidation Act. If that is not done, in no time we shall be back in the difficulty which we had before when we had the Income Tax Act, 1952, and some 20 Finance Bills to try to fit into it. Let us have some loose-leaf consolidation Acts, if not in physical fact at least so that we ourselves are able to tuck the amending Clauses into the consolidation Act so that it reads intelligibly and so that we do not have to search for word Amendments here and there.
Apart from those comments, I repeat that I think that the Bill is a magnificent achievement.

§ The Solicitor-General
I am very glad that the hon. Member for Crosby (Mr. Graham Page) has felt it right to pay that tribute to those who have carried out this work. It is right that the matter of capital gains tax is not included in this provision, and regard will be had in due course, but not immediately, to the desirability of consolidation under that head. Note will be taken of what the hon. Gentleman has said about the saving clause affecting Statutory Instruments.
1055 At this point it must, I think, be acknowledged that the hon. Member has introduced the interesting and, possibly, controversial theme of running consolidation. I do not think that as between him and me there is much difference about the desirability of that objective. I listened to his account of the kind of treatment of the matter that he had in mind and I felt some sympathy with him. The House will, however, perhaps accept it from me that, on the whole, I think it better not to develop the point further tonight.