§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ashton.]
§ 12.30 a.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
I have great pleasure in Mr. Speaker's selection in the ballot of the topic of the refusal of a 714 certificate to
§ Now, after many years of struggle to get the original Act on the statute book, we once again run into what the Opposition would like to see as a constitutional difficulty. In fact it is a clerical error. None of us is perfect. Everybody makes mistakes and we could not possibly legislate against that.
§ We have wasted a great deal of time tonight on an issue which could have been settled in a very short time.
§ Question put, That the Bill be now read a Second time:—
§ The House divided: Ayes 50, Noes 0.
§ Mr. Bredemere, whose address is 6 O'Meara Street, London, S.E.1. I say at once that the right hon. Member for Bermondsey (Mr. Mellish), who is Mr. Bredemere's Member, has written to me saying that he willingly agrees that I should take up this matter, and I am grateful to him for giving me this opportunity to raise a typical example of the main subject matter of the debate we had earlier today.
It is salutary for the Minister to have to deal in particular with what he failed to deal with in general in that earlier debate. This is by no means the best or the worst case; it is fairly typical. It is first necessary for me to tell the House something about Mr. Bredemere and the effect that this refusal will have on his
business, and I can do no better than to read out his letter to me. It says:
We are a small company of roofing contractors, employing six men, two of whom are directly employed by the company, the other four being subcontractors. (That's full employment for six men.)
Since forming this company on the 15th October 1974, I have worked hard to make it a success. (Paying all the taxes, insurance contributions and VAT.) I started with one employee, working 14 hours a day, seven days a week. After one year I was able to rent a small office and employ two subcontractors. (My business was now beginning to progress.)
Since then I have moved from my small office, leasing a bigger office with a yard from the British Railways at an annual rent of £1,300.00 plus rates, I have bought two vehicles several hundreds of pounds worth of plant, and found further employment for yet three more men.
I enclose a photo-copy of a recent letter from H.M. Inspector of Taxes, Mr. Harris. After a long conversation on the telephone with Mr. Harris, regarding what I should do after the 6th April 1977. His advice was to close my business down, making my staff redundant. When we already have over One Million unemployed in this country at present it's ludicrous that I should have to add six men to that list, especially when our present order book will provide work for these six men well into 1977.
As you I'm sure will appreciate the state of limbo my company is in at present, unable to sign contracts, employ more staff etc., for fear of being unable to honour one's obligations after April 1977.
This country was built on small men thinking big, not small men thinking like idiots.
§ The facts of the case—and I have Mr. Bredemere's permission to give them—are that there are possibly two reasons why he has been refused a certificate. Many years ago he was an individual labour-only sub-contractor on his own, and he did what many did and probably worked for cash which was not declared. I do not know whether he has a sort of black mark against his name in the Revenue office, but many people have made mistakes in the past and I do not think it right, whatever may have happened in the past, that it should be held against him at this time.
§ In any case, Mr. Bredemere set about establishing himself, and he started his business. He has been for nearly three years now the proprietor of the business rather than a self-employed individual. In the process he has built up a considerable trade and has been paying tax at a far greater rate than he would otherwise 1624 have been paying if he had not done that.
§ There is one disputed point which is conceivably a second reason for the refusal—a tax sum of £423.30 which is claimed by the Revenue for the year 1973–74. That sum has been in dispute between the Revenue and Mr. Bredemere's accountants and he has now more or less agreed that he has to pay it. But since he has not got a 714 certificate I do not believe that will encourage him or enable him to pay it, because it is hard to get work without a 714 certificate and it is hard to get money without work. We are back in a vicious spiral.
§ I chose this particular case out of many hundreds because it was neither a particularly glaring example where there might have been a mistake nor an example where it would be right to refuse a certificate. It is just a typical case.
§ This man had been refused without any chance that these matters can be aired in public because, if he went to appeal, the tax inspector would simply say that as there were tax irregularities the commissioners could not hear it. That is the most scandalous feature of the whole affair. Even if Mr. Bredemere did fail to pay taxes before he set up in business and even if he does owe £423, which has been disputed, there is no reason in either of those circumstances why he should not be granted a certificate to continue his business.
§ On many occasions the Financial Secretary has enunciated a new doctrine that one has to be a good taxpayer in order to have a licence to work. This does not apply to anyone else. If the Financial Secretary himself is a bad taxpayer and does not pay his own personal taxes until they are two or three years out of date, no one would say that he should resign from the Treasury, be put on the dole and be kicked out of this House. I do not see why the right hon. Gentleman should suggest that about Mr. Bredemere.
§ It is a most intolerable unfairness that the law of the land should apply to some people with severity when it does not apply to others. The factors that I believe to be at the bottom of the refusal are not such as to justify that refusal in any other profession, trade or business, or to cause a severe penalty such as the refusal 1625 of a certificate to be meted out. That is inequitable.
§ The right hon. Gentleman might shelter behind the confidentiality of the Revenue. I can assure him that Mr. Bredemere is quite happy for his affairs to be discussed at this hour of the morning between the Financial Secretary and myself. It is apparently being done in secret, but that is not so because it will all be written down. Therefore, I should like the right hon. Gentleman to come clean about why a certificate was refused. It seems that we have no alternative but to raise these matters in the House because there is no way in which they can be heard before the commissioners.
§ There is no way in which the world outside can see that justice has been done, if indeed it has been done. It may have been done in the refusal of the certificate in respect of this citizen. If justice has not been done the world will be increasingly determined to amend this iniquitous system of 714 certificates. If justice has been done, at least it will have been seen to be done and Mr. Bredemere will know the reasons why this Government are seeking to take away his living.
§ 12.40 a.m.
§ The Financial Secretary to the Treasury (Mr. Robert Sheldon)
In the earlier debate we heard a great deal about the general case that a number of hon. Members made about the inequities, as they saw them, of the 714 certificate scheme. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was considerably more extreme than any of his hon. Friends.
§ Mr. Ridley
§ Mr. Sheldon
If the hon Gentleman looks at Hansard tomorrow he will see a number of places where his tongue was not under complete control or, if it was, where he was guilty of making wild accusations against individuals in the Inland Revenue of a kind that none of his hon. Friends supported. In fact, they repudiated the hon. Gentleman. The hon. and learned Member for Dover and Deal (Mr. Rees), the hon. Member for Maldon (Mr. Wakeham) and others went out of their way to repudiate the hon. Gentleman's allegations. We were dealing then with the general case. The 1626 House had the opportunity to vote, and it endorsed the Government's position.
The hon. Gentleman has now raised a particular case which he considers to be one illustration of the general case deployed earlier. He said that he selected it as giving a general view of the problems, as he saw them, over the whole area, as one illustration of the wickedness of the scheme and the problems it causes certain people, including Mr. Bredemere.
As the law stands, there is nothing I can do for Mr. Bredemere. The law prescribes certain conditions which we went into earlier. Mr. Bredemere does not satisfy those conditions.
The hon. Gentleman said that Mr. Bredemere's was a typical case, and that that was why he selected it, as not being particularly bad nor being at the other end of the spectrum of cases that have come to him. I do not think that it can be argued to be a typical case, because by far the majority of applications are approved. Out of 277,000 roughly 70 per cent. have been approved, 10 per cent. have been refused, and the others are waiting for a number of details or are being processed. This case is more typical of the 10 per cent. refused than of the 70 per cent. approved.
The hon. Gentleman said that Mr. Bredemere was a roofing contractor who had paid all his taxes and had been advised by the Inland Revenue to close down the business. I would consider that surprising, if not astonishing. The law prescribes the conditions that Mr. Bredemere must satisfy, and it is manifest that he has failed to satisfy them.
The hon. Gentleman said that having failed to satisfy the conditions, Mr. Bredemere cannot appeal. The fact is that this gentleman did appeal. He took the matter to the General Commissioners. I would have thought that this fact was so obviously part of the case that the hon. Member would have been fully informed on it at least, if not on the much more detailed and intricate aspects that he might have difficulty in pursuing. But this gentleman did appeal to the General Commissioners and they did not uphold his appeal.
The hon. Member might well say "Then he had to rely on the inspector's discretion." I have looked at this. 1627 I have the papers that were made available to me, and I must say that I concur with the inspector's decision. I believe that the inspector, like so many inspectors with whom I have had dealings—and I believe that those Members who have been professionally connected with inspectors of taxes would concur—upheld the general standards of discretion, courtesy and conduct of inspectors, which are at a very high level. We must be very careful when making allegations directed against particular civil servants who do not have the ability or advantage of being able to defend themselves in the way that other members of society have, but who normally—the hon. Member will recall this from previous Finance Bill debates that we have had, in particular—are accorded, by those people who are knowledgeable, a high level of respect. This is a widespread view held among hon. Members of the civil servants concerned.
The hon. Member went into some detail on this matter, but nothing like the kind of detail that I have had available to me. I believe that I ought not to say very much more. I know that the hon. Member invites me to justify in detail the refusal of a certificate. He will know that on occasions we discuss certain individual's problems in debates, but I know of none—I have gone into this—which resembles the present instance.
In general, the question at issue relates to particular aspects that can be isolated. In this case however we are concerned with statutory conditions that cover the comprehensive history of a taxpayer's general record in tax matters. This obviously may properly be the subject of correspondence between the taxpayer's Member and the Treasury Minister. But what I do not think the House would ever wish to become involved in is the public dissection of an individual's private life and his relations with the tax authorities, even if the individual had indicated his acceptance of the ensuing publicity. The House, and certainly I, would find such a practice obnoxious, whether it served to justify the Government of the day or enabled an attack to be launched upon them.
What I am prepared to do is to give Mr. Bredemere a full account of why the 1628 certificate was refused. Then he can do what he wishes about any subsequent publicity. What I feel is important is that the appeal procedures that I described in an earlier debate have been made available to the taxpayer and to others who are seeking to obtain certificates. I mentioned the various ways in which the procedure operates—I believe to the advantage of those who wish to apply for certificates and whose tax affairs might not be in complete order, and I showed how discretion is used.
It is very difficult to find that a case can be made to show that we are being unduly harsh. I gave a number of illustrations. Perhaps I may repeat them for the benefit of the hon. Member—who may not have followed them in the more tempestuous debate that took place earlier—and possibly for the advantage of Mr. Bredemere himself. The requirement for a person applying for a certificate is that he must bring his tax affairs up to date—this concerns the previous three years—and if he has looked after his tax affairs over that period, he will be granted a 714 certificate.
The hon. Member talked about tax in dispute relating to an earlier period, and he mentioned the requirement of being a good taxpayer. This is not a requirement. The requirement is that the applicant has met his obligations and that he is prepared to continue to meet the obligations which are implied in the granting of this status. Other taxpayers have to meet their obligations in the same way. If a taxpayer brings his tax affairs up to date, he can get a certificate. Inspectors may be prepared to give a certificate even if there is something in the applicant's accounts which is in dispute. If the dispute is genuine it need not delay the granting of a certificate.
I shall give the closest attention to any case which is brought to my notice. However, I do not accept the hon. Member's assertions throughout that the certificate is a work permit. Obviously there are clear advantages for sub-contractors who obtain certificates, and I am happy to do what I can to see that all those who are entitled to get them do so.
There has been considerable misunderstanding of the arrangements. There is no wish to attempt to avoid granting the certificates to people who meet the requirements. The task of the Inland 1629 Revenue is not to harass taxpayers but to make sure that, as far as can be ascertained, it obtains taxes due, not only from the self-employed person himself, but from others working for or with the person who has the certificate in question. That is what the procedure is about, and that is the objective we intend to maintain.
I remind the hon Member—and I am not sure how far back his researches have taken him—that this has been a long and continuing area of evasion, and large sums of money have been lost to the Inland Revenue.
§ Mr. Ridley
Apart from traducing me, the Financial Secretary said he could not give a reason why Mr. Bredemere was not given a certificate. He now proceeds to tell us—it was dragged out of him—that the reason is that Mr. Bredemere has not brought his tax up to date. It is this total cloak and dagger secrecy which makes it intolerable for people who are trying to do the right thing.
§ Mr. Sheldon
The hon. Member is using his extreme language again. He knows very little about this case. I am not blaming him for that, but he gets angry on the basis of no knowledge. Mr. Bredemere has that knowledge, and he knows what is required of him. If he did not give that information to the hon. Member, I can understand that, but the relationship between Mr. Bredemere and the hon. Member is no concern of mine.
The information in this case is better discussed between Mr. Bredemere and the inspector of taxes, but I shall present some information to the hon. Gentleman and following upon that he can use it as he may wish. I advise him, however, not to demonstrate his hatred of a particular method of obtaining tax when that method reflects precisely the objectives of the previous Conservative Government when they sought to safeguard the revenue. He should try to find out something more about the companies and firms concerned. The information he has provided has been in a number of ways not only totally inadequate but misleading. I do not blame the hon. Gentleman for that, but it might do his cause a little more good if he carried out a filtering process on some of the information he received and if he proceeded with a little more moderation. I might then find his interventions 1630 more useful in dealing with the cases he brings to my attention.
I interpret my position widely. I certainly intend to look closely at the working of the Act to ensure that, if changes are necessary, I am informed of that fact at the earliest moment. In the introduction of any new piece of legislation there must be someone responsible for a close and continuing observation of how the various practices are interpreted. I shall do that myself. Moreover, there is no alternative, bearing in mind the amounts of money at present being employed in operating the scheme introduced by the previous Government. The cost of that scheme in a direct result of their decision to proceed in this way. We are introducing a scheme which is cheaper to run, which will safeguard the revenue more effectively and which will ensure that there is as near as perfect an equity between the different taxpayers as it is possible to achieve within the limits of feasibility.
The change we are introducing is a consequence of our taking over the obligations entered into by the previous Government. I am therefore surprised that the hon. Gentleman did not question the actions of his Government. I had expected to see more activity by him in that direction when the scheme was introduced in 1972. He could have spoken against it then, but I have been unable to discover any opposition by him at that time. If he did not oppose the introduction of the scheme, I find it difficult to justify the course of action that he now finds necessary to take against a measure which is purely consequential upon the policy of his own Government.
I have this evening referred to the number of prosecutions which have been undertaken, and the success rate only shows what could have been achieved had more staff and facilities been made available.
§ Mr. Ridley
The hon. Gentleman is lecturing me with a priggishness which I find disgusting—
§ The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at One o'clock.