VALUE ADDED TAX

HC Deb 21 July 1977 vol 935 cc1880-909

4.41 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

I beg to move, Amendment No. 77, in page 60, line 20, at end insert— '12A. For section 45 of the 1972 Act (meaning of "business" etc.) the following section shall be substituted—

"Meaning of business etc.

45.—(1) In this Part of this Act "business" includes any trade, profession or vocation.

(2) The following (without prejudice to the generality of anything else in this Part) are deemed to be the carrying on of a business—

1. (a)the provision by a club, association or organisation (for a subscription or other consideration) of the facilities or advantages available to its members; and
2. (b)the admission, for a consideration, of persons to any premises.

(3) Where a body has objects which are in the public domain and are of a political, religious, philanthropic, philosophical or patriotic nature, it is not to be treated as carrying on a business only because its members subscribe to it, if a subscription obtains no facility or advantage for the subscriber other than the right to participate in its management or receive reports on its activities.

(4) Where a person, in the course or furtherance of a trade, profession or vocation, accepts any office, services supplied by him as the holder of that office are treated as supplied in the course of furtherance of the trade, profession or vocation.

(5) Anything done in connection with the termination or intended termination of a business is treated as being done in the course or furtherance of that business.

(6) The disposition of a business as a going concern, or of its assets or liabilities (whether or not in connection with its reorganisation or winding up), is a supply made in the course of furtherance of the business."•

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

With this we are to discuss the following: Amendment (a) to the proposed amendment, to leave out subsection (3) and insert— '(3) Where a non-profit-making body with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature provides services or goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply.'. Amendment (b) to the proposed amendment, to leave out from "only" in subsection (3) to the end of the subsection and to insert, 'by virtue of the supply of services and goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules; provided that this exemption is not likely to cause distortion of competition'.

Mr. Sheldon

This amendment reintroduces provisions that were removed from the Bill in Standing Committee. What we have done in the amendment is to bring back a revised Section 45, to be incorporated in the Bill—an amendment to the Finance Act 1972—which includes different provisions concerning clubs and associations.

In Standing Committee a number of hon. Members felt that although the criteria to meet the Sixth Directive obviously had to be rather different from the criteria that existed beforehand, nevertheless, the effects of these new criteria were uncertain in their impact on certain clubs, societies and institutions. That complaint is clearly justified. Whenever one changes the basis of legislation, in the form in which it is presented, there will obviously be a change in definitions. Every club, institution or association, over a period of time, is able to devise the kind of system that suits it best within the definition set by legislation; and even if it is not so able to select, at any rate it comes to live with that legislation. When that legislation changes, it has to start the process afresh I hope that what I say this afternoon will help to clarify certain matters.

The hon. Member for Guildford (Mr. Howell) will know that we have had a number of consultations, which I have tried to carry out in the spirit in which he put the point in Standing Committee. Perhaps I may refer to what he said then. Referring to the actions of the Opposition, he said, What we are doing—I hope that that was made clear then but if not I shall make it clear now—is proposing that Ministers should bring forward on Report a new and more full explanation of the criterion on which they intend to proceed. We shall look for that information on Report in one form or another, so that some of the worries that were eloquently expressed on both sides of the Committee can be stilled. I hope that that makes clear our general approach to what is obviously a difficult and complicated area of law making."— [Official Report, Standing Committee D, 26th May 1977; c. 366.] It is in that spirit that I carried out a number of consultations, and a Press notice was made available and a draft order was prepared for the consultations with the various associations, societies and institutions.

This change is a consequence of the Sixth Directive. Where large matters were discussed and where compromises were reached, we feel that we did particularly well in those exchanges and compromises. We obtained what was the most important matter open to the British people—the maintenance of our zero rating, covering, as it does, a wide range of activities. A number of other concessions were made by other countries—I assume and believe —in areas of major importance as far as their individual problems were concerned and the new taxes that they had to accept.

What we have here is an attempt to ensure that within the spirit of the Sixth Directive we are able to make as large a concession to practice as is possible. What happened under the legislation that came before the House for approval in 1972, and was approved, was that those conducting a trade, profession or vocation had in practice the option to decide whether they should be taxable or not taxable. The Sixth Directive does not permit the continuation of the option for taxation which was provided under Section 45 of the Finance Act 1972. Under the directive, all are to be within the scope of the tax.

Perhaps I can show the way in which this affects the two main areas of interest, as expressed in Standing Committee.

The majority of trade associations are not disadvantaged. More than 750 have chosen to be taxable. The disadvantage to traders whose outputs are not exempt or partly exempt of the tax on the subscription, can easily be exaggerated, bearing in mind that we are talking about 8 per cent., and that it is only 8 per cent., in many cases, on the benefit which are receivable.

There is a particular dilemma that the learned societies have tried to resolve in the best way available. That is that existing legislation allows the exemption option only for an organisation for a trade, profession or vocation, whereas membership of learned bodies is open to those interested in the work of the society, so that they did not meet the criteria of the legislation that was enacted. But there was a discretion given, and this seems to have gone through over the years without being questioned. Therefore, they are not strictly exempt within the terms of the existing legislation.

. The problem that we had in the implementation of the Sixth Directive, where we tried to keep the existing system open so that the option could still be retained, is that we were unable to get the other member countries to accept the stand that we wished to make. The problem is that a number of these societies have certain club facilities. They vary. Some provide benefits to their members and some do not.

The test that we might usefully make is that where the membership is customary —that it is not necessarily compulsory for the profession or employment of the person concerned—no VAT would be required. Also, there would be another test that where the facilities that are available are not those for which VAT would otherwise be chargeable. In other words, if there is a particular benefit to the individual concerned, they would be chargeable, but if the benefit that they seek to assert is one to society as a whole, which covers most of the learned societies, the VAT would not be charged. Of course, there is provision for further examination of these matters through the tribunals, in a way that hon. Members will understand.

However, the present position of the vast majority of clubs and associations will remain unchanged. I think that what we have seen here is that there has been an understanding of the particularly important role of these societies, which I believe has always been one of our great strengths.

We have not yet finally decided the shape of the order. That is still open to consultation in the way that I indicated earlier. Any further points which arise, either in debate or as a result of representations made, can be considered in time for further inclusion or further changes in the order that will be produced in due course.

It is right to protect and to preserve these institutions. They have formed a valuable part of our heritage. I intend within the terms of the Sixth Directive to do everything possible to assist these clubs, societies and institutions.

Mr. Peter Rees (Dover and Deal)

I beg to move, as an amendment to the proposed amendment, Amendment (a), to leave our subsection (3) and insert: '(3) Where a non-profit-making body with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature provides services or goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply.'. In moving the amendment I declare a whole range of interests, since I belong to a number of bodies which may come within the scope of the amendment moved by the Financial Secretary—bodies which may be affected, I hope favourably, by Amendments (a) and (b).

I recall in the debate in Committee that the justification for the amendment which was then voted down was purely that it was attempting to embody in domestic legislation the provisions of Article 13 of the Sixth Directive. The debate ranged hardly wider than that. The general principles which might be adduced to support the imposition or non-imposition of VAT over the various activities was hardly canvassed. The Committee voted down the amendment which the Financial Secretary, with his accustomed grace and facility, was pressing on us, on the ground that the amendment was too vague and indeterminate in its terms and would inevitably have to be enforced in individual cases by a battery of orders which were not then before the Committee.

Doing its proper duty and taking a nonpartisan view of the matter, the Committee—the Conservative Benches being supported by Labour Members—decided that it was its duty to impress upon the Government the need to be a little more precise with their measures.

The Financial Secretary now commends to the House Amendment No. 77. Its only justification must surely be that it is an accurate, faithful translation into domestic United Kingdom law of the provisions of Article 13 of the Sixth Directive.

Since the Financial Secretary has been a little coy in referring the House to the provisions of Article 13, particularly paragraph (1), I hope that I shall be forgiven if I refer the House to them. That article exempts from VAT the supply of services and goods closely linked thereto for the benefit of their members in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition. We could have an interesting, if perhaps slightly profitless debate on the precise meaning in this context of political, trade union, religious, patriotic, philosophical, philanthropic or civic nature. The right hon. Member for Down, South (Mr. Powell), with his vast erudition, particularly his knowledge of the Greek language, will no doubt be able to enlarge our horizons on that matter. I do not, however, wish to detain the House over long with these fine questions of construction. I point out only that under Article 13 it is merely necessary for a body or organisation to demonstrate that it is of such a character. If it is, the mere fact that it provides services and goods closely linked with its predominant object for the benefit of its members in return for a subscription, will not expose that subscription to an imposition of VAT. The only limitation on that exemption—I emphasise that this is an exempting provision—is that the exemption should not be likely to cause distortion of competition.

One would have thought that the Financial Secretary would concentrate on that aspect of Article 13, to demonstrate that the amendment that he moved is designed to ensure that though the general exemption will be effective, it is drawn up in such a way that there would be no distortion of competition.

I hope that the Financial Secretary will forgive me for saying that his argument is singularly opaque. He congratulated himself on the fact that a whole range of organisations would not be affected one way or another. He adduced two entirely new criteria which I shall have to examine more closely in Hansard tomorrow. It will be difficult to know how to apply them in a given situation. Since I am professionally concerned with such matters I must say that I would find it difficult to advise clients on the basis of the test which the Financial Secretary has adduced so far. As always, the Financial Secretary is prone to rely on the extra-statutory concession. So I hope, Mr. Deputy Speaker, that if he is fortunate enough to catch your eye at the conclusion of the debate, he will enlarge on the criteria which are to be applied extra-statutorily by the Commissioners of Customs and Excise.

Amendment (a) seeks to reproduce with much greater exactitude and fidelity the provisions of Article 13 of the Sixth Directive. The amendment says: Where a non-profit-making body with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature —the House will discern at once that 1 follow with complete precision the words of Article 13— provides services or goods closely linked thereto for the benefit of its members —again following exactly the provisions of Article 13— in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply. It is only in the last seven words that I diverge from Article 13. But I reproduce precisely the sense and intention of Article 13.

Mr. J. Enoch Powell (Down, South)

How does the hon. and learned Member construe the word "thereto"? Is it to be construed as referring to services or to aims? It appears to me to be ambiguous. It could mean services or goods closely linked to the services provided, or it could mean services linked to their aims, or goods closely linked to their aims.

Mr. Rees

This is a very valid point which I take. I could plead in extenuation that I am only following the wording of Article 13.

Mr. Powell

That is typical of EEC law.

Mr. Rees

The right hon. Gentleman is entitled to make that point. He rubs his hands and says "Once again I have caught out the draftsmen at Brussels at their singularly inept job of framing legislation for the Community." I do not make such a cheap point myself, although I am not conversant with the intricacies of Continental draftsmanship. Being a little circumscribed in my outlook, I prefer the quality of English draftsmanship and construction, although at times I have said hard things of the draftsmen and drafting in this House. None the less, on this occasion I shall not enlarge on that theme. I offer the House my construction, for what it is worth, which is that the services or goods are to be closely linked with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature, of the non-profit making body concerned. This provision may be productive of litigation in future, but that is often a consequence of many of the provisions we enact.

5.0 p.m.

Were it not for these ambiguities, my hon. Friend the Member for Eastbourne (Mr. Gow) and I might be deprived of much remunerative professional work. Perhaps that is one reason for my declaring an interest, although it was not of that kind that I thought originally. But I hope for the moment to have satisfied the right hon. Member for Down, South.

The only point at which I substantially depart from Article 13 is that I have not included the words provided that this exemption is not likely to cause distortion of competition". My hon. Friend the Member for Guildford (Mr. Howell) has included those words in Amendment (b). Although my name is attached to both, I confess a partiality to Amendment (a) because it might be difficult for the courts to apply those words.

The only respectable argument that the Financial Secretary can advance in this case for asking the House to reject Amendment (a) is that it might in a given circumstance lead to distortion of competition, but so far I have heard no argument from him which would lead me to prefer Amendment No. 77 to the same amendment as amended by Amendment (a).

I cannot conceive, for instance, that there will be distortion of competition because various bodies concerned with the ownership of land, such as the CLA or the NFU, might be able to claim exemption in respect of their subscriptions. If the Anglers Association were to achieve exemption from VAT as a result of Amendment (a), I cannot conceive that that would lead to any distortion of competition.

If, for example, the National Union of Students were to be exempted from VAT by Amendment (a) but not by Amendment No. 77, I cannot conceive that that would lead to distortion of competition. I pick out the NUS at random. I have not been approached by any of its representatives, and perhaps it has not applied its collective mind to the problem. Does the Financial Secretary feel that its subscriptions will be caught for VAT by Amendment No. 77? Are the various old-age pensioners' associations likely to be caught?

I cannot conceive that if any of those worthy organisations is let out by Amendment (a), that will cause distortion of competition. The amendment reproduces with fidelity the provisions of Article 13 and will not lead to distortion of competition and on that basis I commend it to the House.

Mr. Deputy Speaker

I should point out that hon. Members will be free to discuss both Amendment No. 77 and the two amendments to it, one of which, Amendment (a), has now been moved. I should add that this will in no way prevent another hon. Member, should he wish to do so, from moving Amendment (b).

Mr. David Howell (Guildford)

I am not clear, Mr. Deputy Speaker whether you wish me to move Amendment (b) now or later, but I should prefer to speak following my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) to the sense of Amendment (b). It may be that with your help that amendment can be formally moved later, should that be necessary.

Amendment (b) has some similarities to Amendment (a). As the Financial Secretary reminded us, we recognised in Committee that we were dealing with a matter of considerable complexity—some would say even of deterrent complexity—in that an attempt was being made to weave into the language of our statute book the words and intentions of Article 13 of the Sixth Directive.

What is at issue in this debate is the question whether the Financial Secretary and his advisers are following this matter through in a way calculated to minimise the difficulties and to be most effective in achieving the ends, or whether they could do better. We felt in Committee that they could do better—that issues were left unresolved—and we looked for a replacement, on Report, of what was in the earlier draft of the Bill. That replacement has now appeared and the fact that there are amendments to it shows straight away that we are still far from happy about what the Government propose.

I want to confine myself to three sets of questions so as to indicate our continuing concern about the problems that seem to be raised for many organisations by Amendment No. 77.

The first question is the basic one. Have the Government interpreted the directive in the right way? Have they, in the words used by the Financial Secretary in correspondence, "used to the full" the wording of the directive'? We still believe that they have not. That is one reason why we have sought in Amendment (b)—and no doubt why my hon. and learned Friend has sought in Amendment (a)—to stick more closely to the wording of the directive, even though, as we have learned from the debate so far, the meaning of that amendment itself is not immune to query.

We still feel that in Amendment No. 77 the Government and their advisers are taking too rigid and narrow a view of what the directive intends. I do not know why they should be doing that, although I shall describe some possible reasons in a moment. They seem to be tying the situation down in a way that the directive does not strictly require.

Secondly, are the Government interpreting the directive in line with its interpretation, and the application of that interpretation, in other member countries of the EEC? Again, making what comparisons we can between bodies in this country and apparently similar bodies elsewhere—one example is the National Farmers' Union—we believe that what is proposed for this nation is uniquely tight and circumscribed. Are the Government really sensitive to the way in which this directive is interpreted elsewhere, or are we being over- zealous in rushing in to bat first and insisting on interpreting it to the letter, not only in the EEC sense but in the sense of the most rigid and narrow interpretation within our own law?

We seek assurances and explanations from the Financial Secretary why bodies in this country will be caught by the requirement to charge VAT on their subscriptions when similar bodies in other EEC countries do not appear to be caught by the directive.

The fundamental question is whether Amendment No. 77 and the draft order make the position clearer than we felt it to be in Committee. The Financial Secretary has elaborated on the draft order and spoken of certain tests that he believes should apply over and above what is intended in the directive. The directive includes the words that are repeated in Amendment (b): provided that this exemption is not likely to cause distortion of competition". That seems a fairly clear and basic statement of the criterion.

However, in correspondence with my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), the Financial Secretary produced another way of saying what I think is the same thing. He said: the new subsection (3) to section 45 which we are proposing on Report would put outside the scope of tax organisations of a kind illustrated in the Directive Article 13A.1(1)—if the subscription is in fact a donation not used for the benefit of members exclusively". Is that the same as what is suggested in Amendment No. 77, where the words are a little different? Subsection (3) reads: if a subscription obtains no facility or advantage for the subscriber other than the right to participate in its management or receive reports on its activities". In his letter the Financial Secretary offered two tests of whether bodies would be exempt. They were whether membership was customary and whether facilities for services were for the benefit of society as a whole, implying, I imagine, that if they were for the benefit of members only they would be regarded as donations that were purchasing facilities for the benefit of members and did not apply necessarily to a vocation or trade, were not covered by the next subsection and would therefore make the body liable to charge VAT on subscriptions.

This is a matter of fiendish complexity, and it may not be clear to the Financial Secretary or to the rest of the House where we are left. There have been various descriptions. The Financial Secretary said that a donation not used for the benefit of members exclusively would allow a club or body to be free of VAT. There is another description in Amendment No. 77, and yet another that appears in the article and is reproduced in our amendments. In addition, we have the tests that have been offered by the Financial Secretary.

I am left with the feeling that our criticisms in Committee remain valid and that we are being offered an attempt that still defines the matter too narrowly and in a way that leaves the position of a great many bodies, perhaps inevitably but quite definitely, extremely uncertain. We are being asked to accept an amendment in that form, and it is not satisfactory. Having examined the matter very carefully and listened to the Financial Secretary, I still feel that he and his advisers have not got it right. Until they do get it right, we shall create even more uncertainty and difficulty than is necessary in applying the directive.

5.15 p.m.

Mr. William Molloy (Ealing, North)

I agree with what the hon. Member for Guildford (Mr. Howell) said about the fiendish difficulty of trying to interpret these matters. It seems that it is almost impossible to get an accurate interpretation.

I wish to put a point on behalf of one of Britain's learned societies—the Royal Geographical Society. I have to declare an interest, as a member of the council of the society. The difficulty in which the society finds itself is probably shared by many other learned societies. Its terms of election are too broad for it to qualify as a trade union or a professional association.

The society regards it as a duty to interpret geography for the interest of members of the general public, so the subscriptions of its 6,000 fellows support the research activities of more learned members that could ultimately be passed on to associate members and, for example, to many thousands of schoolchildren whose schools are associate members.

About half the fellows and members are professionally engaged in geography or related subjects, but this qualification is not included in the definition of eligibility in the society's articles of association.

The imposition of VAT on RGS subscriptions would be a serious financial blow. I hope that in trying to interpret all the documents relating to this subject, my right hon. Friend the Financial Secretary will bear in mind that the Society's terms of reference and election are too broad for it to qualify as a trade union or a professional association, but that there are certain aspects that seem to indicate that it should be exempted from VAT, and I believe that we should adopt this approach.

The immense difficulties of trying to interpret what is meant by the provisions that we are discussing makes it difficult to explain my case in a short debate. I hope, therefore, that if I send my right hon. Friend all the necessary data on behalf of the RGS, he will examine it and will agree with me that it qualifies for exemption.

Mr. Powell

We are having an excellent, if unenjoyable, example of the consequences of an external foreign body seeking to lay down the lines of legislation and limits of legislation for this subordinate House. The whole form and nature of the legislation on the Continent is different in its habits and purposes from that which constitutes our statute law.

There are two specific illustrations of this in Article 13(1) of the Sixth Directive that have caused the trouble in Committee and today. First, there is the ambiguity that was a matter of discussion between the hon. and learned Member for Dover and Deal (Mr. Rees) and myself. I do not think that the draftsman would allow that to arise in English statutes, but we cannot ask the draftsman. It must be a matter of immense difficulty to get an authoritative interpretation of what "linked thereto" means, because these are not our words; they are not the words of the Government; they are not the words of the Government's servants; they are the words of an external body, and we have to sit here musing what that body could possibly mean by those words.

Then there are the words: provided that this exemption is not likely to to cause distortion of competition. It is not uncommon for Continental law that is to be the basis of bureaucratic and official administration to include such philosophical and economic propositions of great generality. It would be interesting to debate how distortion of competition arises, to what extent it arises, and how it could arise in the context of the matter to which the amendment is directed. But that is not the sort of law that we pass. We endeavour in this House not to hand to the judges, whatever view we may take of them, the decision on what are the circumstances in which competition is distorted, and we do not ask them to apply their minds to large philosophical and economic investigations. But, unfortunately, in the directive in question we have to try to translate all that into the interpretable language of a United Kingdom financial statute.

It is, I am afraid, vain for the hon. Member for Guildford (Mr. Howell) to inquire rather plaintively how they do it in other Community countries. What a position we have got ourselves into when, in deciding what we can put, what we are required to put, what we are under duress to put, into a United Kingdom Finance Bill, we have to run round and try to find out what they have done or intend to do in Luxembourg so that we can keep in line with the interpretation of the article which is being employed in all the other eight countries.

But in a sense the hon. Gentleman is right. It would be unreasonable for us to be out of step, to the disadvantage of our own citizens, with what interpretation is applied in the other parts of the Community. What an impracticable situation we have placed ourselves in, unless all these matters are to be justiciable by the European Court, and unless the taxability of the Royal Geographical Society is to become a matter on which case law will be built up in the European Court. That is the implication of the inquiry proffered by the hon. Gentleman.

Speaking for myself and my right hon. and hon. Friends—and we have tried to direct our minds to the problem as best we can—I think that Amendment (a) and Amendment (b) go unconscionably wide and that the formula in Amendment No. 77, moved by the Financial Secretary, at any rate has the advantage of a reasonable degree of certainty and precision. I think that there is a principle here which ought to be recognised and could be agreed, and that is that where the payment of a subscription secures services which, if they were not procured from a society or body, would be subject to value added tax if they were procured by the beneficiary from some other source, prima facie that subscription ought to carry VAT.

I say that without any criticism of the complaints put forward by the CLA, the NFU and other bodies, but it seems to be a requirement of fairness and justice that we ought to adopt, since we have to make the attempt, the wording of the amendment. What one is doing is attempting to give precision and legal statutory meaning to the underlying notion provided that the exemption is not likely to cause distortion of competition", that is to say, we want all services of the same nature, whether they are from a club or society or professional adviser, for example, to attract VAT in as near as may be the same way.

Mr. Peter Rees

Since the right hon. Gentleman has commended the Government amendment and criticised amendments (a) and (b) on the basis that the Government amendment enjoys an enviable precision while (a) and (b) lack that quality, may I ask him to apply himself a little more closely than perhaps he has done to subsection (3) of Amendment No. 77, because at least half of it follows precisely article 13, just as Amendments (a) and (b) do? If, therefore, the Government amendment enjoys precision, so surely should (a) and (b). Perhaps he will consider and apply his mind to that.

Mr. Powell

No; it happens that the difficulty does not lie in the words common to the article and to the amendments; it lies in the words that are not identical in the various amendments. I have done my best with 12A(3) of the Government amendment, and it seems to me that the expression no facility or advantage for the subscriber other than the right to participate in its management or receive reports of its activities effectively excludes all those other goods or services which could be procured from other sources and would be subject to VAT if they were procured from and provided by those other sources. My belief, therefore, is that the Government amendment is far nearer to expressing in statutory terms the principle of equity which underlies the words provided that the exemption is not likely to cause distortion of competition than Amendments (a) and (b).

Mr. Nigel Lawson (Blaby)

Will not the right hon. Gentleman agree, however, that the Government's wording, although very precise, is quite clearly more exclusive, and much narrower, than the terms of the Sixth Directive?

Mr. Powell

It may be more exclusive than the implication of Article 13F—it may be. But it is up to those who claim that is so to specify the services and goods which they think ought to be exempt and which would not be subject to VAT if they were procured from some other source. I find it difficult to distinguish such a category. I feel, therefore, as advised at this stage, that in a choice of difficulties the advantage both of precision and of interpretability lies with the form of words adopted by the Financial Secretary.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I was fascinated by the preferences of the right hon. Member for Down, South (Mr. Powell) in English and Continental draftsmanship, but I am afraid that I was unable entirely to agree with the conclusion he reached. I thought that his view of which club and association subscriptions should attract value added tax was more coloured by his dislike of the EEC than by his understand of the problems and the nature of the organisations concerned. I think that the Government amendment, which he finds so superior in draftsmanship, is almost unintelligible, whereas one can at least understand what Amendment (b) means.

First, Amendment No. 77 carries the extraordinary phrase, in subsection (3) in the public domain and are of a political, religious, philanthropic, philosophical or patriotic nature ". What is the public domain is not at all clear to me, and it seems to be a very untypical piece of draftsmanship that the right hon. Gentleman would do well to ponder on. The wording "political, religious," and so on, seems to be as wide as life itself. I can think of few activities by any organisation that could not somehow be squeezed under one of those hats. Obviously, commerce is excluded, but that we know. It seems to me to add very little to the understanding of which organisations are excluded and which are not.

The draft order goes through a totally different definition. It refers to a trade union or other organisation of persons having as its main object the negotiation on behalf of its members of the terms and conditions of their employment. It also refers to professional associations, and the third category is an association, the primary purpose of which is the advancement of a particular branch of knowledge …". Why that order is not incorporated in the Government amendment I do not know, because we have two completely different sets of definitions. One is contained in Amendment No. 77 and one is contained in the draft order. I am not clear under what powers the Treasury hopes to make the order law, because the powers for order-making seem to have been cut out by the amendment carried in Committee and not reinstated in Amendment No. 77. There is no order-making power in Amendment No. 77 to extend the definition, as far as I can see, but that is a secondary point and it may well be a false one.

5.30 p.m.

The test, surely, is whether any reasonable person reading Amendment No. 77 can tell who is and who is not included. I should have thought that the CLA and the NFU would be excluded, because they are both of a political nature. They could hardly be called philanthropic. Certainly they are political in at least part of their intent.

What happens if an organisation is partly political and partly commercial in its objects? The Royal Automobile Club and the Automobile Association are certainly commercial in part of their activities, because they provide services of a commercial nature to motorists. On the other hand, I suggest that part of their activities is political. They come to this House to lobby Members as to how they should legislate about road traffic and petrol matters. We all receive circulars from them. Are they to be exempt or are they not?

It is very far from clear to me whether this sub-paragraph of Amendment No. 77 would exempt them. It is quite clear that Amendments (a) and (b) would exempt them, because in no sense could they be said to be causing distortion of competition.

Whatever the merits of the draftsmanship may be, at least there is some understanding of what Amendment (b) means, whereas there is very little to commend Amendment No. 77 on the ground of understanding who will be within and who will be without.

At least the Financial Secretary has made an attempt at a definition, and I pay tribute to him for that. He did not simply leave it to some order, although there still appears to be one coming later. I hope that he will clear up the question whether it is still to come or is superseded by Amendment No. 77. But inasmuch as he has tried to define something at this stage of the Bill, it is an improvement to that extent.

Mr. Marcus Kimball (Gainsborough)

Following on from what my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said about voluntary organisations, I feel that nothing could have been more charming than the tribute paid by the Financial Secretary to voluntary organisations when he moved the amendment; but however sympathetic and charming the Financial Secretary may be it is always a little more difficult when we come to deal with the tax-gathering authorities.

However, having said that, I pay tribute to the way in which the Customs and Excise headquarters at Kings Beam House helped in the original stages of VAT in 1972. No one could have been more helpful in advising the voluntary bodies on their approach to this problem and in looking very carefully at the aims and published objectives of voluntary bodies to see whether they were to be VAT-able.

The Financial Secretary said today that the shape of the order is yet to be made. The criterion for deciding whether many of these voluntary bodies have to pay VAT is their published aims and objectives. These aims and objectives are revisable by any voluntary body at its annual general meeting. I am thinking in particular of the Women's Institutes. One's subscription to the Women's Institute—a very powerful body of opinion throughout the country—is VAT-able at the moment, because it publishes a monthly magazine.

Surely there is an opportunity now to say to these bodies "We will reassess your VAT-able position, but there is just a chance, with the order about to be made, that if you change your aims and objectives and bring them into line so that you are not VAT-able, it may be possible to put them right."

As I understand it, the Financial Secretary, in introducing subsection (3) has granted a measure of relief to some of the voluntary bodies for which representation was made in Committee. I do not think there is any doubt now that, tor example, Dr. Barnardo's—a charity about which no one would have any doubt—is now safely excluded from VAT.

I do not think that there is any doubt that the political lobby of which I have the privilege of being chairman will remain un-VAT-able. After the past battles that we have had in another capacity with the Financial Secretary we are very grateful to receive this concession from him now. But, like my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), I doubt whether the Government have drawn their subsection (3) widely enough to exclude bodies such as the CLA and the NFU. It is for that reason that I shall certainly be supporting him in the Lobby tonight.

Will the Financial Secretary say what is meant by the words "public domain"? It is an extraordinary term to have from a Socialist Government. I thought that private domains went out with the French Revolution. It is extraordinary that it takes a Socialist Government to bring forward the public domain to the Statute Book.

Mr. Ian Stewart (Hitchin)

When, in Committee, I moved Amendment No. 130, it was accepted by a vote of no less than 15 to 12, representing not only my hon. Friends but some hon. Members on the Government side and also the Liberal representative on the Committee. I moved that amendment because at that stage it was clear that the Committee was not in a position to judge what were the Government's VAT proposals on subscriptions. As a result of the success of that amendment in Committee, the offending paragraph was removed, and since that date we have had the benefit of a great deal more information about the Government's intention. I think, therefore, that it showed that we were right to carry the amendment in Committee.

We now have a Press notice—No. 459, dated 10th June 1977. There is an explanatory note headed "Trade Unions and Professional Bodies Etc.". There is also a draft of the Treasury Order for Schedule 5, Group 9, which covers these headings. Finally, there are some notes on the order. Whereas we had a shortage of information in Committee, we now have perhaps an embarrassment of information, and it is difficult to reconcile these different documents.

The point I wish to take up—it has been made by a number of my hon. Friends and also by the hon. Member for Ealing, North (Mr. Molloy)concerns the way in which these proposals will affect learned societies. We must always be suspicious when, in formulating our legistion following a directive from the EEC, the Government choose to introduce a measure that is less generous than it might be and that puts associations, clubs and societies in this country on a less advantageous and a less generous footing than that on which they would be under the directive, or, for all we know, in other countries.

The restriction to which I particularly object is that which says that learned societies shall have the right to be exempt from VAT on their subscriptions only if they consist principally of employees. This is no accident, because it is referred to in no less than four different places in four completely different ways in the documents to which I have referred.

First, in the Press notice it says that the Directive contains provisions which will continue the exemption for trade unions and other associations whose membership largely consists of employees or individuals pursuing a trade, profession or vocation. I do not find those words, or anything very close to them, in the directive. But it is not an accident, for if we turn to the explanatory note we read that it shall apply to learned (e.g. scientific or philosophical) societies directly connected with the profession or employment of members. When we read the draft order itself we find that item 1(c) refers to an association, the primary purpose of which is the advancement of a particular branch of knowledge, or the fostering of professional expertise, connected with the past or present professions or employments of its members. But note (3) states that Paragraph (c) does not apply unless the association restricts its membership wholly or mainly— whatever that may mean— to individuals whose present or previous professions or employments are directly connected with the purposes of the association. I declare an interest, as a Fellow of the Society of Antiquaries. Other bodies might be affected by these provisions. What I simply cannot understand is how this definition will operate. For example, the Society of Antiquaries includes a number of professionals—professors of history and archaeology, musuem curators, and others—but also a great number of amateurs. The proportion between the two varies from one year to another. If a number of elderly professionals were to die off one year, the balance could be tipped.

Mr. Molloy

Does the hon. Gentleman agree that there is also the possibility of a real danger, since many of our learned societies, like the Royal Geographical Society and the others that he has mentioned encourage the amateur, and those interested in various subjects, to join? If they really want to avoid the imposition of this tax all they have to do is to exclude the interested amateur and allow only professionals to be members. In my judgment—I hope that the hon. Gentleman will agree that would constitute an almost heinous crime.

Mr. Stewart

I did not want to prolong my speech, but I must take time to agree with what the hon. Gentleman has just said. There is great merit in learned societies that combine professional and amateur contributions to knowledge. If they were to suffer from the directive that is now proposed it would be a grave mistake. So far as I can see, that is not imposed upon us by the terms of the draft directive.

Therefore, I hope that the amendments that we have proposed will be acceptable. More than that, I hope that before this draft order becomes a real one the Financial Secretary and his advisers will have taken time to think further about this and to remedy a situation that could be more serious than they realise.

Mr. Robert Sheldon

I start off with Amendment (a), moved by the hon. and learned Member for Dover and Deal (Mr. Rees). He claimed that the amendment would give what he called greater exactitude and fidelity to the Sixth Directive. I think that the notable part of the amendment is that it avoids the problem of the distortion of competition, which is an inescapable part of the directive itself. Far from providing the greater exactitude and fidelity, it leaves out that which underlines most of the reasons for the inclusion of these arrangements in our legislation.

We are aware that Amendment (b) tries to make good that deficiency. It tries to insert this as the test for VAT to be exempt from clubs, societies and institutions. It seeks to provide real certainty by copying what it assumes to be the precision of the directive itself and incorporating that into our legislation.

As the right hon. Member for Down, South (Mr. Powell) observed, this attempt is an impossible one, because what we are seeing here is the end result that it hopes to achieve rather than the precision of the means by which we guarantee our legislation. What we have done here is to try to produce in legislative form the way in which the directive itself can proceed to implementation. The easy assumption that all we have to do is copy the directive in order to get the certainty that the directive has is a mistaken one.

5.45 p.m.

What we are seeing is an attempt that has been made by the Government to produce the attitude of the Sixth Directive itself. If we were to accept Amendment (b) we would give to the Customs and Excise the task of defining the distortion of competition. If it did not define that adequately it would be open to the aggrieved party to take the matter to a tribunal. It would then be for the VAT tribunal to decide whether a distortion of competition was occurring. That would no doubt result in bevies of economists launching into this complex and impossible-to-ascertain area where no conclusion can ever result.

Mr. Powell

Would it not be possible thereafter for the matter to be referred to the European Court on the ground that the proceedings of the Customs and Excise were in accordance with the directive?

Mr. Sheldon

That could well be a further consequence of the nonsense of this kind of approach, as shown by the arguments advanced by the right hon. Gentleman and the points that I have tried to add to those arguments.

Mr. Peter Rees

The Financial Secretary may have been led to accept too readily the point put to him by the right hon. Gentleman, however authoritative the source may be. Surely it is not yet the position that the European Court has the power to review domestic fiscal legislation or the decisions of domestic courts in order to construe domestic fiscal legislation? If that is so, can the Financial Secretary cite a single case where it has been so?

Mr. Sheldon

I do not think that the avenue down which the hon. and learned Gentleman is trying to lead me is a matter that lies before us. What we are concerned about is the interpretation of a general directive into specific legislation, with the authority of this House, and which could lead to consequences which flow from that.

The hon. Member for Guildford (Mr. Howell) asked about the interpretation of the directive, and whether that interpretation was to the best conceivable advantage of societies, clubs and institutions. I think that I gave the answer in my opening remarks, when I said that I was trying to interpret the Sixth Directive as widely as possible within the terms of the directive as we saw it.

The hon. Gentleman asked about comparisons with other countries. The problem is that by a coincidence of time we happen to be the first to legislate in this area, and therefore it is not possible to make that comparative test. I would give the assurance that if we are seen to be more restrictive and to interpret the directive too strictly, via the order that has yet to come, and on which consultations are proceeding, the draft order as published can be amended in the light of discussions and consultations that are taking place, and can take into account some of these possible changes. This is the answer to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).

Mr. Ridley

The Financial Secretary should not use the word "amended". He knows that an order cannot be amended. That is our objection. He ought to have said"changed by ministerial fiat".

Mr. Sheldon

I accept the point, but this is only a draft order, and a draft order can be changed before it comes to this House for final approval.

The hon. Member for Guildford asked me about the tests. Perhaps I may summarise them without too much loss of accuracy. I know that this is an area where accuracy is important, but although it may not have the precision that legislation has it will at any rate give the House the opportunity to question more fully the kind of tests that I announced earlier.

The first test for exemption is whether membership is customary—that is, for people in a certain occupation or profession. It need not be essential. The membership of certain professional bodies is regarded as essential for many people in the professions. We do not go as far as that. We say that provided its membership is customary, the organisation will be exempt. The second test is that provided that the facilities that are given are facilities for which VAT is not normally chargeable, the organisation will be exempt. This meets the test that the right hon. Member for Down, South mentioned. It is one that I myself mentioned earlier. This is an important element of it. The third test is that the benefit is to the community generally and not to the individual concerned. The final test is that the subscription has the nature of a donation.

I think that those tests go very far in meeting the problems of the various organisations concerned, and they show the importance that the Government attach to the flourishing of the societies. We look forward to receiving further representations that may be made, and we hope to be able at any rate to take into account the general views expressed to us before the order is finally brought to the House.

Mr. David Howell

With the leave of the House, I should like to say that the debate has turned on the alleged vagueness or precision of the rival amendments, and various arguments have been put forward to support the qualities of each amendment.

What is certain is that vagueness or uncertainty is endemic in the situation with which we are grappling. It is endemic because the procedure which is to be followed is that a Treasury order will be drawn up, of which we have a draft, and will come into effect on 1st January 1978, and then certain criteria, some of which are mentioned in the draft order and others of which the Financial Secretary has elaborated, will be applied. So uncertainty and vagueness are there, anyway.

The right hon. Member for Down. South (Mr. Powell) pointed to what he asserted to be the potential vagueness of Amendment (b). Then he went on to talk of the precision of the Government's Amendment No. 77, and the Financial Secretary echoed this claim. The Government's amendment is alleged to meet more clearly the problem of the supply of goods that may be supplied by other bodies in competition. presumably, with the society or learned body.

I have to ask those who use the word "precision" in connection with Amendment No. 77 whether that can be applied when we look at the list of bodies that are to be exempt. It includes political, religious, philanthropic, patriotic or philosophical bodies. How can they be precise? I hesitate to raise any of the definitions of philosophical ", but I am sure that the right hon. Member for Down, South will accept that that is an attitude to life. It is not a precise word or definition. We know from Socrates onwards that the unexamined life is not worth living.

So the amendment is about the whole of life. How can it be precise? However, perhaps I should not pursue that. I merely make the point to bring home the fact that uncertainty is endemic in the whole range of these amendments. There is bound to be uncertainty if we do not know how the order is applied, and the Financial Secretary's more elaborate tests.

That being the case, we are offered a choice between the uncertainties and vaguenesses of the Government's amendment, which is excessively narrow, and excludes a number of bodies, and our own amendment, which at least provides an opportunity for an interpretation that would exempt those bodies and would leave them in the same position as we suspect similar bodies in other member countries of the Community are to be left.

For those reasons, I urge my right hon. and hon. Friends to press Amendment (b), in that it makes a less bad job—

Mr. Lawson

Does my hon. Friend agree that the Government's complacency is unwarranted? The Bill originally contained a formula that was manifestly unacceptable and manifestly stricter, more rigorous and more exclusive than the Sixth Directive. It is only as a result of our pressure that the Government have been able to move in this modest way and to improve the formula to the extent that they have.

Mr. Howell

I nearly always agree with my hon. Friend the Member for Blaby (Mr. Lawson). In this case, I agree with him totally. He has put with great precision the point that is in all our minds. There is no credit to the Government in the way that they have acted in this matter. By good fortune, we were able to raise it in Committee and avoid being saddled with even more uncertain legislation. If we can now press Amendment (b), we shall make the best of that bad job.

Mr. Peter Rees

The only point of substance made against Amendment (a) came from the Financial Secretary, who said that it did not contain the proviso that is to be found in Article 13 and is reproduced in Amendment (b).

I found a certain difficulty in that proviso—a difficulty that the courts might have shared. On reflection, however, I appreciated that the difficulties would probably evaporate, since they were difficulties that must have been encountered by the courts in the application of the Restrictive Trade Practices Act. In the application of that Act the courts have done justice evenhandedly, though that may not be entirely acceptable to Government supporters. I see no reason why the courts should not do equal justice in the application of Amendment (b).

The case made out by the Financial Secretary also rested on the precision, accuracy or lucidity of Amendment No. 77, He received surprising but perhaps not unaccustomed support from the right hon. Member for Down, South (Mr. Powell).

If and when I am called on to construe Amendment No. 77, should it find favour with the House, I shall recall this debate a little wryly. The phrases that are to be found in it are not those that any English lawyer has had to encounter. The phrase "public domain" has not so far been the subject of construction by the courts.

Mr. Powell

In that case, is not it regrettable that Amendment (b) proposes to leave in those terms?

Mr. Rees

The right hon. Gentleman makes an interesting point. In any event, the difficulties of construction with which the courts are to be faced will be considerably increased by Amendment No. 77, whereas they would be diminished by Amendment (a) and, it must be said, also by Amendment (b).

So as to disarm criticism, and in deference to my hon. Friend the Member for Guildford (Mr. Howell), I beg to ask leave to withdraw Amendment (a). I hope that Amendment (b) will find favour with my right hon. and hon. Friends.

Amendment (a) to the proposed amendment, by leave, withdrawn.

Amendment proposed to the proposed Amendment(b), in line 13, leave out from 'only' to end of line 15 and insert 'by virtue of the supply of services and goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules; provided that this exemption is not likely to cause distortion of competition'.—[Mr.David Howell.]

Question put, That the amendment to the proposed amendment be made:—

Division No. 204]	AYES	[6.00 p.m.
Adley, Robert	Goodhart, Philip	Monro, Hector
Aitken, Jonathan	Goodhew, Victor	Montgomery, Fergus
Alison, Michael	Goodlad, Alastalr	Moore, John (Croydon C)
Amery, Rt Hon Julian	Gorst, John	Morgan, Geraint
Arnold, Tom	Gow, Ian (Eastbourne)	Morgan-Giles, Rear-Admiral
Atkins, Rt Hon H. (Spelthorne)	Gower, Sir Raymond (Barry)	Morris, Michael (Northampton S)
Awdry, Daniel	Grant, Anthony (Harrow C)	Morrison, Charles (Devizes)
Baker, Kenneth	Gray, Hamish	Morrison, Hon Peter (Chester)
Bell, Ronald	Grieve, Percy	Mudd, David
Bennett, Sir Frederic (Torbay)	Griffiths, Eldon	Neave, Airey
Bennett, Dr Reginald (Fareham)	Grist, Ian	Nelson, Anthony
Benyon,W.	Hamilton, Michael (Salisbury)	Neubert, Michael
Berry, Hon Anthony	Hampson, Dr Keith	Normanton, Tom
Biffen, John	Hannam, John	Nott, John
Biggs-Davison, John	Harrison, Col Sir Harwood (Eye)	Oppenheim, Mrs Sally
Blaker, Peter	Harvie Anderson, Rt Hon Miss	Osborn, John
Body, Richard	Haselhurst, Alan	Page, John (Harrow West)
Boscawen, Hon Robert	Hastings, Stephen	Page, Rt Hon R. Graham (Crosby)
Bottomley, Peter	Havers, Rt Hon Sir Michael	Page, Richard (Workington)
Bowden, A. (Brighton, Kemptown)	Hawkins, Paul	Parkinson, Cecil
Boyson, Dr Rhodes (Brent)	Hayhoe, Barney	Pattie, Geoffrey
Braine, Sir Bernard	Henderson, Douglas	Peyton, Rt Hon John
Brittan, Leon	Heseltine, Michael	Price, David (Eastleigh)
Brooke. Peter	Hicks, Robert	Pym, Rt Hon Francis
Brotherton, Michael	Higgins, Terence L.	Rathbone, Tim
Brown, Sir Edward (Bath)	Hodgson, Robin	Rawlinson, Rt Hon Sir Peter
Bryan, Sir Paul	Holland, Philip	Rees, Peter (Dover &Deal)
Buck, Antony	Hordern, Peter	Rees-Davies,W.R.
Budgen, Nick	Howe, Rt Hon Sir Geoffrey	Renton, Rt Hon Sir D. (Hunts)
Bulmer, Esmond	Howell, David (Guildford)	Renton, Tim (Mid-Sussex)
Burden,F.A.	Howell, Ralph (North Norfolk)	Rhodes James,R.
Butler, Adam (Bosworth)	Hunt, David (Wirral)	Rhys Williams, Sir Brandon
Carlisle, Mark	Hunt, John (Bromley)	Ridley, Hon Nicholas
Chalker, Mrs Lynda	Hurd, Douglas	Ridsdale, Julian
Channon, Paul	Hutchison, Michael Clark	flifkind, Malcolm
Churchill, W.S.	Irving, Charles (Cheltenham)	Roberts, Michael (Cardiff NW)
Clark, Alan (Plymouth, Sutton)	James, David	Roberts, Wyn (Conway)
Clark, William (Croydon S)	Jenkin, Rt Hon P. (Wanst'd&W'df'd)	Rodgers, Sir John (Sevenoaks)
Clarke, Kenneth (Rusticliffe)	Jessel, Toby	Rossi, Hugh (Hornsey)
Clegg, Walter	Johnson Smith, G. (E Grinstead)	Rest, Peter (SE Derbyshire)
Cockcroft, John	Jones, Arthur (Daventry)	Royle, Sir Anthony
Cooke, Robert (Bristol W)	Jopling Michael	Sainsbury, Tim
Cope, John	Joseph, Rt Hon Sir Keith	St. John-Stevas, Norman
Cormack, Patrick	Kaberry, Sir Donald	Scott, Nicholas
Corrie, John	Kellett-Bowman, Mrs Elaine	Scott-Hopkins, James
Costain,A.P.	Kershaw, Anthony	Shaw, Giles (Pudsey)
Critchley, Julian	Kimball, Marcus	Shelton, William (Streatham)
Crouch, David	King, Evelyn (South Dorset)	Shepherd, Colin
Crowder,F.P.	King, Tom (Bridgwater)	Shersby, Michael
Dean, Paul (N Somerset)	Kitson, Sir Timothy	Silvester, Fred
Dodsworth, Geoffrey	Knox, David	Sims, Roger
Douglas-Hamilton, Lord James	Lamont, Norman	Sinclair, Sir George
Drayson, Burnaby	Latham, Michael (Melton)	Skeet, T. H. H.
du Cann, Rt Hon Edward	Lawson, Nigel	Smith, Timothy John (Ashfleld)
Duranl, Tony	Le Merchant, Spencer	Speed, Keith
Dykes, Hugh	Lewis, Kenneth (Rutland)	Spence, John
Eden, Rt Hon Sir John	Lloyd, lan	Spicer, Jim (W Dorset)
Edwards, Nicholas (Pembroke)	Loveridge, John	Spicer, Michael (S Worcester)
Elliott, Sir William	Luce, Richard	Sproat, lain
Emery, Peter	McAdden, Sir Stephen	Stainton, Keith
Ewing, Mrs Winifred (Moray)	McCrindle, Robert	Stanbrook, Ivor
Eyre, Reginald	Macfarlane, Neil	Stanley, John
Fairbairn, Nicholas	MacGregor, John	Stewart, Rt Hon Donald
Farr, John	MacKay, Andrew James	Stewart, lan (Hitchin)
Fell, Anthony	Macmillan, Rt Hon M. (Farnham)	Stokes, John
Finsberg, Geoffrey	McNair-Wilson, M. (Newbury)	Stradling Thomas, J.
Fisher, Sir Nigel	McNair-Wilson, P. (New Forest)	Tapsell, Peter
Fletcher, Alex (Edinburgh N)	Madel, David	Taylor, R. (Croydon NW)
Fookes, Miss Janet	Marshall, Michael (Arundel)	Taylor, Teddy Cathcart)
Forman, Nigel	Marten, Neil	Tebbit, Norman
Fowler, Norman (Sutton Cf'd)	Mates, Michael	Temple-Morris, Peter
Fox, Marcus	Maude, Angus	Thatcher, Rt Hon Margaret
Fraser, Rt Hon H. (Stafford & SI)	Maudling, Rt Hon Reginald	Thomas, Rt Hon P. (Hendon S)
Fry, Peter	Mayhew, Patrick	Thompson, George
Galbraith, Hon T. G. D.	Meyer, Sir Anthony	Townsend, Cyril D.
Gardiner, George (Reigate)	Miller, Hal (Bromsgrove)	Vaughan, Dr Gerard
Gardner, Edward (S Fylde)	Mills, Peter	Viggers, Peter
Gilmour, Rt Hon Sir Ian (Chesham)	Miscampbell, Norman	Wakeham, John
Gilmour, Sir John (East Fife)	Mitchell, David (Baslngstoke)	Walder, David (Clitheroe)
Glyn, Dr Alan	Moate, Roger	Walker-Smith. Rt Hon Sir Derek

The House divided:Ayes 250 Noes.282

	Wall, Patrick	Wiggin, Jerry
Walters, Dennis	Wilson, Gordon (Dundee E)	TELLERS FOR THE AYES
Warren, Kenneth	Wood, Rt Hon Richard	Mr. Carol Mather and
Weatherill, Bernard	Young, Sir G. (Ealing, Acton)	Mr. Jim Lestor.
Welsh, Andrew	Younger, Hon George

NOES
Abse, Leo	Ennals, David	Mabon, Rt Hon Dr J. Dickson
Allaun, Frank	Evans, Fred (Caerphilly)	McCartney, Hugh
Archer, Rt Hon Peter	Evans, loan (Aberdare)	McDonald, Dr Oonagh
Armstrong, Ernest	Evans, John (Newton)	McElhone, Frank
Ashley, Jack	Ewing, Harry (Stirling)	MacFarquhar, Roderick
Ashton, Joe	Faulds, Andrew	MacKenzie, Rt Hon Gregor
Atkins, Ronald (Preston N)	Fernyhough, Rt Hon E.	Maclennan, Robert
Atkinson, Norman	Fitch, Alan (Wigan)	McMillan, Tom (Glasgow C)
Bagier, Gordon A. T.	Flannery, Martin	McNamara, Kevin
Barnett, Guy (Greenwich)	Fletcher, Ted (Darlington)	Madden, Max
Barnett, Rt Hon Joel (Heywood)	Foot, Rt Hon Michael	Magee, Bryan
Bates, Alf	Forrester, John	Mahon, Simon
Bean,R. E.	Fowler, Gerald (The Wrekin)	Mallalieu, J. P. W.
Benn, Rt Hon Anthony Wedgwood	Fraser, John (Lambeth, N'w'd)	Marks, Kenneth
Bennett, Andrew (Stockport N)	Freeson, Reginald	Marshall, Jim (Leicester S)
Bidwell, Sydney	Freud, Clement	Maynard, Miss Joan
Bishop, Rt Hon Edward	Garrett, John (Norwich S)	Mellish, Rt Hon Robert
Blenkinsop, Arthur	George, Bruce	Mendelson, John
Boardman, H.	Gilbert, Dr John	Mikardo, lan
Booth, Rt Hon Albert	Ginsburg, David	Millan, Rt Hon Bruce
Boothroyd, Miss Betty	Gourlay, Harry	Miller, Dr M. S. (E Kilbride)
Bottomley, Rt Hon Arthur	Grant, George (Morpeth)	Mitchell, R. C. (Soton, ltchen)
Boyden, James (Bish Auck)	Grant, John (Islington C)	Molloy, William
Bradley, Tom	Grimond, Rt Hon J.	Moonman, Eric
Bray, Dr Jeremy	Grocott, Bruce	Morris, Alfred (Wythenshawe)
Brown, Hugh D. (Provan)	Hamilton, James (Bothwell)	Morris, Charles R. (Openshaw)
Brown, Robert C. (Newcastle W)	Hamilton, W. W. (Central Fife)	Morris, Rt Hon J. (Aberavon)
Brown, Ronald (Hackney S)	Hardy, Peter	Moyle, Roland
Buchan, Norman	Harper, Joseph	Mulley, Rt Hon Frederick
Buchanan, Richard	Harrison, Rt Hon Walter	Murray, Rt Hon Ronald King
Callaghan, Jim (Mlddleton & P)	Hart, Rt Hon Judith	Newens, Stanley
Campbell, Ian	Hatton, Frank	Noble, Mike
Canavan, Dennis	Hayman, Mrs Helene	Oakes, Gordon
Cant,R. B.	Healey, Rt Hon Denis	Ogden, Eric
Carmichael, Neil	Heffer, Eric S.	O'Halloran, Michael
Carter, Ray	Hooley, Frank	Orbach, Maurice
Carter-Jones, Lewis	Hooson, Emlyn	Orme, Rt Hon Stanley
Cartwright, John	Horam, John	Ovenden, John
Castle, Rt Hon Barbara	Hoyle, Doug (Nelson)	Owen, Rt Hon Dr David
Clemilson, Ivor	Huckfleld, Les	Padley, Walter
Cocks, Rt Hon Michael	Hughes, Rt Hon C. (Anglesey)	Palmer, Arthur
Cohen, Stanley	Hughes, Robert (Aberdeen N)	Pardoe, John
Coleman, Donid	Hughes, Roy (Newport)	Park, George
Concannon,J. D.	Hunter, Adam	Parry, Robert
Conlan, Bernard	Irving, Rt Hon S. (Dartford)	Pavitt, Laurie
Cook, Robin F. (Edin C)	Jackson, Colin (Brighouse)	Pendry, Tom
Corbett. Robin	Jackson, Miss Margaret (Lincoln)	Perry, Ernest
Cowans, Harry	Janner, Greville	Phipps, Dr Colin
Cox, Thomas (Tooting)	Jay, Rt Hon Douglas	Prescott, John
Craigen Jim Maryhill	Jeger, Mrs Lena	Radice, Giles
Crawshaw, Richard	Jenkins, Hugh (Putney)	Rees, Rt Hon Merlyn (Leeds S)
Cronin John	John, Brynmor	Richardson, Miss Joe
Crowther, Stan (Rotherham)	Johnson, James (Hull West)	Roberts, Albert (Normanton)
Cryer, Bob	Johnson,Walter(Derby S)	Roberts, Gwilym (Cannock)
Cunningham, G. (Islington S)	Johnson, Russell(Inverness)	Robinson, Geoffrey
Cunningham Dr J (Whiteh)	Jones, Alec (Rhondda)	Roderick, Caerwyn
Davidson,Arthur	Jones, Barry (East Flint)	Rodgers, George (Chorley)
Davies, Bryan (Enfleld N)	Jones, Dan (Burnley)	Rodgers, Rt Hon William(Stockton)
Davles, Denzll (Llaneill)	Kaufman, Gerald	Rooker,J.W.
Davies,Ifor(Gower)	Kelley, Richard	Roper,John
Davis, Clinton (Hackney C)	Kilroy-Silk, Robert	Ross, Stephen (Isle of Wight)
Deakins, Eric	Kinnock, Neil	Ross, Rt Hon W. (Kilmarnock)
Dean, Joseph (Leeds West)	Lambie, David	Rowlands, Ted
de Freitas, Rt Hon Sir Geoffrey	Lamborn, Harry	Ryman.john
Dempsey, James	Lamond, James	Sandelson, Neville
Doig, Peter	Latham, Arthur (Paddington)	Sedgemore, Brian
Dormand, J. D	Leadbitter, Ted	Selby, Harry
Douglas-Mann, Bruce	Lee, John	Shaw, Arnold (liford South)
Duffy, A. E. P.	Lestor, Miss Joan (Eton & Slough)	Sheldon, Rt Hon Robert
Dunnett, jack	Lever, Rt Hon Harold	Shore, Rt Hon Peter
Dunwoody, Mrs Gwyneth	Lewis, Arthur (Newham N)	Silkln, Rt Hon John (Deptford)
Eadle, Alex	Lewis, Ron (Carlisle)	Silkin, Rt Hon S. C. (Dulwich)
Edge, Geoff	Litterick, Tom	Silverman, Julius
Edwards, Robert (Wolv SE)	Loyden, Eddie	Skinner, Dennis
Ellis, John (Brigg & Scun)	Luard, Evan	Small, William
Ellis, Tom (Wrexham)	Lyon, Alexander (York)	Smith, Cyril (Rochdale)
English, Michael	Lyons, Edward (Bradford W)	Smith, John (N Lanarkshire)

Snape, Peter	Thorpe, Rt Hon Jeremy (N Devon)	Whitlock, William
Spearing, Nigel	Tierney, Sydney	Wigley, Dafydd
Spriggs, Leslie	Tomlinson, John	Willey, Rt Hon Frederick
Stallard, A. W.	Tomney, Frank	Williams, Rt Hon Alan (Swansea W)
Steel, Rt Mon David	Torney, Tom	Williams, Alan Lee (Hornch'ch)
Stewart, Rt Hon M. (Fulham)	Tuck, Raphael	Williams, Sir Thomas (Warrington)
Stoddart, David	Urwin, T. W.	Wilson, Alexander (Hamilton)
Stott, Roger	Wainwright, Edwin (Dearne V)	Wilson, William (Coventry SE)
Strang, Gavin	Wainwright, Richard (Colne V)	Wise, Mrs Audrey
Strauss, Rt Hon G. R.	Walker, Harold (Doncaster)	Woodall, Alec
Summerskill, Hon Dr Shirley	Walker, Terry (Kingswood)	Woof, Robert
Swain, Thomas	Ward, Michael	Wrigglesworth, lan
Taylor, Mrs Ann (Bolton W)	Watkins, David	Young, David (Bolton E)
Thomas, Dafydd (Merioneth)	Watkinson. John
Thomas, Jeffrey (Abertillery)	Weetch, Ken
Thomas, Mike (Newcastle E)	Weitzman, David	TELLERS FOR THE NOSE:
Thomas, Ron (Bristol NW)	White, Frank R. (Bury)	Mr. Ted Graham and
Thorne, Stan (Preston South)	White, James (Pollok)	Mr. James Tinn.

Question accordingly negatived.

Amendment No. 77 agreed to.

Amendment made: No. 78, in page 61, line 48, at end insert—

'(c) the tax on the deemed supply would not be more than £50; or'.—[Mr. Robert Sheldon.]