INLAND REVENUE (DISCRETION) (Hansard, 27 March 1979)

§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I beg to move, That leave be given to bring in a Bill to limit to individual cases the discretion of the Inland Revenue and Customs and Excise to reduce or forgo payments of tax; and to require that that discretion in favour of classes or groups of taxpayers shall be exercised only by an order subject to approval by the House of Commons. At the outset I emphasise the importance of the discretion that tax authorities have exercised in favour of individuals for compassionate or other reasons. That is something that we have all experienced in our constituency work and that we all admire. To extend that discretion to a general amnesty up to 1977 for the casual workers in Fleet Street is a totally different interpretation of the powers of the Inland Revenue. It is highly political. Nothing has caused greater fury among certain classes of taxpayer than that amnesty.

The change in the attitude of the public is best witnessed by early-day motion No. 354, signed by 66 members of the Tribune group, who are basically in favour of the principle of the Bill. They are the same hon. Members who voted against my first Bill to outlaw the practice of ghost workers. That is a transformation indeed.

In evidencing why the Bill should receive leave, one must consider the inordinate delay in bringing to light the scandal of the fictitious names in Fleet Street. In answer to a question, the Financial Secretary to the Treasury told me: Evidence of the use of fictitious names among casual workers in Fleet Street has been accumulating for some years."—[Official Report, 21 March 1979; Vol. 964, c. 659.] In response to another question, I was told by the Minister of State, Department of Health and Society Security: Employers of casual workers in the newspaper industry, like other employers of labour, are responsible for the payment of earnings-related national insurance contributions in respect of any of their employees whose earnings derived from the employment reach the the lower earnings limit for contribution liability."—[Official Report, 19 March 1979; Vol. 964, c. 478.] There are powers under the Income and Corporation Taxes Act 1970 for the Inland Revenue to require employers to deduct tax from casual workers' earnings, 271 yet none of these things was done—or perhaps they were done and we do not know about it. In the case of national insurance contributions, it may well be that these have been paid. Perhaps somewhere in Sunset Boulevard there is a heap of brown envelopes containing the pensions for Mr. M. Mouse. But for many years there has been an extraordinary lack of responsibility, and an extraordinary failure to take this serious situation to heart.

The next disturbing feature of the tax amnesty is that it has literally been negotiated by the Inland Revenue with the trade unions concerned. We have found out from answers to questions that there was some consultation with Ministers, but Sir William Pile yesterday confirmed that the decision was his and his alone. He went to the unions and negotiated the amnesty.

I quote from the letter that the Society of Graphical and Allied Trades sent out to all its members. It said: The offer extends to errors made in returns completed, or in information provided before 4 March in respect of casual earnings for the years up to 5 April 1977, which will be similarly disregarded, subject to acceptance of the arrangements and full co-operation by the individual. This treatment will also be extended to errors in minor sources of income, such as savings interest. Is that not rather extraordinary? Later on, the letter said: The above procedures and arrangements apply only to printing casuals who are members of SOGAT, NATSOPA and NGA "— —I suppose that the NGA is the National Ghosts' Association— They will be applied uniformly to casuals throughout Fleet Street from 4 March. The arrangements for other casuals will be reviewed in due course. The letter said, finally: We fully appreciate that a casual may find himself in something of a dilemma if he has not paid tax properly in the past and now wants to put matters in order. He may fear the consequences. What we are saying to him is that if there is general acceptance of the new procedures and if he co-operates fully with the Revenue, we will release him from most of the liabilities which the Revenue could demand. I do not believe that that should be left to the discretion of the Revenue to negotiate. I believe that there are millions of citizens in this country who feel deeply aggrieved because they are being 272 harassed by Customs and the Revenue for tax for perhaps five, six or seven years back, and often very small amounts. The policy of the Revenue in relation to small businesses is to carry out investigations in depth. It takes 12 per cent, of cases, quickly discards 9 per cent, and then picks on the 3 per cent, to go into the last detail and crawl back over the past six years with the greatest care. The idea of this is so to frighten the taxpayer that the word gets around that it is not a good idea to misdeclare one's income.

However, the effects of this policy have been to cause nervous breakdowns, and in two cases of which I have heard to cause heart attacks. Also, serious distress and unhappiness are caused among the unfortunate 3 per cent.

Sir William Pile yesterday claimed that that policy represented an amnesty for the 97 per cent, who were not deeply investigated and therefore it was fair to grant an amnesty to Fleet Street casual workers. But the self-employed and the small business men will not share that feeling. They feel that as each and every one of them is liable to be subjected to this treatment they should at least have the same arrangement as the Fleet Street casual workers.

Finally, I contrast the attitude of the Government in agreeing to the amnesty with that that they have exhibited in tax affairs on Finance Bills and in the pursuit of tax evasion. Indeed, the Chief Secretary has become the most virulent pursuer of tax evaders in the history of the Treasury. I quote one sentence from a speech that he made in Committee during the last Finance Bill: If the Committee will accept that these are wholly artificial schemes, with no commerciality, which have the diliberate intent—and no other reason—of avoiding very large sums in tax at the expense of the mass of the taxpayers, it is incumbent upon us to see whether there are ways that we can stop it." —[Official Report, Standing Committee A; 6 June 1978; c. 730.] Those very words could have been used about the Fleet Street tax evasion scandal. The Goverment went as far as to use retrospection in legislation to ram that provision through this House despite protests from the Opposition in those cases of tax evasion. Now, when we have £1 million lost due to evasion by members of trade unions and self-employed, after 273 three or four years of failing to pursue them a tax amnesty is granted. Is it any wonder that feeling is running high?

That is why I seek to leave to introduce a Bill to limit the discretion of the Revenue to individual cases, so that this House can take a political decision—which is what this decision about a Revenue amnesty is—and so that we can make sure that there is equality of treatment between all our citizens.