HC Deb 17 July 1975 vol 895 cc1886-93

Amendment made: No. 69, in page 37, line 8, leave out 'at the same time as the notice of appeal' and insert 'within thirty days after the date of the issue of the notice of assessment'.—[Mr. Joel Barnett.]

Mr. Peter Rees (Dover and Deal)

I beg to move Amendment No. 70, in page 37, line 34, after 'appeal', insert 'provided always that if the Commissioners shall consider that the conduct of the inspector has been oppressive or vexatious they may award the taxpayer the costs of such application'. I hope that I am moving the amendment in the atmosphere of benevolence and goodwill engendered by Amendments Nos. 68 and 69, which have been so graciously moved by the Chief Secretary and accepted by the House.

The Chief Secretary said that he recognised the merit of the representations made on Clause 44 in the Committee. This atmosphere has superseded the somewhat bizarre exchange between him and my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) over the previous amendment. Perhaps in this new spirit of goodwill the Chief Secretary will look kindly at Amendment No. 70.

The amendment is designed to introduce a further measure of liberality into Clause 44. Clause 44 is designed to enable the Revenue to recover a little earlier than it might otherwise have done tax that is not in dispute. As I said in Committee, there was at least a possibility that Section 55 which Clause 44 amends, provided the Revenue with certain remedies although the Revenue appears not to have chosen to exercise them up to now.

The Chief Secretary has introduced an elaborate and—if he will permit me to say so—cumbersome pre-trial procedure which compels the taxpayer, if he feels that there is a greater sum of tax in dispute than the Revenue concedes, to make an application in which he has to state the grounds on which he feels he has been overcharged. The very cumbersomeness of this procedure has been recognised by Amendments Nos. 68 and 69, and I ask the Chief Secretary to build on those amendments.

In Committee I pointed out to the Chief Secretary that the pre-trial hearing before the appeal commissioners might be rather long drawn out and involve investigation of a considerable number of issues which would also have to be gone into at the substantive trial. On that occasion the Chief Secretary was prone to give us the benefit of his hunches as to how the appeal commissioners might proceed. I was a little sceptical about the Chief Secretary's hunches, his usual sunny nature was a little disturbed on that occasion and a note of asperity crept into our debate. I hope that this is now just a sad memory and that the Chief Secretary is approaching this amendment in a more buoyant spirit.

The pre-trial procedure could be onerous to the taxpayer, to the inspector and indeed to the appeal commissioners, because the appeal commissioners have to consider whether there might be a sum legitimately in dispute on the basis of representations made to them and lawful evidence adduced. In many cases these will be complex issues.

One is always flattered when the Patronage Secretary shows acute interest in the minutiae of the tax law. He may be catching your eye, Mr. Deputy Speaker, to make a contribution on this important issue. Perhaps the Chief Secretary would give us his undivided attention for a moment, although I know that he has the enviable facility of being able to listen through each ear independently.

I recognise that on the whole our Revenue system is administered with admirable imperturbability, fairness and justice by Somerset House, but there are one or two occasions on which I have seen an inspector of taxes a little overzealous in the discharge of his duties, and inclined to lean a little heavily on the taxpayer. Knowing the tender regard of the Chief Secretary for the susceptibilities of taxpayers, and knowing that most of the harsher measures designed to grind the faces of taxpayers emanate from the Chancellor of the Exchequer rather than from the Chief Secretary, I should like him to consider that possibility.

If the right hon. Gentleman can accept that that kind of situation might arise, that we might have an inspector who has been pressing a taxpayer a little too hard, it might be fair for the appeal commissioners to have the power to award the costs to the taxpayer if he has been led into the pre-trial procedure by Clause 44. I refer to the costs which the taxpayer might have legitimately incurred in defending his own interests. It is on the basis that we should protect the taxpayer where possible, and on the basis that this modest amendment will not dampen the enthusiasm or impair the efficiency of the Commissioners of the Inland Revenue, that I move the amendment.

11.45 p.m.

Mr. Joel Barnett

I am always happy to tell the hon. and learned Member for Dover and Deal (Mr. Rees), at any hour of the day or night, that he has it wrong. I am afraid that he has it wrong on this occasion. Probably the trouble tends to stem from the somewhat higher spheres in which the hon. and learned Gentleman normally speaks when he talks of pre-trials. I must tell him that the atmosphere at a general commissioners' hearing is not like a trial of any description. One of the merits of general commissioners' hearings is the very informality which prevails. The hon. Member for Hertfordshire, South (Mr. Parkinson), who sits next to the hon. and learned Gentleman, has some experience of these matters. No doubt he will be able to explain the position to his hon. and learned Friend.

The hon. and learned Gentleman is not right to talk of commissioner hearings as being great pre-trial hearings. The amendment relates to a situation in which an inspector of taxes has been "oppressive or vexatious". That is to be more than a little unfair, and I know that the hon. and learned Gentleman is a fair man. Indeed, I see him smiling in agreement. When a matter is brought before a hearing as informal as a commissioner hearing, a taxpayer has the opportunity to appear at modest cost without having to employ learned counsel of the highest standard, such as the hon. and learned Gentleman. Where there are costs, it would be a little unfair for them to be borne entirely by the Revenue.

I am sure that the hon. and learned Gentleman will recognise that there are likely to be many more cases where it is the taxpayer who is being vexatious. The example that we are considering, where a case is brought before the commissioners, is a situation in which from nine to 21 months has passed from the end of the year when the accounts should have been completed. The only reason for the matter being brought before the commissioners is that the taxpayer, despite that amount of time, has not submitted his accounts to enable the inspector of taxes, whether vexatiously or in any other way, to know at what level to assess him. It is to stand the matter on its head to suggest that it is only the inspector of taxes who could be in the wrong. In most cases of this description it is the other way round.

I hope that the hon. and learned Gentleman on reflection will see that what he is suggesting in the amendment would not be fair. I hope that he will ask leave to withdraw the amendment.

Mr. Ridley

My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) and the right hon. Gentleman the Chief Secretary will be flattered by the large number of right hon. and hon. Members who have come to hear this important debate. Those hon. Members who attend the Committee stage of the Finance Bill will feel that their labours upstairs have reached a fitting climax and that all due deference and respect has been paid to us by those hon. Members who have been so kind as to come back from their dinner parties, or whatever it may be, to hear our discussion. But the Chief Secretary runs the risk of falling foul of the Patronage Secretary. If the Patronage Secretary had been listening to what the Chief Secretary said—and I think he may not have been listening—he would have been vexed at the paucity of the reply.

My hon. and learned Friend deployed a sound argument. I could not understand why the Chief Secretary sought to beat my hon. and learned Friend about the head with words when such a course was so unjustified. My hon. and learned Friend is well known on Finance Bills as being one who always advances, with utter reasonableness and great brevity, points of real substance. The Chief Secretary, having sought to defeat him with verbal brickbats, fell back on a weak argument.

In my constituency a certain Mr. Smith was brought before the commissioners for not paying his tax. An assessment was made against him which Mr. Smith refused to pay. After a long period of time and a certain amount of litigation, it turned out that he was the wrong Mr. Smith, that it was a totally different Mr. Smith who owed the tax, and that my constituent was totally guiltless. In such a case it was surely appropriate that costs should have been awarded against the Inland Revenue and not against either Mr. Smith.

I thought that my hon. and learned Friend made a strong case. I was sorry that the Chief Secretary was unable to produce a stronger and more resounding defence of the case against the amendment. I hope that my hon. and learned Friend will not feel abashed. It is clear that the House would like the debate to continue. I know that hon. Members, who have come into the Chamber in such numbers, would like to hear arguments further deployed. I invite my hon. and learned Friend not to let the matter lie. Late though the hour is, and snubbed though hon. Members are by not being allowed to have their full pay increase—

Mr. Deputy Speaker

Order. I would not wish to snub anybody, but I require the hon. Gentleman now to come to this amendment.

Mr. Ridley

I was seeking to let my hon. and learned Friend collect his thoughts.

Mr. Deputy Speaker

Order. I think it was clear what the hon. Gentleman was doing. I was listening to him, as was the rest of the House, but I should like him to speak to the amendment.

Mr. Ridley

Perhaps this is a good moment to conclude by saying that I hope that the House will accept the amendment.

Mr. Peter Rees

With the leave of the House, and With a certain diffidence, but encouraged by the fine words coming from behind me from my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), I must rise to correct the Chief Secretary on one or two misconceptions.

The right hon. Gentleman says that he is always happy to correct me. I am always unhappy to correct him because I feel that a Minister of the Crown as a person holding an important office of State should have his facts right. Let us look again at Clause 44. It is not limited to general commissioners alone, but extends also to special commissioners of income tax. It grieves me that on occasions the Chief Secretary does not appreciate what he is about. I regret to say that on several occasions in the watches of the night I have detected a certain laxity in his approach to these matters.

Clause 44 applies to both general and special commissioners. However informal the nature of the proceedings, they can be regarded as a trial and therefore the procedure laid down in Clause 44 can be accurately described as a pre-trial trial. With his buoyant, insouciant nature he probably coasted through these occasions before the general commissioners in the North-West, perhaps with a little less gravity than we expect of him on these occasions. For people as diffident as myself these are occasions of moment when one appears before the special commissioners. Great sums of money are often at stake and close legal arguments have to be advanced.

Although the Chief Secretary would have us believe that a taxpayer can stumble in, uninstructed and unprepared, my experience in these matters is that more often than not professional assistance is needed by the taxpayer. Due to the machinations of the Government, it now appears that professional assistance will be needed on two occasions, not only on the trial of the substantive issue but also on the trial of the previous application.

I was unable to detect from the Chief Secretary's reply whether he can even envisage oppressive or vexatious conduct on the part of an inspector, or whether he can envisage such conduct but thinks we should condone it. If the first is his proposition, it is belied by the experience of my hon. Friend the Member for Cirencester and Tewkesbury and his constituent, Mr. Smith. I hope that Mr. Smith's case has been presented to the Ombudsman for further examination, because there are these unfortunate administrative lapses, and we should be very quick to pick them up.

If, on the other hand, the Chief Secretary is saying that such lapses, when they occur, should be condoned, that opens up a vast and profound gulf between the two sides of the House, because I do not believe that we should overlook these administrative lapses. It is because they occur, albeit rather rarely, that I feel that there should be some very small measure of protection to the taxpayer. He should he awarded his costs if the general or special commissioners, in their experience and discretion, feel that he has been harshly treated.

I ask no more and no less, and if the Chief Secretary says that there is a certain asymmetry in my approach, I shall have to refer to that argument when we come to the next amendment. Any imbalance is corrected by the fact that the Inland Revenue will, of course, be paid interest from a very early date.

I started in moving the amendment by saying that there was a feeling of good will. I am bound to tell the Chief Secretary that the temperature has been lowered appreciably as a result of his rather ill-judged comments. However, I would be the last person, I hope, to disturb the equanimity of the House at this late hour. Bearing in mind that we shall always be able to return to these matters when we have turned out such unfortunate instances as those of which my hon. Friend has reminded the House, perhaps we shall be able to come back to this on another occasion in another year. I await the possibility of yet a fourth Finance Bill emerging from this administration before long, perhaps in October or November and when that happens I shall present to the House some hard evidence of the kinds of occasion which I fear may arise. Until that moment, to preserve the feeling of good will, albeit slightly chilled, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 72, in page 39, line 14, at beginning insert Section 45(2) above shall not apply to an application under subsection (3) or (4) above; and'.

No. 73, in line 28, at end insert— (2A) Section 56(9) (statement of case for opinion of the High Court) and section 59(6) (election for county court in Northern Ireland) of the said Act of 1970 shall each be amended by substituting for paragraph (b) of the proviso— (b) if too little tax has been charged, the amount under-charged shall be due and payable at the expiration of a period of thirty days beginning with the date on which the inspector issues to the other party a notice of the total amount payable in accordance with the order or judgment of that court."'—[Mr. Joel Barnett.]

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