Purchase Tax (Hansard, 5 July 1971)

§ The Minister of State, Treasury (Mr. Terence Higgins)
I beg to move, That it is expedient to provide that the functions conferred on the Commissioners of Customs and Excise by section 6 of the Purchase Tax Act 1963 (registration, &c, of wholesalers, manufacturers and others) shall be exercisable, and, together with the corresponding functions conferred on the Commissioners by the enactments repealed by that Act, treated as having always been exercisable, by any officer of customs and excise. I suggest, Mr. Speaker, that it would be for the convenience of the House to discuss at the same time new Clause No. 7 to the Finance Bill, "Purchase tax—exercise of functions of Commissioners with respect to registration, etc." Is that agreeable?

§ Mr. Speaker
If that be the wish of the House, I willingly agree.

§ Mr. Higgins
The effect of the Ways and Means Resolution and the new Clause to the Finance Bill associated with it is to delegate to officers of Customs and Excise the functions of the Commissioners in relation to the registration of purchase tax traders and to remove doubts as to the validity of the past exercise of those functions.
In two recent law cases, there has come to light a loophole in the machinery which, although it can be regarded as a mere legal technicality of no real substance or merit, is nevertheless a weakness in the legal basis of the tax which fundamentally affects its operation and which, I am sure the House will agree, cannot be allowed to continue.
The law cases in question concerned the prosecution by the Department of certain registered traders for failure to make returns of the tax for which they were accountable as required by Regulation 7 of the Purchase Tax Regulations, 1965. It was argued by the defence in the first case that it was necessary for the prosecution to show that the registration of the trader, which had been effected some years ago, had been carried out by an official authorised to do so.
The point here is that under the law, which is now Section 6 of the Purchase 931 Tax Act, 1963, the duty of registering traders is laid upon the Commissioners. They have delegated the work of registration to the Customs and Excise officers responsible for the purchase tax control of traders, and the officers' authority under that delegation is supported by Section 4(1) of the Customs and Excise Act, 1952, the relevant part of which says: Any act or thing required or authorised by or under any enactment to be done by the Commissioners or any one of them may be done— (c) by any other person authorised generally or specially in that behalf in writing by the Commissioners. The question of authorisation of officers under that provision had previously been considered by the courts in a different context in 1962 and again in 1967. In those two cases a written authority under Section 4(1) had not been given, but there was no difficulty in regularising the position ad hoc. However, the opportunity was taken to consider the question of authorisation generally, and as a result a document was drawn up and signed by the then Deputy Chairman of the Board of Customs and Excise in December, 1969, which formally authorised, both generally and specially, the various grades of officer to whom have been delegated functions which in law are laid upon the Commissioners.
Unfortunately, the point at issue in the prosecution in the cases to which I have referred concerns the authority of the officer at the time when the registrations were effected, several years before the authorisation of December, 1969. The court decided in the first case that as no authority covering the officer's action had been produced, there was no evidence of registration, and the summonses were accordingly dismissed.
In the interval between that decision and the decision in the second case, a document was drawn up and signed by the Commissioner concerned which sought to ratify registrations effected before the general authority of December, 1969. But when that document was produced in the second case, the court ruled that it could not be accepted as applying in criminal cases.
Clearly, we need to resolve the situation. The great majority of the 73,000 932 purchase tax traders were registered before the general authority of December, 1969, and it is on the validity of that registration that most of the purchase tax revenue depends. The House will agree that the common sense of the situation is that the officers who effected the registrations were properly appointed members of the Department who had been instructed to undertake the work of registration and had been issued with a set of printed instructions. All that is missing is a document formally delegating to them the registration work which in law is laid on the Commissioners. The purpose of the Motion is to close this technical loophole in the law.

§ Mr. Robert Sheldon (Ashton-under-Lyne)
I am in some difficulty, because the annotated copy of the 1963 Act is missing from the Library. As a result, any investigation into what the Minister has explained has not been carried out in the way in which many hon. Members wishing to consult the references would wish.
Is any prosecution now being undertaken, and will any such prosecutions be affected by the Motion?

§ Mr. Charles Fletcher-Cooke (Darwen)
It sounds very simple to say that the delegation concerned should be allowed, and that it should be allowed retrospectively. But the question whether he is registered or not can mean a great deal to a businessman. Some who are not registered think that they should be, and some who are registered think that they should not be.
Is there any statutory appeal against refusal to register or against a registration. The Commissioners are persons of some distinction, whose judgment in the matter might reasonably be taken as final, although I am always in favour of an appeal being provided if possible. But when discretion is delegated to a great number of officers, and if at the same time an appeal is not provided for, rather different considerations arise. My hon. Friend may well reply that I should have taken that objection, if it be an objection, in 1969, when the general Order was laid, and that all we are doing now is to regularise the 1969 position by making the power to delegate retrospective. That is a very small and narrow 933 point, and it is not the point that I am on. That I readily concede, but if there is no provision for an appeal, does not my hon. Friend think that there should be, since delegation has taken place, and presumably will take place, pretty widely, and the discretion in future will not remain with those very distinguished and highly respected officers, the Commissioners of Customs and Excise?

§ Mr. Joel Barnett (Heywood and Roy-ton)
Apart from the very small ones, all the manufacturers are registered, but wholesalers in particular have frequently had difficulty, in some cases where they wanted to register and were not allowed to and in others where they did not want to register but it was insisted that they should. Does the Motion indicate a change of policy? I understand that in the past the general policy was that the authorities tried to register as few wholesalers as possible. But now, in view of the impending value-added tax and the registration of large numbers, is it the intention that in the interim period before the introduction of the value-added tax—is that eventually happens—wholesalers shall be allowed to register where perhaps they might not otherwise have been able to do so?

§ Mr. Higgins
I understand that there are no cases of the kind which the hon. Member for Ashton-under-Lyne (Mr. Sheldon) suggested would be affected by the change. I am sorry about the difficulty which the hon. Gentleman had in the Library. I did not have notice of his 934 question, but to the best of my knowledge no cases will be affected, and I understand that the two cases to which I referred will not be affected by the change either.
I stress in answer to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) that the purpose of the Motion is simply to maintain what had always been thought until recently to be the position. Therefore, it is not what happened in 1969 which is relevant to the question of appeal but what exists in the relevant legislation, and the Clauses to which I referred are particularly concerned with registration. I understand that there is no provision for appeal as such, but an action can be brought in the courts if someone is dissatisfied with the situation.
We are receiving representations from all interested parties on the question of the value-added tax in the light of the Green Paper. I cannot give the hon. Member for Heywood and Royton (Mr. Barnett) an off-the-cuff answer to the specific point he raised, but I will look into it.