§ In relation to interest paid under subsection (3) of section 43 of the Finance Act 1968 after the end of the year 1972–73 subsection (5) of that section shall have effect as if the deduction allowable under it were a deduction in computing income for the purpose of ascertaining the excess of liability to income tax over what it would be if all income tax were chargeable at the basic rate to the exclusion of any other rate and as if for the reference to the standard rate there were substituted a reference to the basic rate.—[Mr. Peter Rees.]
§ Brought up, and read the First time.
§ Mr. Peter ReesI beg to move, That the clause be read a Second time.
I hope that this will not put my right hon. Friend the Chief Secretary to any great intellectual difficulty. The clause is designed to correct something that may be an oversight. Under the previous legislation, interest on an overdue special charge was allowable for relief both against income tax and surtax. When surtax was abolished and combined income tax was introduced, possibly through an omission, relief was preserved 1442 but only against income tax at the basic rate. That strikes me as inequitable.
There seems to be no good reason why the position should have been worsened as against the taxpayer, and I hope that my right hon. Friend will be able to accept the clause which will continue to give the same measure of relief in respect of special charge as there was before the introduction of the unified system of tax.
§ Mr. Patrick JenkinI think that my hon. and learned Friend the Member for Dover (Mr. Peter Rees) has made an unanswerable case. It was not due to an oversight that this was omitted from the legislation last year. It was hoped that by the time the unified tax came into operation virtually all the special charge assessments would have been completed and the sums paid. Regrettably, that is not the case.
Although the special charge was imposed about five years ago, I am told that 4,000 to 5,000 assessments have still not been completed. As a result, it is right that we should now perpetuate into the unified tax system the relief for interest on special charge that was written into the original legislation in 1968. I therefore think that the new clause is appropriate, and I ask the House to accept it.
§ Dr. GilbertI am grateful to the Chief Secretary for giving us that information in reply to his hon. and learned Friend the Member for Dover (Mr. Peter Rees). Can he give us a rough estimate of the amount involved? The number of cases—4,000 to 5,000—is staggering.
§ Mr. JenkinIf I may reply with the leave of the House, I have to say that I cannot give the amount, but if the hon. Gentleman tables a Question we shall do our best to give him an answer. I think the hon. Gentleman has to recognise that the legislation was immensely complex, and it was regrettable that because the 1968 Finance Bill was guillotined not one word of debate was addressed to the special charge. It may be that that is the reason why we are still suffering from the hangover five years later.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.