§ Amendments made: No. 135, in page 55, line 37, leave out 25th ' and insert 26th '.
No. 137, in page 56, line 44, after 32', insert :
`or (conditional exemption for certain buildings, etc. on death) '.
No. 138, in page 56, line 44, after Act ', insert :
' or under paragraph 2 of Schedule (Relief for woodlands) to this Act '.
§ No. 494, in page 56, line 46, leave out three ' and insert six'.—[Mr. Joel Barnett.]
§ Sir Geoffrey Howe (Surrey, East)
I beg to move Amendment No. 697, in page 57, leave out lines 9 to 27 and insert :4.—(1) Where a settlement is made after 26th March 1974 by a settlor who was at the time domiciled in the United Kingdom and the trustees of the settlement arc not resident in the United Kingdom the settlor shall within three months of the making of the settlement or, if it was made before the passing of this Act, within three months of the passing of this Act, send a copy of the settlement to the Board and give the Board such particulars thereof as the Board may require for the purposes of this Part of this Act.(2) Where the trustees of a settlement made by a person domiciled in the United Kingdom at the time the settlement was made become not resident in the United Kingdom the settlor shall make a return to the Board within the time specified in subparagraph (1) above as if references therein to the making of the settlement were to the trustees becoming not resident in the United Kingdom.(3) If the settlor fails to comply with subparagraphs (1) or (2) above within the times therein stated or such long period as the Board shall allow, the settlement shall be void.(4) This paragraph shall not apply to the creation of any resulting, implied or constructive trusts or to the creation of any settlement by will.(5) Paragraph 12(5) of Schedule 5 to this Act applies for the purposes of this paragraph '.
§ Mr. Speaker
With this it may be convenient to discuss the following amendments : No. 690, in page 57, line 9, after 116 person ' insert other than an individual '.
No. 686, in page 57, line 10, after 'trade',insert:
'Other than the trade of banking'.
§ No. 434, in page 61, leave out lines 1 to 9.
§ No. 139, in page 57, leave out lines 9 to 27.
§ Sir G. Howe
Amendments Nos. 697 and 139 are directed to removing from the Bill or modifying the unnecessary and unjustifiable invasion of the privacy that exists between a taxpayer and his professional advisers. They are directed towards the section of the Bill that is becoming known as the "noopers' charter ". It is an area in which we believe the Government have made grave and unnecessary errors from the point of view of the collection of the tax, and damaging errors as regards the citizen and civil liberties. It is yet another instance where it is necessary to draw attention to the volume of protest outside the House at the way in which this legislation has been handled.
In case the Chief Secretary has not observed it already, I draw his attention to the powerful criticism uttered on Saturday by the President of the Institute of Chartered Accountants whilst speaking in Sheffield. He said that the use of the guillotine on the last stages of this Finance Bill amounted tothe crassest folly for which the public generally, and the accountancy and legal professions, and the Inland Revenue in particular, will suffer endless hours of unproductive worry and argumentation to no beneficial end and significant waste of valuable human effort.He concluded with the warning that I echo ; namely :the only effect of the present absurdities is to ensure the continued decline in respect for both Parliament and the law.Nowhere is the Government's determination to reduce respect for the law more evident than in the provisions of Schedule 4, paragraphs 4 and 11, which are the subject of the two amendments with which I am principally concerned at this stage. Paragraph 11, which is the subject of Amendment No. 434, gives 117 the Board of the Inland Revenue wide-ranging powers to inspect any property under very wide circumstances on terms that we regard as unjustifiable. Our amendment is to leave out paragraph 11.
The worst wickedness arises in paragraph 4 and in the disingenuous, misleading way in which in our discussion in Committee the Chief Secretary sought to justify the provisions of the paragraph. It introduces a new principle whereby those concerned with advising a taxpayer are required, without any prior notice, from the Revenue authorities to make returns to the board, unprompted and uninvited, in relation to what their clients have been doing.
The Chief Secretary suggested that precedents were to be found in the Income and Corporation Taxes Act 1970, and he referred to Section 481(3). However, that is not the case. It is true that the Inland Revenue has powers under Sections 443 and 453 of the 1970 Statute to require information from the parties to a settlement on written notice from an inspector. That is a great deal less extensive than the provisions in paragraph 4 of Schedule 4. Paragraph 4 provides for automatic notification not just by transferors but by their representatives and advisers as well.
It is also true that Section 481(3) of the 1970 Act, wrongly cited as a precedent. enables the Commissioners to require by written notice information of a specified kind. But that again is no precedent for what is required here.
The vice here is the provision whereby all advisers other than barristers are required to furnish names and addresses of settlors and trustees not merely in relation to any settlement which takes place under specified circumstances but where they have been concerned with its making—retrospectively, incidentally—and have reason to believe that certain circumstances arise.
I see no reason why barristers should be excluded, unless it be because of a sense of guilt which has pervaded even the Chief Secretary's narrow mind and because he realises that it is unjustifiable in relation to other professional advisers.
This is to impose far too wide a burden for which there can be no justification. It has been criticised bitterly by the pro- 118 fessional institutions—by the Law Society and the Institute of Chartered Accountants—and no significant justification for it has been brought forward.
The author of the leading article in the New Law Journal of 27th February this year described this as "yet another damaging precedent." He set out clearly why it is wrong to allow the Revenue to advance in this respect still further the frontier of intrusiveness in relation to the taxpayer, and he pointed out :…it is the nature of a precedent that it diminishes the onus of proving that the course of conduct proposed is justifiable, at least to the extent that that course of conduct has apparent features in common with the course of conduct sanctioned by the precedent itself.He therefore regards it as a dangerous departure from previous practice.
The case was made even more powerfully in The Times on 10th February, and I adopt these words without qualification :This would be a major attack on the professional obligations of secrecy about a client's affairs. It may be argued that, since it will be an offence for someone domiciied in this country to make such a settlement without notifying it to the authorities, these provisions …do no more than place a further obligation on `accessories after the fact' to inform those in authority.The Times acknowledges :There is some force in this argument, but it must be balanced against the damage that would be done to the relations between a professional adviser and his clients.Let us examine how little force there is in the argument by looking at two previous pieces of legislation, both passed, not surprisingly, under Socialist administrations. The first is the Exchange Control Act 1947, about which Hugh Dalton wrote eulogistically in his autobiography. I recall that it has an unattractive legislative progeny. It was founded on emergency regulations passed under the 1939 emergency legislation. It imposed a tyrannous control on the transfer of funds outside this country, and it is to be regretted that it has been allowed to remain unamended on the statute book. But even that legislation contained in paragraph 1(3) of the Fifth Schedule:Nothing in the preceding provisions of this paragraph shall be taken to require any person who has acted as counsel or solicitor for any person to disclose any privileged communication made to him in that capacity.That is right. The normal rules against disclosure exclude professional advisers 119 from the concept of accessories after or before the fact. If they did not, how could a professional adviser carry out his duties to his client?
More recent, more pervasive and more extensive in its obligations is a statutory instrument passed in 1968 in relation to sanctions on exports to Rhodesia. It is Statutory Instrument No. 1020 of 1968, the Southern Rhodesia (United Nations Sanctions) (No. 2) Order. That imposes very wide prohibitions on the exportation of goods from the United Kingdom to Rhodesia and on their importation. It gives massive and extensive powers of entry, powers of search, very wide liabilities on any people connected with the making of such transactions. But even in that, when we come to Schedule 1 (Evidence and Information), we find the hallowed provision :Nothing in the foregoing subparagraph shall be taken to require any person who has acted as counsel or solicitor for any person to disclose any privileged communication made to him in that capacity.The long tradition of the British legal system has been that whatever the extent of the obligations imposed on citizens, successive Governments have striven to preserve that privilege. It is because of the casual way in which this Government sweep that aside in relation to this tax that I move this amendment.
§ Mrs. Winifred Ewing (Moray and Nairn)
Will the right hon. and learned Gentleman agree that it is very strange to be a member of the legal profession—in my case, the solicitor branch—and to find that the long-standing tradition of confidentiality will be partly thrown to the wind in certain respects? Is he aware that I support him on this matter?
§ Sir G. Howe
I am grateful for the hon. Lady's support. I feel almost guilty, however, because of the special exemption made in favour of the Bar. I can see no justification for any discrimination between her and me.
It is easy for Treasury Ministers and those who advise them to be persuaded "Here is a potential loophole and an area where we should take wide ranging powers. Let us stop it up in advance." But they should not take that action in that way to create a precedent which is without justification. It may be that some revenue will pass through the net because 120 of this, but that would be a small price to pay for preserving the principle to which the hon. Member for Moray and Nairn (Mrs. Ewing) has drawn attention.
Amendment No. 697 asserts a respectable, practicable and workable principle that the obligation of notification shall be placed on the settlor, and we suggest it by way of substitution for paragraph 4. If the Chief Secretary asserted that there was some defect in our draftsmanship, I should regard that as a slender and irrelevant excuse. Our intention is clear. and he should accept it. However, we would support as an alternative the Liberal amendment which seeks to delete the offending paragraph altogether.
Balancing the importance of preserving professional privilege in this respect and the importance of not creating a very dangerous new precedent—an obligation upon professional advisers to notify over a wide, ill-defined area without notice and without requirement from the Inland Revenue—against the marginal advantage to the Revenue of including this paragraph, I hope the Chief Secretary will accept the amendment in one form or another.
Again, according to The Times:Were the Bill to pass into law with this section unchanged, it would have undesirable consequences.… It is an established principle of British tax law that it is the obligation of the client and not the adviser to make the necessary fiscal declarations. There seems to be insufficient reason to change that by introducing provisions that would be very difficult to enforce.I suggest that there is not only insufficient reason but no possible justification. I hope that the Chief Secretary has for once at least arrived in the House armed with a white sheet and/or sackcloth and/or ashes and is prepared to accept the amendment with the appropriate sense of shame for what he has been trying to do.
§ Mr. Graham Page
It has been a long-established principle that in order that justice should properly be administered there should be confidentiality between a client and his legal adviser so that they may communicate frankly and unreservedly. For the solicitor or barrister this is part of the larger principle of confidentiality between advisers. This principle is clearly recognised by the courts in that no legal adviser, be he 121 barrister or solicitor, can be obliged to disclose that confidentiality in the court except with the client's consent. Unless the client knows that he has the protection afforded by the unqualified operation of this principle, he will not communicate freely with his legal advisers for fear that something he may say will come into the hands, in this instance, of the Inland Revenue or some other Government authority, and a serious curtailment of the rights of the individual to unfettered legal advice and representation then arises.
Paragraph 4 of Schedule 4 erodes the principle of the privilege of client and legal adviser. It requiresany person, in the course of a trade or professionto disclose certain information. I am at a loss to understand why it includes "trade or profession ". This matter concerns mainly the legal and accountancy professions. We have never quite gathered from the Chief Secretary in previous debates on this subject why "trade" was included. Nevertheless, anyone whohas been concerned with the making … of a settlementhas to disclose certain information.
It might be said that he has to disclose only the names and addresses of certain persons. But the very fact that he discloses the names and addresses of, for example, the trustees of a settlement implies that those trusteesare not or will not be resident in the United Kingdom ".Otherwise he is under no obligation to give the names and addresses. Therefore, he is disclosing a confidence between himself and his client that the trustees of a settlement will not be resident in the United Kingdom. How on earth does he look into the crystal ball and decide that someone will not be resident in the United Kingdom at some future date? In those circumstances he has to give the names and addresses, and by doing that he is disclosing that he knows certain facts about both the settlor and the trustees.
Indeed, paragraph 4 (3) brings into play another paragraph from Schedule 5. According to that paragraph, if the adviser discloses the names and addresses 122 to the Revenue, he is implicitly giving information about those persons.
When it was thought necessary to erode the principle of privilege between the legal adviser and his client for the purpose of Part XVII, Chapter III, of the Income and Corporation Taxes Act 1970, headed "Transfer of Assets Abroad ", which deals with only a minor part of income and corporation tax law, it was done with some specific provisos. For example, Section 481, having said that certain particulars should be given on receipt of notice from the Inland Revenue, goes on to provide in subsection (3):Notwithstanding anything in subsection (2) of this section, a solicitor shall not … in relation to anything done by him on behalf of a client, be compellable under this section, except with the consent of his client, to do more than state that he is or was acting on behalf of a client, and give the name and address of his client ".It goes on specifically to indicate cases when that name and address should be given—for example, a body corporate, and so on. In Committee the Chief Secretary quoted this section as a precedent for Schedule 4, paragraph 4, but it goes nowhere near being a precedent for that provision.
One major difference is that under Section 481 of the Income and Corporation Taxes Act 1970 the information is required to be given only on notice by the Inland Revenue requesting it. There is a great difference between requiring legal advisers, as it were, to volunteer information about their clients and their doing so on receipt of a specific notice for that information from the Board of Inland Revenue.
The principle that a legal adviser can be obliged, albeit by statute if this paragraph is accepted by the House, to give information about his client's affairs whenever certain matters with which he is dealing for the client are specified in a statute is a serious erosion of the privilege between solicitor and client. Therefore, I suggest that there is no need for the Chief Secretary to press for the inclusion of this paragraph.
Another grave distinction between Schedule 4, paragraph 4, and Section 481 of the 1970 Act is that in the Bill there is no express inclusion of anything which is privileged. Whenever there has been any erosion of this privilege between legal 123 adviser and client on previous occasions, the House has seen fit to put in a specific clause such as that which I have read from Section 481—that a solicitor shall not be, in relation to anything done on behalf of his client, compellable except with the consent of his client—in short, that a solicitor shall not be compelled to breach the privilege of his client.
I say "the privilege of his client" deliberately, because this is not the privilege of the legal adviser. It is the privilege of the client, and, therefore, of the ordinary citizen, that he shall be enabled to consult his legal adviser frankly and freely and receive advice in the same spirit.
The Chief Secretary should accept the amendment readily. Although in principle there is a great distinction between this paragraph and the paragraph which is in the Bill, the amendment would provide the Revenue with more information than would the paragraph in the Bill. Our paragraph would give the information in the proper way. It would oblige the potential taxpayer to provide the Revenue with full information about the settlement and about the residence of the trustees.
In arguing this matter in Committee I proposed to the Chief Secretary that he should replace Schedule 4(4) by a direct duty on the taxpayer. I argued that the Chief Secretary should not seek to get this information by the back door as it were, that he should not seek to get the information by obliging legal advisers to disclose their client's affairs. I argued that clients should not be required to disclose information on notice, but should disclose it in a voluntary way, and then it should be only the name and address.
The amendment goes about it in the right way, but putting an obligation on the taxpayer to provide the Revenue with details of settlements. I should have thought that the Chief Secretary would jump at this and say that this was a reasonable amendment which breaks no established principles of law but merely requires the taxpayer to give information. There is no doubt but that if this paragraph were written into the Bill legal advisers would say to clients concerned "Here is the law. You must send the Revenue a copy of this settlement ".
124 I suppose that the Chief Secretary, with that benign smile which he is now putting on, will say "There would be terrible avoidance of tax if this were done ". I wonder whether he can identify avoidance of tax merely because names and addresses have not been given on previous occasions. Does he believe that his paragraph will be effective, or will he accept the amendment as providing a far better means of getting the information?
§ Mr. John Pardoe (Cornwall, North)
Amendment No. 139 covers the same ground and, as I have already indicated, I reserve my position to ask for a separate vote on it. The reason I felt that this amendment, which was tabled in Committee, should be tabled again for the House to consider was that, though I entirely endorse and support Amendment No. 697, which was moved by the right hon. and learned Member for Surrey, East (Sir G. Howe), it occurred to me that the Government might hide from the principle behind some minutiae or trivia of the amendment—in other words, that it might be possible for the Chief Secretary to say "There is much to be said for what the Opposition have said, but the third comma in the fourth line is not quite in the right place. Therefore, I cannot accept the amendment ".
Just in case the Chief Secretary tries to evade the principle—this is very much a debate on principle—we have in reserve Amendment No. 139 which simply strikes out the powers which paragraph 4 gives to the Inland Revenue.
Paragraph 4 contains provisions requiring professional advisers to inform the Revenue of foreign settlements. In our view and in the view of many on both sides of the House—though I doubt whether we shall have much support in the Lobby when it comes to it—this is an objectionable principle.
The provision is objectionable in terms of history and in terms of our whole professional development over a very long time. It is, first, a gross interference in the professional relationship between the professional adviser and his client. Secondly, it is counter-productive, because it will make people furtive about their affairs.
I am tempted to ask what exactly is a professional relationship. I suppose it 125 is one for which one is paid if one is the professional adviser. I can imagine a situation in which certain sorts of professional advisers will put a notice on their desk, facing the client's chair, saying "If you intend to reveal anything which could possibly come within the scope of this provision I must advise you that the moment you utter those words you are not paying me for my advice."
§ Mr. Graham Page
I am wondering what the position of Members of the House is when their constituents tell them about a settlement which they have made.
§ Mr. Pardoe
That is a very interesting point. I am never quite sure whether a Member is in a professional relationship with his constituents if he is not professionally qualified. I imagine that he is not. I can see that the courts will have a field day on this.
It is an objectionable provision, thirdly, because it is unenforceable in the case of foreign advisers. No doubt we shall hear from the Chief Secretary how he intends to enforce it. It is objectionable, fourthly, because it poses a vague and unrealistic question for the British adviser.
I shall amplify those four points for the benefit of the Chief Secretary. In this country—indeed, in many other countries—professional privilege has, over the years, come to be regarded as of vital importance. This is not just one of those things dreamed up by professional people. I am not a professional man. I do not have a professional qualification, other than the votes I obtained to get to the House, if that is one. However, I believe that the confidentiality between the professional adviser and his clients is of the utmost importance, and that we should be extremely foolish if we took it lightly : This provision will prejudice the relationship in precisely those areas where it most needs to be nurtured.
The provision is counter-productive and will make people furtive in their affairs, because those who wish to escape their tax liabilities will have no difficulty in seeking advice anonymously, through foreign agents. It is possible that a flourishing industry will set up on the other side of the Channel, or in Ireland, or elsewhere, composed of British tax advisers, who will then have to establish that they themselves are not resident or 126 domiciled here, quite apart from advising trustees whether they are resident here. Those seeking the advice of such professional people will have to be advised "If you tell me what you propose to do I may have to tell the Revenue." This is contrary to public policy, and it is a pretty pointless exercise.
The provision also purports to apply to a French advocate or notary as well as to a Channel Islands adviser. Indeed, the provision would be grossly unfair if it were to apply only to British advisers. Yet how does the Revenue propose to enforce it? Foreign advisers, like foreign taxpayers, owe no duty to the United Kingdom, and I cannot see that it is, therefore, in the least enforceable. Above all else, the provision involves the professional adviser deciding on two points which in many cases cannot possibly be answered by him. A man's domicile is often wholly uncertain.
I remember a debate shortly after I came into the House—it must have been in the late 1960s—when Lord Hailsham was replying to an amendment of mine which sought to remove the right of South Kensington and Chelsea voters to buy country houses in my constituency and register themselves there to vote in Chelsea or Kensington. I said that it ought to be possible in this House to define where one lived and where one was registered to vote. I remember the noble Lord giving me a long lecture—he was then a shadow Law Officer—on the difficulties of defining that sort of thing in English law. If it is difficult to define it as between South Kensington and Cornwall, it is even more difficult for some professional adviser to define where trustees live, or will live—which is pretty futuristic. It is particularly difficult for him in cases where a foreign settlement is under consideration.
The provision requires an answer to the question, "Where was the settlor domiciled?" Even disregarding the fact that the provision does not explain what is the relevant time at which the question has to be answered, it is one which the professional adviser, in honesty, cannot answer either way. Similarly, the provision requires an answer to the question, "Where will the trustees be resident?" and often he cannot say that for certain, either.
127 To add to the ludicrous nature of the provision, a professional adviser does not have to make a return if someone else has done it. I think that is a useless provision, since he has no power to find out whether the others involved have made a return. Suppose he asks them, or a client, and takes the client's word that no one has done it. Is that sufficient? No professional adviser owes a duty to anyone other than his client—certainly not to other advisers—so why should one tell another what he has done or not done?
It is not true, as the Chief Secretary said in Committee, that this is the same thing as had been done in previous cases. He quoted the relevant Act. This is an extension of the existing powers of the Inland Revenue. Let us make no mistake about that. At present the Inland Revenue has powers to require information under Section 481 of the Income and Corporation tax Act 1970, but the Revenue has to ask for it first. That is an important difference. Under that Act the adviser is under no duty to supply information except in answer to this question.
It is of some interest to quote the words of Mr. Justice Ackner, in a case which I suppose is really the classic of its sort in this matter—Clinch v. IRC. He said :Had such powers been reserved for use in the detection of the most serious offences in the criminal calendar, doubtless there would have been, not acclamation, but a public outcry, judged by the emotion that has been generated by the recent suggestion of a very learned Law Reform Committee that a judge should be allowed to suggest to a jury that silence could, if they thought fit, be considered by them as some evidence of the accused's guilt.It seems to me, therefore, that we are being asked by the Government to advance into the field of tyrannical interference in the affairs of the individual and, in particular, into the affairs of an individual and his professional adviser.
The Chief Secretary, in Committee, expressed himself as rather surprised at the language used by hon. Members in describing this provision. He said that he was shocked at such words as "monstrous ". In fact, it is not just Members of Parliament who whip up this kind of thing for the benefit of the Committee stage. On 27th February a letter was written to The Times by three very 128 learned Members of the Bar, one of whom, Mr. Leolin Price, QC, said :The proposal would have us adopt the practice of totalitarian States ; for it has been their hateful practice—in Nazi Germany and Soviet Russia and elsewhere—to compel citizens to spy on their neighbours … It is easy to find reasons for any new demand that is made on behalf of the State. It is also fatally easy to step on to the slippery path to tyranny …The excuses, the reasons which the right hon. Gentleman advanced in Committee, will no doubt be advanced again today—that the Inland Revenue cannot have its hands tied behind it, and must not be disadvantaged in finding the tax avoiders. No hon. Member on either side of the House wants to ease the path of those who break the law. At the same time, we cannot allow a situation to creep into our tax affairs in which the end always justifies the means.
There has been a great deal of controversy recently about the visit to this country of the former head of the KGB. I notice that the Secretary-General of ASTMS, Mr. Clive Jenkins, said in a television interview the other day that the head of the KGB was no different from the head of the British Secret Service. I thought that was a monstrous parallel. If this provision is passed, he would have done far better to say that the correct parallel might well be drawn between the head of the KGB and the President of the Board of Inland Revenue, because the Inland Revenue is becoming an organisation somewhere between the CIA and the KGB.
§ Mr. Esmond Bulmer (Kidderminster)
I support Amendment No. 697. I think it is absolutely true that when taxes go too far—that is to say, when they go beyond people's willingness to pay them—the law is undermined. We have seen the same thing in industrial relations in the last two years. In Holland it was found that a wealth tax between 1½ per cent. and 2 per cent. represented the difference between people's readiness to pay or not. If one remembers that inflation is running in excess of 20 per cent. in this country, capital gains tax at the present time represents a wealth tax more severe than that operating anywhere else in Western Europe.
In this Bill there is capital transfer tax which can inflict upon a family a tax in excess of 100 per cent. of the asset. 129 In this situation I have no doubt that the threshold has been crossed. The Government and the Revenue recognise this in the offending paragraph 4. I believe the effect will be as the hon. Member for Cornwall, North (Mr. Pardoe) has pointed out, that people will go overseas for advice. I do not need to say any more about that.
Secondly, I think that those who perhaps do not think in those terms will tend to revert to do-it-yourself advice. They will go to quarters which are perhaps not reputable and will cause the Revenue a lot more trouble. I believe it is axiomatic that the Revenue can function efficiently only with the help of responsible professionals. To the extent that the Bill in its present form makes this less likely, it is doing a disservice to the Revenue and to the Government.
The Government continue to miss the simple truth that if they try to close every loophole they will inflict grave economic damage on this country. We have seen it in forestry, and I believe that we shall see it in jobs. The Chancellor of the Exchequer has said that it is not possible to calculate how much revenue has been lost by evasion. Neither is it possible to calculate how many jobs will be lost because people will say that they cannot pay the capital transfer tax and will for that reason refrain from investing.
It has been said that Britons are Romans in the course of becoming Italians. There is, I believe, a real danger that, as these taxes ravage and the fires of inflation burn, we shall, indeed, become a nation of fiddlers. That process will not be stopped by forcing the professions to abandon confidentiality. It will be stopped, or, at least, it will be redressed, if the Government tackle inflation firmly, and if they reduce the confiscatory levels of taxation which they propose.
§ Mr. Ian Percival (Southport)
Hon. Members have made a series of telling points, and, to avoid repetition, I shall dwell only on the wider aspect of this matter, though, before I do so, I must say that I agree wholeheartedly with everything said about the seriousness of the proposed breach of the principles of confidentiality which we have all for so long observed.
This is yet another instance of a Government putting administrative con- 130 venience before the rights of the individual. It is an obnoxious and dangerous practice, of which we have seen far too much in the last 10 years. It must stop.
The whole life of this country has for a long time depended to a very large extent upon respect for and observance of the law. One of the reasons for this respect for and observance of the law has been that people have recognised that, although not always successful, the purpose of the law, or one of its main purposes, has been to protect the weak from the strong, to protect the individual from the State.
Now, however, time and again we see the law being changed to give more strength to the already strong—in this instance, to the administration—at a time when most individuals already feel that the balance between the administration and the individual has become wholly wrong, that there is, indeed, no balance or anything approaching the balance that there should be, and that what is needed is more protection for the individual against the administration, not more power to the administration against the individual.
It is a thoroughly bad development when individuals feel, and rightly feel, that the law is constantly being used to give more strength to the already strong and is being used less and less to protect the individual from the strong.
There will be two practical consequences of this process unless we stop it. It will bring the law further into disrepute. It pains me to have to use the words "further into disrepute" since they connote that it has already been brought substantially into disrepute, and that is a terrible thing to have to recognise. But we delude ourselves if we do not recognise that one of the results of our activities as law makers in this House has been to bring the law substantially into disrepute. Our task is to stop it falling further into disrepute.
The second inevitable consequence is that if we allow the law to fall further into disrepute the temptation to ignore it will increase. It will be ironic if we here, who all say—sincerely, I am sure—that the laws of our country should be observed by all, make those laws so badly 131 as to render it inevitable that people pay less and less regard to them.
I understand, of course, that it would be very convenient administratively for the gentlemen in Whitehall and for Ministers to have these powers. It may well be that, without them, somebody would escape the net. But that is an argument to which there is no end. One can go on thinking of more and more things which would make it easier for the administrators to administer.
The further invasion of the rights of individuals entailed in gaining the small advantage of administrative convenience which these provisions represent is too high a price to pay. The giving up of that minimal or marginal administrative convenience, on the other hand, would be but a small price to pay for recognising for once that the rights of individuals are a lot more important in many instances than administrative convenience of the kind we are discussing here.
I hope that, both on such general grounds and for the detailed reasons advanced today, the Government will give way.
§ 8.15 p.m.
§ Mr. Ian Gow (Eastbourne)
I support what was said by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in moving his amendment. I do so for four principal reasons.
The primary liability to give information to the Revenue ought to lie with the prospective taxpayer and not with his professional advisers. I declare an interests here, in that I am a practising solicitor, and the principle of confidentiality between client and professional adviser is, for me, of the first importance. I hope that the Chief Secretary will tell us what discussions he had with the chartered accountants, the certified accountants, the Law Society, and the Bar Council. Presumably, he had discussions with all those bodies, not least in order to exclude barristers from the provisions of paragraph 4—the part of the schedule which we find so objectionable.
My second objection to paragraph 4 is that it is drafted in an extremely sloppy way. When the Chief Secretary was dealing with this matter in Committee—this was on 18th February—his hon. Friend 132 the Member for Nottingham, East (Mr. Dunnett) raised the question whether a will amounted in law to a settlement. It is well known that after the death of a testator trusts frequently come into operation. I hope that the Chief Secretary will deal with that matter tonight, because it is one of immense practical significance for chartered accountants and solicitors.
§ Sir Geoffrey Howe
It appears that Amendment No. 144 in the name of the Chancellor of the Exchequer is intended to meet that point by dealing separately with any settlement made by will, but my hon. Friend may care to give consideration to the possibility which strikes me, that although intended to meet the point it fails to do so because it separates any settlement made by will and any other settlement, so that the sub-paragraph would read :and so on. It seems probable that it will apply exactly as it did as originally drafted. Perhaps the Chief Secretary, if not my hon. Friend, will give thought to that. I do not think that the right hon. Gentleman can be saved by the printer from the consequences here.
settlement if such a return in relation to "—
- "(a) any settlement made by will, or
- (b) any other
§ Mr. Gow
I am grateful to my right hon. and learned Friend, since what he says emphasises my point. The Bill and the Chief Secretary's amendments are drafted in a sloppy way. Even on Amendment No. 144, what is the date from which the settlement made by a will operates? We all know that a will speaks from death. Does the Chief Secretary's amendment refer to the date of the will or the date of the death?
I wish to continue with my criticism of the drafting of paragraph 4 of the schedule. What is meant by the wordsin the course of a trade or profession carried on by him … has been concerned with the making … of a settlement and knows or has reason to believe … that the trustees of the settlement are not or will not be resident in the United Kingdom."?How can a professional man—a chartered accountant or solicitor—possibly know who the trustees of a will, the executors of a will or the trustees of a settlement are to be in the future, and whether or not they will be resident in the United Kingdom? This is pure crystal ball gazing. 133 In Standing Committee the Chief Secretary failed to answer the point when it was raised by the hon. Member for Nottingham, East on 18th February.
Why are barristers to be excluded from the provision? The Opposition can only assume that as a result of a guilty conscience, and as a sop to his conscience, the Chief Secretary has exempted barristers. I urge the Government to accept that a principle of the greatest importance is at stake here. The obligation to make a disclosure should rest with the taxpayer when he completes his tax return each year. It would be a perfectly simple matter for the Chief Secretary to ask, in the tax return form, whether the taxpayer had made a settlement during the previous 12 months. It the Chief Secretary is prepared to listen to arguments he should accept the amendment, which seeks to reinforce the principle that we have followed down the centuries, that of confidentiality between a professional man and his client.
If the Government persist in their intention the consequence will be that professional men will set up business overseas—perhaps in the Republic of Ireland—and the Chief Secretary will not get his information. It is time the Government stopped setting up this growing network of informers. I hope that the Chief Secretary will accept the amendment.
§ Mr. Joel Barnett
May we first get one thing absolutely clear? We are not here discussing the average taxpayer on PAYE. Paragraph 4 deals with settlements and trusts. We can do without the gross exaggeration which has emanated from the Opposition benches. Conservatives have made the most far-fetched speeches imaginable. They have reached the height of absurdity. We are talking here about trusts and settlements which are often sophisticated tax avoidance schemes. We are asking only that the solicitor or other professional adviser should give the name and address of the settlor. That is the extent of this so-called monstrosity. It is nonsense for the Conservatives to talk about its being a snooper's charter. If there were disclosure with consent of the client there would, of course be no breach of privilege, and a solicitor would not be disclosing anything that the client was not himself obliged to disclose—
§ Mr. Barnett
The hon. and learned Gentleman must control himself. I have only just begun, and I shall be dealing with all the points he raised. If the client is not prepared to consent to the information being disclosed there is at least the possibility that he is contemplating evasion of tax, and not avoidance. If there were evasion, no privilege would be involved, at least to that extent.
When I hear hon. Members talking in the way they have been I am astonished. We must be clear what we are talking about. When they say that this is a great infringement of personal liability they seem to forget that many democratic countries have much wider powers than we are endeavouring to take —[An HON. MEMBER : "East Germany? "] The hon. Member should know better than to say that, but perhaps he does not. Other democratic countries take much wider powers to ensure that when there is a tax on the statute book it is paid. That is why they take those powers, and that is why we give powers to the extent we do to the Inland Revenue. Here we are talking about the possibility, which we know exists, of settlements being arranged in a way that the Revenue would never find out about. We discussed this matter in Standing Committee at great length.
We cannot go to a foreign professional man and obtain information, because we do not have the power. Frequently, however, a professional man in this country will know about a professional man abroad who is setting up a particular trust. It is not asking too much that the Revenue should have the name and address of the settlor and the trustee. That is all that paragraph 4 seeks to ensure.
I now turn to the amendment moved by the right hon. and learned Member for Surrey, East (Sir G. Howe), not the Liberal amendment, which wants to go the whole hog and remove the paragraph altogether. The right hon. and learned Gentleman's amendment would provide that in place of paragraph 4 there should be a sanction of nullity. I venture into these matters with great trepidation. When I see distinguished Conservative lawyers present I am reluctant to venture into such 135 areas, but I shall deal with some of the fairly straightforward points.
Where a United Kingdom settlor makes an overseas settlement it would place on the settlor the obligation to supply a copy of the settlement and any other necessary information to the board, and if he failed to do so the settlement would be void. Paragraph 4 broadly requires certain persons concerned with the making of a settlement to inform the Revenue if they know the trustee will not be resident in the United Kingdom.
The method the amendment chooses to deal with the matter was considered when the Bill was being prepared, but we rejected it as being impractical. The idea of imposing a sanction of nullity is to be found in the income tax legislation of some countries, and it would enable the Revenue to disregard, for tax purposes, transactions entered into for the purpose of avoiding tax. Provisions of this kind have created considerable problems in practice, because when one disregards what has happened in reality it is not always easy to know what should be hypothetically substituted for it. In any event, the function of an "annihilation" provision for capital transfer tax would be quite different from its function for income tax. Despite the practical difficulties it may be a sensible aim, in income tax matters, to say that a man should still be treated as taxable on the income of which he has sought to divest himself.
On the other hand, it scarcely makes sense, in the context of capital transfer tax, to penalise a man for trying to evade tax when he transfers his property by saying that he is to be treated as still having it, which is what the amendment would do. This would be to wipe out the effect of the charge, which would be a rather strange method of rewarding attempted evasion of the tax.
I understand that the right hon. and learned Gentleman may support the amendment on the footing that the sanction of nullity would not be effective for capital transfer tax purposes, but would be effective for all other purposes. If that is so, the intention would require to be spelled out rather more explicitly than it is.
136 8.30 p.m.
Apart from the reasons that I have just given, there is another very important one. Besides the fact that the United Kingdom legislature cannot effectively impose a sanction of nullity if a transaction is governed by foreign law—and nine times out of 10, settlements of this kind would be made with overseas trustees—the property transferred when a settlement is made will be held by trustees, who will be under a legal duty, enforceable in the jurisdiction where they live, to give effect to the terms of the settlement. It would be a completely empty gesture for the House of Commons to say that the property still belonged to the settlor, which is what the amendment would do.
§ Sir G. Howe
I acknowledge the skill with which the right hon. Gentleman has read the analysis of our amendment. Does he acknowledge, first, that any difficulties of the imperfections of the amendment would be overcome by accepting the Liberal amendment to delete the paragraph altogether? Secondly, does he acknowledge that the fact that he has had to appeal to the traditions of democratic countries unnamed by way of precedent proves that this is an innovation without precedent in the tax law of this country? Thirdly, does he acknowledge that when he says that this is not of general application but applies only to settlors, that does not affect the fact that it is a departure of principle, that it is an innovation just as damaging, if it affects millions of people in the magistrates' courts, as if it affects settlors in one jurisdiction? Does he acknowledge those three things—first, that the Liberal amendment would knock it out ; secondly, that there is no precedent in this country ; thirdly, that it is an important departure of principle?
§ Mr. Barnett
I recognise that the Liberal amendment would knock it out, but I am not prepared to recommend my hon. Friends to accept that amendment. It is true that we are extending our present law in these matters—I have never sought to deny it—but if we are putting a tax on the statute book, it is right that the Revenue should be able to enforce it if people seek to evade it, particularly when it is a tax that enormously reduces the extent to which 137 the former estate duty could be avoided. Clearly, opportunities will be taken wherever possible to find whatever loopholes may be available, and what the right hon. and learned Gentleman is seeking to do is to put in another loophole.
§ Mr. Gow rose—
§ Mr. Barnett
I am still replying to the right hon. and learned Gentleman. I said that it was with some trepidation that I entered upon these legal discussions with right hon. and learned and hon. and learned Gentlemen opposite. I am honoured and flattered that the right hon. and learned Gentleman has recognised that I have taken the point that he was trying to make and that he has appeared to recognise that his own amendment would not deal with the problem. I hope that he will appreciate that all his amendment would do would be simply to cancel out any transaction that was a virtual form of evasion, so that there would be no tax where there should be tax.
§ Mr. Gow
The right hon. Gentleman has now conceded that there is a breach of an established principle. He has sought to justify it on the ground that it will not affect many people. Surely the number of people affected by a breach of principle is irrelevant. The Government must be the champion of all and not just the champion of what they call the big battalions.
§ Mr. Barnett
The hon. Gentleman must understand that what is on the statute book now is not necessarily right for all time. If he is saying that, it is a strange philosophy that he is attempting to put to the House. I am saying that if the Revenue is left without these powers, and it has been without these powers for many years, enormous opportunities will be available for a small minority of people to use trusts and settlements to avoid tax liability.
If we are putting a new tax on the statute book, it is not unreasonable to provide that the Revenue shall have power to enforce it. If that is extending a principle, I accept and support it.
§ Mr. Powell
Is there any limitation on personal liberty that could not be justified on exactly the arguments that the right hon. Gentleman is putting?
§ Mr. Barnett
We are not talking about any extension. We are talking about an extension to trusts and settlements set up specifically by a small number of people who are seeking to avoid tax. It would be the height of absurdity to suggest that the Inland Revenue should tie at least one hand behind its back when dealing with this kind of person. That would be nonsense. I am sorry, but I cannot accept it.
§ Sir G. Howe
Surely the right hon. Gentleman accepts that almost all the law enforcement authorities, be they the Inland Revenue or any other, have so far managed to govern a free society with one hand tied behind their backs, and that it is a principle that a professional adviser shall not be required, without notice and without the consent of his client, to inform upon his client to the authorities of the State? We have survived through the centuries, upholding that principle and being dependent upon it. Does the Chief Secretary suggest that the new tax is an innovation of such catastrophic importance that that principle should be overthrown? Where do we go from here? Why is it justified?
§ Mr. Barnett
The right hon. and learned Gentleman is right in saying that this principle has lasted for a long time, but during that time many people have avoided their fair share of tax whilst the vast majority of ordinary taxpayers have paid theirs. I cannot believe that what the right hon. and learned Gentleman is seeking to do is to ensure that that kind of situation should continue. I am not prepared to recommend my hon. Friends to support the amendment.
§ Mr. David Howell
The Chief Secretary has gone too far this time, and I believe he knows it, with his uncharacteristic outburst at the end containing as it did the absurd statement, which he will regret when he reads it in Hansard, about how many people evade their fair share of tax.
§ Mr. Graham Page
The Chief Secretary did not talk about evading. He was talking all the time about avoiding tax. Why should not people avoid paying tax? Why do they have to be snooped on if they are doing a legal act?
§ Mr. Howell
My right hon. Friend is correct. We are dealing with a Government and a Chief Secretary who believe 139 that the act of life is a loophole to avoid death. Therefore, for those who are not prepared to die and be liable for estate duty the loophole of life must, because of the Chief Secretary's way of looking at things, be made much more difficult.
The right hon. Gentleman has gone too far. There is no precedent for this. Section 481(3) provides no precedent for the new provisions in paragraph 2 of the schedule. Under Section 481(3) it is the Revenue which calls upon the solicitor or the agent making the return, but that is not the case under this paragraph. This paragraph breaches the principle of privileged communication between a solicitor and his client or whoever in the broad terms of the paragraph is concerned with making the settlement. Secondly—and the Chief Secretary did not mention this when he spoke about what the Revenue was being asked to do—it places the onus or obligation on a solicitor or whoever is concerned with the making of the settlement.
These are new principles without precedent, and the Chief Secretary has sought to defend them both here and in Committee upstairs by what might be called a housemaid's baby talk. First, he used the argument "Do not worry. It is only just names or addresses. It is a small matter of giving that information ". Secondly, he used the argument "Do not worry. It is only a small amount of privacy that is being surrendered." I should like to take both those thin ends of larger wedges and examine the sharpness of them with my thumb.
I invite the House to think first about the phrase "only names and addresses "We know that it is a small step from there to "If he is not at that address, where did he go? If he is no longer at that address, when did he leave? What are his or her movements? What were his or her movements after a certain time? Why did he go? Who was he with? What was he seeking? What was he trying to avoid? "We know the cataclysm of questions that can follow from the innocent matter of the name and address. We have heard it happen in other countries, be they the Chief Secretary's democracies 140 to which he irrationally refers, or those where the word "democracy" is not used in a way which we would recognise. We know what a large wedge that is, and we know how much can follow from that simple question "Only your name and address, please ; that is all we want. The only obligation is to provide the name and address."
We come to the second easy little phrase that pops in almost unobtrusively "just a small amount of privacy ". How the Chief Secretary measures a small amount of privacy I do not know. Privacy is becoming increasingly valued as it diminishes, and it diminishes fast. The more it diminishes, the more crucial it is. When a Minister says that by decree—it is little less than that with the guillotine on the debate—a small further amount of privacy is to be removed, we ask "What will there be in exchange? "What has the Minister given to the community? What has the Minister given in the eyes of the people who govern the affairs of the country to be sacrificed against this further surrender of privacy?
We are told nothing, except some generalisations from the Chief Secretary about many people not having paid their fair share of tax and having avoided tax by not dying. He seems to think that it is time they did die so that they could pay this ill-chosen tax instead of estate duty. That is a silly argument related to a dangerous and serious principle on which we are being asked to give way.
There are other difficulties with the Government's proposals and their Amendment No. 144. I know that the Chief Secretary is trying to meet the point made by the hon. Member for Nottingham, East (Mr. Dunnett) in Committee about settlements under will. As the hon. Gentleman rightly said, how is one to know whether from 26th March—remember, the legislation runs from a year ago—one has been concerned in making a will which might have led to a settlement which might become liable under this provision? It is impossible to know. I am doubtful whether Amendment No. 144 meets the need to rule out all settlements under a will. Although it rules them out, it immediately rules them in again by the additional provisions in the rest of the 141 amendment. It would be fair for the House to have a better explanation of that than the one which the Chief Secretary gave.
Another aspect raised in Committee but not this evening is the chilling one of retrospection. We are almost reduced to shrugging our shoulders at each new retrospective incursion the Government make, regardless of whether they were in power, which Parliament was sitting at the time and whether a previous Parliament overruled them. All these propositions, courtesies and customs have been thrown out.
Here is another. Because of the retrospective nature of the legislation, confidential discussions which took place between March and November between clients and solicitors, agents or other advisers are not confidentially protected. When it became clear that the Government were going much further, although there had been no indication of that beforehand, those privileged confidential discussions became not confidential at all. By a law which the participants did not know about at the time, which was not threatened and which was not on the statute book, if the Bill reaches the statute book those conversations at that time will become not privileged and not confidential.
That is a monstrous and lethally sinister move of a kind that makes Government's other retrospective efforts in the Bill look relatively pale and paltry. It stretches into the most intimate and detailed relationships between the professional adviser and his client which we have succeeded in defending over many years and through many crises. When the pressure has been, in war and in peace, to do things which may infringe liberty for the greater good, we have succeeded in defending this precious privilege, amongst others.
That is a triumph and a victory for the basis of our liberties. Now it is to go because the Chief Secretary is worried about all those people who were undermining the principles and being unfair in insisting on escaping the death duties which he believes should have applied to all. The right hon. Gentleman has said that all that is being asked is that 142 the Revenue shall have the names and addresses. He added one other category.
That is just not true. Many hon. Members respect the Chief Secretary and believe that he has had a rough deal at the hands of some of his colleagues. He is no doubt in great difficulty even now, not only on this Bill but on other matters of public expenditure as he tries to keep at bay the maniacs in his Government, who would inflate public expenditure to the point when the pound is hardly worth the paper it is written on. We appreciate the difficulties he is under. Why does he stand up and tell us something that is not true?
The schedule not only enables the Revenue to have the names and addresses—that is an incursion into privilege about which we have complained—but it places the obligation on the citizen-informer, on the agent of his own volition, to give the names and addresses required. This is not in response to a request by the Revenue, as under Section 481, not in response to a normal provision or request of any kind from the authorities.
It would not only be names and addresses. This is a shabby piece of work, shabbier than much of the work that the Chief Secretary has had to undertake at the behest of his colleagues in the name of Heaven knows what. Of all the aspects of this lethal tax, this is the nastiest, and my hon. and right hon. Friends should have no hesitation whatever in supporting the amendments. If there are difficulties in the drafting of our amendment, we accept them. I urge my hon. and right hon. Friends to support the Liberal Amendment No. 139 and to wipe this vicious provision out of this vicious Bill.
§ Question put, That the amendment be made :—
§ The House proceeded to a Division—
§ Miss MARGARET JACKSON and Mr. JOHN ELLIS were appointed Tellers for the Noes but, no Member being willing to act as Teller for the Ayes, Mr. DEPUTY-SPEAKER declared that the Noes had it.
§ Amendment negatived.
§ Amendment proposed: No. 139, in page 57, leave out lines 9 to 27.—[Mr. Pardoe.]143
§ Question put, That the amendment be made :—144
§ The House divided: Ayes 240, Noes 264.147
|Division No. 136.]||AYES||[8.48 p.m.|
|Adley, Robert||Gow, Ian (Eastbourne)||Morrison, Charles (Devizes)|
|Alison, Michael||Gower, Sir Raymond (Barry)||Morrison, Hon Peter (Chester)|
|Arnold, Tom||Grant, Anthony (Harrow C)||Neave, Airey|
|Atkins, Rt Hon H. (Spelthorne)||Gray, Hamish||Nelson, Anthony|
|Awdry, Daniel||Grieve, Percy||Neubert, Michael|
|Bain, Mrs Margaret||Griffiths, Eldon||Newton, Tony|
|Baker, Kenneth||Grist, Ian||Nott, John|
|Banks, Robert||Grylls, Michael||Onslow, Cranley|
|Bell, Ronald||Hall, Sir John||Oppenheim, Mrs Sally|
|Bennett, Sir Frederic (Torbay)||Hall-Davis, A. G. F.||Page, John (Harrow West)|
|Bennett, Dr Reginald (Fareham)||Hampson, Dr Keith||Page, Rt Hon R. Graham (Crosby)|
|Benyon, W.||Hannam, John||Pardoe, John|
|Berry, Hon Anthony||Harrison, Col Sir Harwood (Eye)||Parkinson, Cecil|
|Biffen, John||Havers, Sir Michael||Penhaligon, David|
|Biggs-Davison, John||Hawkins, Paul||Percival, Ian|
|Blaker, Peter||Henderson, Douglas||Peyton, Rt Hon John|
|Boscawen, Hon. Robert||Heseltine, Michael||Pink, R. Bonner|
|Bowden, A. (Brighton, Kemptown)||Hicks, Robert||Powell, Rt Hon J. Enoch|
|Boyson, Dr. Rhodes (Brent)||Holland, Philip||Prior, Rt Hon James|
|Brotherton, Michael||Hordern, Peter||Pym, Rt Hon Francis|
|Brown, Sir Edward (Bath)||Howe, Rt Hn Sir Geoffrey||Raison, Timothy|
|Buchanan-Smith, Alick||Howell, David (Guildford)||Rathbone, Tim|
|Buck, Antony||Howells, Geraint (Cardigan)||Rees, Peter (Dover & Deal)|
|Budgen, Nick||Hunt, John||Rees-Davies, W. R.|
|Bulmer, Esmond||Hurd, Douglas||Renton, Rt Hon Sir D. (Hunts)|
|Burden, F. A.||Hutchison, Michael Clark||Renton, Tim (Mid-Sussex)|
|Butler, Adam (Bosworth)||Irving, Charles (Cheltenham)||Ridley, Hon Nicholas|
|Carlisle, Mark||James, David||Ridsdale, Julian|
|Carson, John||Jenkin, Rt Hon P. (Wanst'd & W'df'd)||Rifkind, Malcolm|
|Chalker, Mrs Lynda||Johnson Smith, G. (E. Grinstead)||Roberts, Michael (Cardiff NW)|
|Channon, Paul||Jones, Arthur (Daventry)||Roberts, Wyn (Conway)|
|Clark, Alan (Plymouth, Sutton)||Joseph, Rt Hon Sir Keith||Ross, Stephen (Isle of Wight)|
|Clark, William (Croydon S)||Kershaw, Anthony||Ross, William (Londonderry)|
|Clarke, Kenneth (Rushcliffe)||Kilfedder, James||Rost, Peter (SE Derbyshire)|
|Clegg, Walter||King, Evelyn (South Dorset)||Sainsbury, Tim|
|Cockcroft, John||King, Tom (Bridgwater)||St. John-Stevas, Norman|
|Cooke, Robert (Bristol W)||Knight, Mrs Jill||Shaw, Giles (Pudsey)|
|Cope, John||Knox, David||Shelton, William (Streatham)|
|Cormack, Patrick||Lamont, Norman||Shepherd, Colin|
|Costain, A. P.||Lane, David||Shersby, Michael|
|Crawford, Douglas||Langford-Holt, Sir John||Silvester, Fred|
|Critchley, Julian||Latham, Michael (Melton)||Sims, Roger|
|Davies, Rt Hon J. (Knutsford)||Lawrence, Ivan||Sinclair, Sir George|
|Dean, Paul (N Somerset)||Lawson, Nigel||Skeet, T. H. H.|
|Dodsworth, Geoffrey||Le Marchant, Spencer||Smith, Dudley (Warwick)|
|Douglas-Hamilton, Lord James||Lester, Jim (Beeston)||Speed, Keith|
|du Cann, Rt Hon Edward||Lewis, Kenneth (Rutland)||Spence, John|
|Durant, Tony||Lloyd, Ian||Spicer, Michael (S Worcester)|
|Eden, Rt Hon Sir John||Luce, Richard||Sproat, Iain|
|Edwards, Nicholas (Pembroke)||MacCormick, Iain||Stainton, Keith|
|Elliott, Sir William||McCrindle, Robert||Stanbrook, Ivor|
|Emery, Peter||Macfarlane, Neil||Stanley, John|
|Evans, Gwynfor (Carmarthen)||MacGregor, John||Steel, David (Roxburgh)|
|Ewing, Mrs Winifred (Moray)||Macmillan, Rt Hon M. (Farnham)||Steen, Anthony (Wavertree)|
|Eyre Reginald||McNair-Wilson, M. (Newbury)||Stewart, Donald (Western Isles)|
|Fairbairn, Nicholas||McNair-Wilson, P. (New Forest)||Stewart, Ian (Hitchin)|
|Fairgrieve, Russell||Marshall, Michael (Arundel)||Stokes, John|
|Farr, John||Marten, Neil||Stradling Thomas, J.|
|Fell, Anthony||Mather, Carol||Tapsell, Peter|
|Finsberg, Geoffrey||Maude, Angus||Taylor, Teddy (Cathcart)|
|Fisher, Sir Nigel||Maudling, Rt Hon Reginald||Tebbit, Norman|
|Fletcher, Alex (Edinburgh N)||Mawby, Ray||Temple-Morris, Peter|
|Fletcher-Cooke, Charles||Maxwell-Hyslop, Robin||Thompson, George|
|Fookes, Miss Janet||Mayhew, Patrick||Townsend, Cyril D.|
|Fowler, Norman (Sutton C'f'd)||Meyer, Sir Anthony||Trotter, Neville|
|Fox, Marcus||Miller, Hal (Bromsgrove)||van Straubenzee, W. R.|
|Fraser, Rt Hon H. (Stafford & St)||Mills, Peter||Vaughan, Dr. Gerard|
|Freud, Clement||Miscampbell, Norman||Viggers, Peter|
|Fry, Peter||Mitchell, David (Basingstoke)||Wainwright, Richard (Colne V)|
|Galbraith Hon. T. G. D.||Moate, Roger||Wakeham. John|
|Gardiner, 'George (Reigate)||Molyneaux, James||Walker, Rt Hon P. (Worcester)|
|Gardner, Edward (S Fylde)||Monro, Hector||Walters, Dennis|
|Gilmour, Sir John (East Fife)||Montgomery, Fergus||Watt, Hamish|
|Glyn, Dr Alan||Moore, John (Croydon C)||Weatherill, Bernard|
|Goodhart Philip||More, Jasper (Ludlow)||Wells, John|
|Goodhew, Victor||Morgan, Geraint||Welsh, Andrew|
|Goodlad, Alastair||Morgan-Giles, Rear-Admiral||Whitelaw, Rt Hon William|
|Gorst, John||Morris, Michael (Northampton S)||Wiggin, Jerry|
|Wigley, Dafydd||Wood, Rt Hon Richard||TELLERS FOR THE AYES:|
|Wilson, Gordon (Dundee E)||Young, Sir G. (Ealing, Acton)||Mr. A.J. Beith and|
|Winterton, Nicholas||Mr. Cyril Smith.|
|Abse, Leo||Fernyhough, Rt Hon E.||Marquand, David|
|Allaun, Frank||Flannery, Martin||Marshall, Dr Edmund (Goole)|
|Anderson, Donald||Fletcher, Raymond (Ilkeston)||Marshall, Jim (Leicester S)|
|Ashley, Peter||Fletcher Ted (Darlington)||Mason, Rt Hon Roy|
|Ashley, Jack||Foot, Rt Hon Michael||Meacher, Michael|
|Ashton, Joe||Ford, Ben||Mellish, Rt Hon Robert|
|Atkins, Ronald (Preston N)||Forrester, John||Millan, Bruce|
|Atkinson, Norman||Fowler, Gerald(The Wrekin)||Miller, Dr M.S.(E Kilbride)|
|Bagier, Gordon A.T||Fraser, John (Lambeth, N'w'd)||Miller, Mrs Millie (Ilford N)|
|Barnett, Guy (Greenwich)||Freeson, Reginald||Mitchell, R.C (soton, Itchen)|
|Barnett, Rt Hon Joel (Heywood)||Garrett, John (Norwich S)||Molly, William|
|Bates, Alf||Garrett, W.E.(Wallsend)||Moonman, Eric|
|Bean, R. E.||George, Bruce||Morris, Alfred (Wythenshawe)|
|Benn, Rt Hon Anthony Wedgwood||Gilbert, Dr John||Morris, Charles R. (Openshaw)|
|Bennett, Andrew (Stockport N)||Ginsburg, David||Mullley, Rt Hon Frederick|
|Bidwell, Sidney||Golding, John||Mulley, Rt Hon Frederick|
|Blenkinsop, Arthur||Gourlay, Harry||Murray, RT Hon Ronald King|
|Boardman, H||Graham,Ted||Newens, Stanley|
|Booth, Albert||Grant, George (Morpeth)||Noble, Mike|
|Boothroyd, Miss Betty||Hamilton, James (Bothwell)||Oakes, Gordon|
|Bottomley, Rt Hon Arthur||Hamilton, W. W (Central Fife)||Ogden Eric|
|Boyden, James (Bish Auck)||Hardy Peter||O'Halloran Michael|
|Bradley, Tom||Harper, Joseph||Orbach, Maurice|
|Bray Dr Jeremy||Harrison, Walter(Wakefield)||Ovenden, John|
|Brown, Hugh D. (Provan)||Hatton, Frank||Padley, Walter|
|Brown, Robert C.(Newcastle W)||Healey, Rt Hon Denis||Palmer, Arthur|
|Brown, Ronald (Hackney S)||Hooley, Frank||Park, George|
|Buchan, Norman||Hooley, John||Parker, John|
|Buchanan, Richard||Howell, Denis(B'ham, Sm H)||Pavitt, Laurie|
|Butler, Mrs Joyce(Wood Green)||Hoyle, Doug (Nelson)||Pendry, Tom|
|Callaghan, Jim (Middleton & P)||Huckfield, Les||Perry, Ernest|
|Campbell, Ian||Hughes, Rt Hon C.(Anglesey)||Phipps, Dr Collin|
|Canavan, Dennis||Hughes, Mark (Durham)||Prentice, Rt Hon Reg|
|Cant, R. B.||Hughes, Robert(Aberdeen N)||Prescott, John|
|Carmichael, Neil||Hughes, Roy (Newport)||Price, William (Rugby)|
|Carter, Ray||Hunter, Adam||Radice, Giles|
|Carter-Jones, Lewis||Irving, Rt Hon S (Dartford)||Richardson, Miss Jo|
|Cartwright, John||Jackson, Colin (Brighouse)||Roberts, Albert (Normanton)|
|Castle, Rt Hon Barbara||Jay, Rt Hon Douglas||Roberts, Gwilym (Cannock)|
|Clemitson, Ivor||Jeger, Mrs Lena||Robertson, John (Paisley)|
|Cocks, Michael (Bristol S)||Jenkins, Hugh (Putney)||Roderick, Caerwyn|
|Cohen, Stanley||Johnson, James (Hull West)||Rodgers, George (Chorley)|
|Coleman, Donald||Johnson, Walter (Derby S)||Rooker, J.W.|
|Colquhoun, Mrs Maureen||Jones, Alec (Rhondda)||Roper John|
|Concannon, J. D.||Jones, Barry(East Flint)||Rose Paul B.|
|Conlan, Bernard||Jones, Dan (Burnley)||Ross, Rt Hon W.(Kilmarnock)|
|Cook, Robin F. (Edin C)||Judd, Frank||Rowland, Ted|
|Corbett, Robin||Kaufman, Gerald||Ryman, John|
|Cox, Thomas (Tooting)||Kelley, Richard||Sandelson, Naville|
|Craigen, J. M. (Maryhill)||Kerr, Russell||Sedgemore, Brain|
|Cronin, John||Kilroy-Silk, Robert||Selby, Harry|
|Cryer, Bob||Kinnock, Neil||Shaw, Arnold(Ilford South)|
|Cunningham, G. (Islington S)||Lambie, David||Sheldon, Robert(Ashton-u-Lyne)|
|Cunningham, Dr J. (Whiteh)||Lamborn, Harry||Shore Rt Hon Peter|
|Dalyell, Tarn||Lamond, James||Short, Rt Hon E.(Newcastle C)|
|Davidson, Arthur||Latham, Arthur (Paddington)||Short, Mrs Renée(Wolv NE)|
|Davies, Bryan (Enfield N)||Lee, John||Silkin, Rt Hon John(Deptford)|
|Davies, Denzil (Llanelli)||Lever, Rt Hon Harold||Silkin, Rt Hon S.C.(Dulwich)|
|Davies, Ifor (Gower)||Lewis, Arthur (Newham N)||Sillars, James|
|Davis, Clinton (Hackney C)||Lewis, Ron (Carlisle)||Silverman, Julius|
|Deakins, Eric||Lipton' Marcus||Skinner, Dennis|
|Dean, Joseph (Leeds West)||Litterick, Tom||Small, William|
|Delargy, Hugh||Lomas, Kenneth||Smith, John (N Lanarkshire)|
|Dell, Rt Hon Edmund||Loyden, Eddie||Snape, Peter|
|Dempsey, James||Luard, Evan||Spearing, Nigel|
|Doig, Peter||Lyon, Alexander(York)||Spriggs, Leslie|
|Dormand, J. D.||Lyons, Edward(Bradford W)||Stallard, A.W.|
|Douglas-Mann, Bruce||Mabon, Dr J Dickson||Stewart, Rt Hon M.(Fulham)|
|Duffy, A. E. P.||McCartney, Hugh||Stoddart, David|
|Dunn, James A.||McElhone, Frank||Stott, Roger|
|Dunnett, Jack||McGuire, Michael (Ince)||Strang, Gavin|
|Eadie, Alex||Mackenzie, Gregor||Strauss, Rt Hn G. R.|
|Edge, Geoff||Mackintosh John P.||Summerskill, Hon Dr Shirley|
|Ellis, Tom (Wrexham)||Maclennan, Robert||Taylor, Mrs Ann (Bolton W)|
|English, Michael||McMillan Tom (Glasgow C)||Thomas, Jeffrey (Abertillery)|
|Ennals, David||McNamara Kevin||Thomas, Mike (Newcastle E)|
|Evans, John (Newton)||Madden Max||Thomas, Ron (Bristol NW)|
|Ewing, Harry (Stirling)||Mahon, Simon||Thorne, Stan (Preston South)|
|Faulds, Androw||Marks Kenneth||Tierney, Sydney|
|Tinn, James||Ward, Michael||Williams, Alan Lee (Hornch'ch)|
|Tomlinson, John||Watkins, David||Williams, W. T. (Warrington)|
|Tomney, Frank||Watkinson, John||Wilson, Alexander (Hamilton)|
|Torney, Tom||Weetch, Ken||Wilson, William (Coventry SE)|
|Urwin, T. W.||Wellbeloved, James||Wise, Mrs Audrey|
|Varley, Rt Hon Eric G.||White, Frank R. (Bury)||Woodall, Alec|
|Wainwright, Edwin (Dearne V)||While, James (Pollok)||Young, David (Bolton E)|
|Walden, Brian (B'ham, L'dyw'd)||Whitlock, William||TELLERS FOR THE NOES:|
|Walker, Harold (Doncaster)||Willey, Rt Hon Frederick||Miss Margaret Jackson and|
|Walker, Terry (Kingswood)||Williams, Alan (Swansea W)||Mr. John Ellis,|
§ Question accordingly negatived.
§ 9.0 p.m.
§ Mr. Ray Mawby (Totnes)
On a point of order, Mr. Deputy Speaker. I have made inquiries in various parts of the House on the question of hot food. I was assured in a number of areas, especially those areas that normally serve the staff with hot beverages, that gas was unavailable. Therefore, not only hon. Members, but members of the staff are denied hot beverages. Upon inquiry I have found that gas supplies to the building have not been cut. All those who are engaged in strike action should at least stand up and be counted and admit that they are on strike, or work properly to enable the staff to be supplied with hot beverages and whatever else is required.
§ Mr. Deputy Speaker (Sir Myer Galpern)
Let me deal with one point of order at a time. While I do so, perhaps the hon. Gentleman could bring me in a hot cup of tea. I do not know that the Chair can help the hon. Member for Totnes (Mr. Mawby). There are no facilities available. The proper quarter to which he should address his complaints is the Chairman of the Catering Committee. If he does that I shall certainly support him, because I am feeling rather chilly sitting up here.
§ Mr. Cryer
Further to that point of order, Mr. Deputy Speaker. I cannot bring you a hot cup of tea, because tea is not available. I am sure you will appreciate that this is because of an industrial dispute which is taking place. Is it in order for members of the Opposition to put forward silly and superfluous points of order which can only worsen an industrial dispute? Is it not characteristic of the sort of situation which brought this country to its knees in February 1974?
§ Mr. Deputy Speaker
We must not get ourselves involved in points of order in order to generate some heat. The trouble 148 with points of order is that one does not know what any hon. Member will say until he has said it. It may be silly or wise. It is a matter of opinion.
§ Amendment made : No. 140, in page 57, line 12, leave out 25th ' and insert 26th '.—[Mr. Joel Barnett.]
Amendment proposed : No. 144, in page 57, line 23, leave out ' any ' and insert—
§ Mr. Graham Page
The amendment was not dealt with when we debated a previous group of amendments, although it was mentioned and a question was asked about it. Perhaps the Chief Secretary would be good enough to answer it now, if I repeat it.
The amendment seeks to deal with the point about a settlement made by will, but as it is printed on the Notice Paper it seems that the words following those to be omitted apply to both (a) and (b). It may be that printing those words on another line would enable us to see it correctly. Perhaps the Chief Secretary will see that that is done, so that the latter part of paragraph 4(2) does not apply to his new line(a) any settlement made by will ".
§ Mr. Powell
I join in complaining of the lax drafting of the amendment, which is no doubt due to the fact that it was produced so hastily, and that it is a result of second thoughts.
It is not good drafting that the sense of a statute should depend upon the division of a sentence by the letters "a "and" b ", or upon punctuation. The amendment will make nonsense unless (a) and (b) are treated as introducing a separation of meaning into sub-paragraph 2.
All that was necessary in order to produce an elegant amendment, with the effect which the Government desired, was to insert, in line 12, after "settlement" the words "other than a settlement made by will ".
149 The amendment is an indication of the slovenly work we are bound to get if we attempt to pass a Finance Bill in the way we are doing.
§ Mr. Joel Barnett
I am sorry that both the right hon. Member for Crosby (Mr. Page) and the right hon. Member for Down, South (Mr. Powell) find the drafting inelegant and slovenly. It at least does what they both want. It carries out all undertaking I gave in Committee to exclude will settlements from paragraph 4. Not being as well versed in grammar, elegance or slovenly drafting as both right hon. Gentlemen, I took advice on the matter, and I am advised that the amendment meets the objectives which we all have.
The right hon. Member for Crosby suggested that the wordshas already been made by another personin sub-paragraph (2) would qualify (a) as well as (b). I am advised that it would he possible to produce that result only by a most perverse lay-out. That is not the case with the amendment, which I hope will be acceptable to the House.
§ Mr. David Howell
If we had a proper amount of time to discuss the Bill, we should send the amendment back to the kitchen to be heated up and served again in better form. It is one more example of the unholy muddle over the Bill. We need another stage to discuss the Bill, and it looks more and more as though the next Finance Bill will provide it. In the meantime, we shall have to take it as it is.
§ Mr. Barnett
The hon. Gentleman knows that he and his hon. Friends had ample opportunity to debate the Bill, and they refused to take the opportunity.
§ Amendment agreed to.
§ Mr. Joel Barnett
I beg to move Amendment No. 495, in page 61, line 14, at end add:'or, in the case of a transfer made after 5th April and before 1st October in any year otherwise than on death, at the end of April in the next year'
§ Mr. Deputy Speaker(Sir Myer Galpern)
With this it may be convenient to consider the following amendments to the amendment :
§ Amendment (a), in line 2, leave out '1st October' and insert ' 31st December '.150
§ Amendment (b), in line 2, leave out ' April ' and insert September '.
It may also be convenient to consider Amendment No. 550, in page 61, line 14, at end insert:
' or when the tax has been agreed in writing between the person liable to pay and the Board, or has been determined and specified in a notice under paragraph 6 above, whichever is the later '.
§ Mr. Barnett
The amendment honours a Government commitment to reconsider the due date for tax on lifetime transfers and the date from which interest on that tax is to run. Together with a number of consequential amendments, it provides that in each case the date is to be the later of either six months from the end of the month in which the transfer occurs, or the 30th April following the end of the tax year in which the transfer is made. The consequential amendments increase from three to six months the time allowed for payment of tax on works of art which cease to be exempt.
I know that this does not go quite as far as some hon. Members wanted, but it is not an unreasonable way of dealing with the matter.
§ Mr. John MacGregor (Norfolk, South)
As a result of the lengthy debates that we had on Schedule 4, paragraph 12 in Standing Committee we have at least this crumb of comfort. We are grateful for it, but in view of the fairly large plate of goodies that we offered the Chief Secretary we must have expected at least a slice of cake. This is an improvement, but I do not think that it goes far enough. I do not wish to delay the House for too long, but I should mention that in Standing Committee there were two main arguments for trying to get some amendment of the time in which people are to be allowed to pay the tax.
The first main argument was that of administrative convenience. That was concerned mainly with administrative convenience for the taxpayer and his advisers, and not so much with the convenience of the Revenue. There are two main points to be made about administrative convenience. The first is that despite this change there is still a difference between the time at which the taxpayer has to deliver his accounts on chargeable transfers and the time at which payment of the tax has to be made.
151 Despite the Government's amendment, the only month, as I understand it, in which the taxpayer will find that he is having to deliver both his account and his tax at the same time will be April. He is allowed 12 months for the delivery of his account, but in most cases the period ranges from anything between six to 12 months—it is 12 months in the case of April—for the payment of tax. Although we pressed him on this matter in Standing Committee, the Chief Secretary still has it the wrong way round. He is asking most taxpayers to pay their tax first and to give the Revenue the information later as to the basis on which the tax has been assessed.
The second point to be made on the administrative convenience argument is that relating to normal tax returns. The majority of taxpayers usually make only one return a year. They may now find themselves having to make one return for income and a separate return both for payment of the capital transfer tax and for their accounts for the tax. There is no other tax which involves this very hasty requirement for the payment of the tax shortly after the end of the tax year. For the capital transfer tax, and in the case of every chargeable transfer, the right hon. Gentleman is asking for about three weeks from the end of the tax year for a taxpayer to pay his tax in many cases, when in nearly every other form of tax there is a much longer period.
Amendments (a) and (b) have been designed to try to help the situation. I realise that they are not totally neat models. I accept that there is a small drafting mistake in Amendment (b), in that it should read "2nd April" and not "1st April ". I call only say that that is due to the haste with which many of us had to draft our amendments to the Government amendment. I am sure that that is a point that applies to many other amendments. Such errors are due entirely to the lack of time that we had to draft our amendments correctly. But by the amendment we were trying to achieve in Standing Committee a situation in which a taxpayer would be given a reasonable period, between three and six months after the end of the tax year, in which to submit his return and pay his tax.
152 The second main argument relates to the time that it takes to value many of the assets involved in chargeable transfers. It is to that point that Amendment No. 550 relates. In Standing Committee the Chief Secretary at one point said that we had misunderstood the purpose of the tax in talking of a year of assessment. On the year of assessment the right hon. Gentleman said :There is, of course, no such thing as far as capital transfer tax is concerned. Capital transfer tax is not an annual tax as such, and under the Bill as it stands it is due six months after the lifetime transfer. That is the reason for the misunderstanding about the fact that the due date for payment of tax can sometimes come before the actual return is delivered."— [Official Report, Standing Committee A, 18th February 1975 ; c. 2037.]But in some cases in the capital transfer tax there is a year of assessment—for example, in all the exemptions under Schedule 6 to which the £1,000 a year relates—and the Bill itself states what the year is, and also with reference to exemptions out of income.
I do not think that that is a strong enough argument. It would be right still to look at the end of the year of assessment as the right date from which to begin to assess the chargeable transfer. In many cases there will be a considerable time lag before, even between the taxpayer and the Revenue, the value the asset has been agreed, and there is nothing in the Bill to allow the taxpayer to pay his tax after the valuation has been agreed. That is quite different from the situation in relation to capital gains tax, which is another capital tax and not an income tax, where the taxpayer is given the alternative of three months after the end of the year of assessment or 30 days after the assessment has been agreed with the Revenue. Some provision of that kind would also be justified in relation to the payment of the capital transfer tax.
There is one final matter in relation to the time that it will often take to value the asset. That is the point which the Chief Secretary made in Committee when he said that under estate duty executors were given 12 months from the death to assess the tax payable and to pay it. Again we come back to the point which we have had to make time after 153 time to the Chief Secretary about the capital transfer tax, that the chargeable transfer in life is a totally different form of tax. There will be many cases where taxpayers will not know until the end of the year what chargeable transfer they should return and, therefore, what tax they should be paying.
I have mentioned the exemptions—the exemption out of income and the £1,000 exemption. Now the situation has been complicated by a Government amendment, which we welcome, to give the small gifts exemption of £100. But it makes it more difficult for the taxpayer to know at what point he moves into the chargeable transfer area. There is also the question of deemed transfers, which again he will not now have to pay until 1976. Even so, there will be a complication for the taxpayer.
Having listened to the arguments of the Chief Secretary in Committee and having re-read them and reconsidered the matter, it still seems to me that the taxpayer will be put in some difficulty if the Government insist on this early payment of tax and because he has to make his return for tax at a different point from that at which he pays the tax.
For reasons of progress, I doubt whether the Opposition will press these amendments. But I hope that the Chief Secretary will reconsider for the next Finance Bill the valid argument that it would still be right to bring into line the point at which the taxpayer has to make his return and to pay his tax, and that this should be either three or six months after the end of the tax year in which the chargeable transfers took place, with provision for the later payment where agreement has still not been reached as to the value between the taxpayer and the Revenue, as outlined in Amendment No. 550. If the right hon. Gentleman cannot agree to do that, I hope at least that he will ensure reasonable interpretation by the Inland Revenue, when it comes to enforcing the payment of this tax from people with chargeable transfers, to take account of these arguments.
§ Mr. Ridley
I do not think that these provisions are yet right. This is a very suitable candidate for the next stage of this Bill, which we understand is now to be the next Finance Bill itself. I am sure that we all look forward to another 154 attempt to improve this monstrous, outrageous abortion of a tax. I am prepared to debate as many Bills in a row as may be necessary to make some dint in the thick skins of Treasury Ministers.
I want to ask what happens in the case of a very protracted valuation dispute. I heard the other day of a private company and a dispute about the valuation of shares which went on for eight years.
What is the taxpayer supposed to do under capital transfer tax? I presume that he is to pay on some mythical value and the matter will be adjusted at a later stage.
With life-time transfer accumulations there could be some difficulties. If the transferor had agreed to pay the tax and, after a period of years while a dispute was going on, decided not to pay, the Revenue would have recourse to the transferee for the tax. Any other transfers of value made in the meantime would suddenly attract a lower rate of tax because the transferor would go down several slices in the table as he would have made a much smaller gift eight years before. The Revenue would then have to reimburse many people who had paid tax at an inflated value because of the change of mind of the transferor.
Will the revenue make those repayments? If so, how long will it take to make repayments of capital transfer tax to those who have overpaid? If we are to make the taxpayer hustle to pay the tax, we ought also to make the Revenue hustle to repay in cases where there has been overpayment. It seems that the interaction of the valuation clauses and the long time that it will take to make valuations in some cases, together with the short time to pay, have not been properly thought out. I hope that the Chief Secretary will have another look at this matter.
§ Mr. Joel Barnett
I am very hurt by the comments made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I think he must be getting tired to describe my hon. Friend and myself in that way. It really is not good enough. Had I been inclined to accept the amendment, I should have been put off a bit by the hon. Gentleman talking to me in that exaggerated way.
155 The hon. Member for Norfolk, South (Mr. MacGregor), who usually reads his briefs on these matter very well, said that the tax could be payable within three weeks. Under our amendment, the tax could not be payable in less than six months. It is either not less than six or more than 12 months.
§ Mr. MacGregor
Perhaps I should clarify the situation. I meant to say, if I did not, three weeks after the end of the tax year. I was trying to make the point that it would be much simpler for taxpayers to deal with their tax relating to the past year at the one time. The taxpayer is being asked to pay this tax and to make his assessment within three weeks of the end of the tax year, whereas in all other cases it is much longer.
§ Mr. Barnett
The hon. Gentleman knows that under our amendment he would have rather longer than that. The taxpayer would have a minimum of six months.
The hon. Member for Cirencester and Tewkesbury gave us an example of a protracted dispute. I hope that the hon. Gentleman is listening. It does not really matter, because he can read it in Hansard. If there is a dispute, the Revenue cannot enforce payment while the first appeal is pending. That is dealt with in Paragraph 21, sub-paragraphs (1) and (2).
I assure the hon. Member for Norfolk, South that the Inland Revenue will always give a reasonable interpretation of these matters, as it does with all taxes. I hope that the hon. Gentleman will agree that the amendment goes a long way to meet the points made in Committee. I hope, therefore, that it will be acceptable to the House.
§ Amendment agreed to.
Amendments made : No. 797, in page 61, line 19, at end insert :
' (2A) So much of the tax chargeable on the value transferred by a chargeable transfer made within three years or, as the case may be, one year of the death of the transferor as—
No. 148, in page 61, line 20, after '32', insert :
or (conditional exemption for certain buildings, etc. on death)'.
No. 149, in page 61, line 20, after Act ', insert :
or paragraph 2 of Schedule (Relief for woodlands) to this Act '.
§ No. 496, in page 61, line 21, leave out three ' and insert six '.
§ No. 787, in page 62, line 37, after ' 4 ', insert 6(2), 12 or 14 '.
No. 801, in page 62, line 46, at end insert :
'(aa) references to the time six months after the end of the month in which that date falls were references to the time when the tax would be due if it were not payable by instalments ;
No. 788, in page 62, line 47, at end insert :
'or, if the transfer is made under paragraph 6, 12 or 14 of Schedule 5 to this Act, to the trustees of the settlement '.
§ No. 789, in page 63, line 33, after entitled ', insert in possession '.
No. 790, in page 63, line 33, at end insert :
'(except in a case where no individual is so entitled) '.
§ No. 791, in page 64, line 27, after 4 ', insert 6(2), 12 or 14 '.
No. 802, in page 64, line 35, leave out from to ' to end of line 36 and insert :
' the time six months after the end of the month in which the death occurred were references to the time when the tax would be due if it were not payable by instalments ; and '.
No. 154, in page 64, line 49, at end insert :
' 14A. Tax chargeable on such a chargeable transfer as is mentioned in paragraph 4 of Schedule (Relief for woodlands) to this Act may, if the person paying the tax by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the transfer is made '.
§ No. 155, in page 65, line 3, at beginning insert (a)'.
No. 156, in page 65, line 5, after 'business ', insert :
(b) is payable by instalments under paragraph 14A above '.
§ No. 157, in page 65, line 27, leave out (1) ' and insert (1)(a) '.157
No. 792, in page 65, line 34, at end insert:
'(5A) The reference in sub-paragraph (5) above to the same transferor includes, in relation to chargeable transfers which are made under paragraph 6, 12 or 14 of Schedule 5 to this Act, the assumed transferor referred to in paragraph 6(4) of that Schedule'.
No 161, in page 66, line 37, after '32(4)', insert:
' or subsection (6) of section (conditional exemption for certain buildings, etc. on death)'.
No. 803, in page 66, line 39, leave out 'any' and insert:
§ No. 804, in page 66, line 40, leave out 'a' and insert 'any other'.—[Mr. Joel Barnett.]
§ Mr. Deputy Speaker
With the permission of the House, I will put the question on the next batch of amendments together—No. 805, No. 162, No. 806 and No.798.
§ Mr. Nott
I am sorry to interrupt you, Mr. Deputy Speaker, but I must say that this is the most impossible Finance Bill that has ever been presented to the House. Would you be so kind as to ask whether the Government will let us know on which page of the Notice Paper these Government amendments appear so that we can keep pace with what is going on? The Government have tabled hundreds of amendments—[Interruption.] They are on the Notice Paper, but it would greatly convenience the House if the Chief Secretary, when he believes an amendment to be a major one, would let us know on which page of the Notice Paper it appears. When we last debated the Bill the Government had tabled a manuscript amendment only an hour before it was read out and moved by the Government.
§ Mr. Deputy Speaker
I think that I can help the hon. Gentleman. I will give the page numbers. On page 847—Amendments Nos. 805, 162, 806.
§ Amendments made: No. 805, in page 66 line 43, leave out ' if ' and insert (c)'.
No. 162, in page 66, line 44, after ' Act ', insert :
' or paragraph 2 of Schedule (Relief of woodlands) to this Act '.
§ No. 806, in page 66, line 45, leave out ' three ' and insert six '.— [Mr. Joel Barnett.]
Amendment proposed, No. 798, in page 67, line 3, at end insert:
' (1A) Sub-paragraph (1) above shall apply in relation to tax for which, under section 26(2A) of this Act, only a charity or only a political party is liable, and in relation to such an excess as is mentioned in section 27(3A) of this Act, as if the chargeable transfer had been made on the death of the transferor. '.— (Mr. Joel Barnett.]
§ Mr. Nott
Perhaps the Government would like to explain a little to us about the amendment. I thought I heard the Chief Secretary saying a few moments ago—I say this with the best of humour—that it should be easy enough to follow these matters. We will be patient with the Chief Secretary. We are in very good humour about this. We will wait. We should like to hear what the amendment is about.
§ Mr. Deputy Speaker
I hope that the hon. Gentleman is satisfied with that explanation. The Question is—
§ Mr. Joel Barnett
Perhaps I can help the hon. Gentleman. It is possible that the hon. Gentleman has not read all the others. This amendment is consequential upon the others.
§ Mr. Ridley
I have on a previous occassion had to mimic a Treasury Minister answering a debate on an amendment. I should hate to do that again at this more serious and august stage of the Bill. The Chief Secretary, if he is challenged by my hon. Friend the Member for St. Ives (Mr. Nott) to say what the amendment seeks to do, should be able to do this. He has a very large number of folders on the bench. I notice with horror and consternation that they are bright red. Surely amongst all those papers there is just one piece of paper which will tell the right hon. Gentleman what the amendment seeks to do.
§ Mr. Joel Barnett
I thought I told the hon. Gentleman. He cannot have been listening. I told him that this amendment was consequential upon Government amendments, which perhaps he had not read, providing reduced rates of tax for lifetime transfers and unlimited exemption for lifetime gifts to charity and to political parties. This is perfectly understandable. If the hon. Gentleman had read the amendment clearly he would have seen that it was consequential upon the others.
§ Amendment agreed to.
§ Amendment proposed: No. 165, page 72, line 11, leave out 'he' and 'insert' that other person'.—[Dr. Gilbert.]
§ 9.30 p.m.
§ Mr. Graham page
May I have an explanation of this amendment? In fact, I think I can probably explain it to the Chief Secretary if he has not got the explanation handy. This is a very import amendment. The right hon. Gentleman may have the explanation in his head. He certainly did not have the last one in his head.
This is a case in which a person is required to inform the Board of Inland Revenue if he happens to know of an error made by any other person. I presume that this is just a matter of drafting. This is one of what we have labeled the snooping provisions. It is most extraordinary. If a piece of paper happens to blow over one's garden wall and one reads it, to discover that someone else has not disclosed something by way of tax, a duty is imposed on the reader of that piece of paper to report the fact to the Board of Inland Revenue, and one suffers a penalty for not doing so.
This is a provision of the utmost width. The public ought to realize what is being done, which the Chief Secretary has said is necessary, because of this entirely new tax imposed on the public. If the Chief Secretary is prepared to give the reason for amending what he first put in the Bill, the House might allow him to have this amendment.
§ Mr. Joel Barnett
I am surprised at the right hon. Gentleman for getting so excited about these points at this time of night.
This amendment relates to paragraph 30, which deals with the situation where 160 information furnished to the Revenue for capital transfer tax purposes is afterwards discovered to have been incorrect in some material respect. Subparagraph (1) applies where the person who discovers the error is the same person as supplied the information in the first place. The right hon. Gentleman will recall that we had a little discussion about the interpretation of this paragraph in Committee. In fact, it went on at some length.
Subparagraph (2) deals with the case where the person who discovers the error is a person liable for tax to which the information was relevant but is not himself the one who provided the information in the first place. Those who were present or who have read Hansard will recall that there was some confusion about the interpretation, and I promised to look at it to see whether I could clarify the matter.
The present amendment deals with what was thought to be an ambiguity in subparagraph (2) which has apparently contributed to a misunderstanding of the scope of the provision. I hope the amendment leaves no further misunderstanding of the sort which gave rise to the stuff that we had in Committee, and which the right hon. Gentleman has given us again, about snoopers. I see that he is smiling. He knows it is a lot of rubbish. I hope the amendment will clarify the matter beyond doubt.
§ Amendment agreed to.
Amendment made: No. 166, in page 75, line 23, at end insert:
'41 A. Section 44(3) of the Finance Act 1950 and section 3(3) of the Finance Act (Northern Ireland) 1951 (certificate of prospective amount of estate duty) shall, notwithstanding their repeal by this Act, have effect with the necessary modifications in relation to tax for which trustees of a settlement may become liable under section 25(6) of this Act'.—[Dr. Gilbert.]