HC Deb 09 July 1985 vol 82 cc984-98

'The provisions of section 183 (1) of the Income and Corporation Taxes Act 1970 shall have effect except in regard to personal Christmas gifts and presents given to individual postmen in appreciation of the recipient's personal qualities, such as faithfulness, consistency, and a readiness to oblige.'.—[Mr. Campbell-Savours.]

Brought up, and read the First time.

Mr. Campbell-Savours

I beg to move, That the clause be read a Second time.

This issue first came to the attention of British postmen and postwomen about a year ago when members in branches of the Union of Communication Workers in the area covered by the Guildford Inland Revenue office received a shock assessment of their income. The inspector of taxes had deemed that all postmen and postwomen received £150 in tips whether or not they receive them, and that they were to be taxed on those tips. The notices that included the assessment had wrongly been issued to members of the UCW who never delivered mail, including a number of individual postmen who had no direct contact with the public that they served. Cases then surfaced in Blackburn, Chorley, Preston, Burnley and Southport. Many more are no doubt in the pipeline.

After some exchanges between the professional advisers of the UCW and the Inland Revenue, the notices to non-delivery members were withdrawn and a long argument about the nature of Christmas boxes began. The union's case was, and still is, that any tip received at Christmas — whether a bar of chocolate, a calendar, a bottle or cash — is a gift and not a reward for work, in the sense that it becomes a part of earnings. The union's accountants and solicitors have pressed the case most firmly throughout the year with the Inland Revenue authorities. Just before Christmas a meeting was held with the district inspector in London Provincial 20. Following the meeting it was confirmed after discussions with the Inland Revenue's policy division, that its view was that, on the basis of present information, there were no grounds either in equity or in law for the issue of any extra-statutory concessions in respect of submissions that Christmas tips were a gift from customers and as such should not be taxable.

It was suggested in some quarters, particularly in the press, that the employers had the power to vary the decision of the Inland Revenue. This suggestion has proved to be completely unfounded, but it arose from the confusion caused by the original decision. In the discussions with the inspector, the Inland Revenue representatives made the point that comparatively few postmen who had received the notice had appealed to their local tax authority. The union pointed out that this was still the position and that it was advising that course of action. As the union wanted a decision in Parliament, there were dangers in risking appeal decisions that might be unfavourable to the union membership.

The amendment is important in so far as the wording is drawn from two sources. First, it is drawn from a letter from the Guildford office of the Inland Revenue which identifies section 183(1) of the Income and Corporation Taxes Act 1970 as the section which has led to this penal tax assessment having been made. Secondly, and perhaps more importantly, it is drawn from a judgment in the case of Seymour v. Reed in which it was held that gifts or presents made to a person on personal grounds and not by way of a payment for his services are not included as 'salaries, fees, perquisites, profits, etc.' The fact that a payment is made by someone other than the employer suggests that the payment is made by way of gift. A voluntary payment may be made in circumstances which show that it is given by way of a present on grounds personal to the recipient. In such a case the proper conclusion is likely to be that the voluntary payment is not a profit accruing to the recipient by virtue of his employment but a gift to him as an individual, paid and received by reason of his personal qualities or attainments.

Mr. Moore

indicated assent.

Mr. Campbell-Savours

I see that the Financial Secretary is nodding his head. I hope that he will also nod his head when it comes to winding up the debate and that he will say that he agrees with the new clause.

Sir William Clark

Who wrote it?

Mr. Campbell-Savours

The hon. Member for Croydon, South (Sir W. Clark) asks who wrote it. The judge did. This was his judgment: It was also pointed out by Mr. Justice Atkinson in the case of Seymour v. Reed that a sum given as a present in appreciation of the recipient's personal qualities, such as faithfulness and consistency"— we know that the hon. Member for Croydon, South subscribes to such principles— and readiness to oblige, would not be taxable. The judgment concluded: We are of the opinion that these tips are not, therefore, taxable. The Union of Communication Workers cannot accept that a one-off gift to a postman at Christmas time must be treated on the same basis as regularly given tips and gratuities to taxi drivers, waiters and hairdressers. Their measure and magnitude make them totally different.

It would be wrong for the Minister, when replying, to address himself to what he may consider to be a similarity. I think I see him shaking his head in dissent. I hope that that means that he will not deploy an argument on the basis of similarity. Taxi drivers and waiters have been known to solicit tips. Britain's postmen are precluded, by the rules of the Post Office, from soliciting tips.

10 pm

I wish to draw attention to an interesting article which appeared in the Sun, a publication from which I do not normally quote, and which is hardly known for its reliability. It carried a story on Wednesday 13 February 1985 under the headline: The meanest mail. Lawson rapped by postie Celia. Exclusive. Mr. Denis Budge, the journalist, wrote: Postie Celia Mills delivered a rollicking yesterday to Chancellor Nigel Lawson — one of her customers — over his planned tax on postmen's tips. Celia, 52, stormed, 'I have never had a penny from him in the ten years I've been delivering letters to his country home.' The Inland Revenue will assume for tax purposes that posties pick up £150 a year in tips. But Celia said, 'In the past year I have had a total of £8'— not £150— 'a box of biscuits and a pair of tights.' Mother-of-two Celia, who works as a £52-a-week part-timer in Stoney Stanton, Leicestershire, where the Lawsons own the old rectory, now plans to send a protest letter to the Chancellor. She said, 'I'm mad enough to bite his dog. I've always been civil to him but I'll just have to clench my teeth next time.' and Celia's husband Roy said 'His tax on phantom tips is diabolical'. Why should the Treasury assume that everyone tips their postman at Christmas, when it seems that the Chancellor has not tipped his postman for 10 years?

Celia and her husband were not the only people to object. Along with the Union of Communication Workers, my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) also objected and he received a reply from the Treasury. The Financial Secretary, in an appendix to a letter dated 15 March 1985, conceded that the assessment of £150 was merely an estimate based on assumptions that subsequent returns from postmen showed in many cases to have been excessive. Equally, he accepted that in assuming that all postmen in an area received Christmas gratuities, the tax offices concerned had not followed departmental instructions. I would have thought that was a fairly grave admission to make. Will the Minister address himself to that statement in winding up the debate? What is he going to do about it? Does he intend to issue instructions to all his tax offices that they should not deem in this way? Postmen and postwomen throughout the country want him to take this decision. He has the opportunity to do so when he winds up the debate.

Mr. A. J. Beith (Berwick-upon-Tweed)

I am glad that this matter is on the Order Paper, because it exposes a piece of extraordinary behaviour by the Inland Revenue which caused great and justified offence to postmen and postwomen throughout the country. It demands some explanation from the Financial Secretary, who wrote to many of us on the subject. We all have copies of the letter which has been quoted. It came to the notice of postmen in the area I represent when a notice was circulated to all postmen and postwomen from the head postmaster reproducing the letter which he received from the Revenue. The letter said:

"POSTMEN/WOMEN—TIPS ETC I understand that some, or all of your postmen/women may be in receipt of tips, (e.g. Christmas 'boxes')—whether in cash, or in 'kind'. Such income is taxable under the provisions of the Taxes Acts. Starting in April 1985 i.e. the tax year 1985/86, I propose to tax an estimated amount (150 per annum), by means of a deduction from the individuals' PAYE coding allowances … Any individual who disagrees with his/her coding should contact Morpeth Tax Office". This notice was circulated to postmen, who immediately wrote to Members of this House to protest. Many of them specified what they had received. Some of them pointed out that they worked in sorting offices and did not meet the public. Others pointed out the precise amount they received. One postman stated that he received £22, which was the highest figure quoted. I received a petition from 12 postmen who stated that not one of them had received more than £5 in tips in any recent Christmas.

If anything, the practice of giving postmen substantial tips at Christmas has declined along with the economic fortunes of the country and the financial security of many of the people to whom they deliver. This is not the mark of any lack of respect for the postman, who is one of he most popular figures in most of the communities in my constituency and the constituencies of many other hon. Members and whose personal service and attention is appreciated. In rural areas postmen frequently carry other messages and provide information and guidance, especially to the elderly. The postman is often the only caller of the day for many old people. He is the only person to whom they speak. He not only brings them their Giro cheques and news from their families but also gives them all kinds of advice and help.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Is it not the case that many of our postmen and postwomen deliver mail in communities within which the people themselves are not in a position to give them gifts at Christmas or any other time of the year?

Mr. Beith

That is absolutely so. They may also be the most generous communities. A postman is often given a hot drink on a cold wet winter's morning in a house which can least afford to be generous with food or other facilities. People who cannot afford to be generous and hand out tips and extra benefits are none the less generous and appreciative of the postman's services. The amount of money assumed by the Revenue to be a reasonable estimate is many times higher than the top figure which any postman ever receives.

I took this up with the Chancellor and I was slightly taken aback to find that the first reaction was a letter from his private office saying that a report on the tax affairs of my constituent had been called for. My constituent was the secretary of the Union of Communication Workers, who sent a petition to me and had an investigation into his tax affairs for his pains. This merely revealed the truth of the case that we were advancing. I wrote back to the Chancellor and tried to remind him that this was not one individual problem but a general problem created by tax inspectors and a series of tax offices making completely unwarranted assumptions.

The upshot of all this was that, following correspondence between many hon. Members and the Financial Secretary, the Revenue revised its estimate and suggested that £30 was a reasonable figure. It is still wrong. There may be parts of the south-east where postmen pick up that sort of money regularly, but it is simply not so in many other parts of the country. That kind of money is not pressed into postmen's hands at Christmas time because it is not available or spare.

The Revenue has made completely unwarranted assumptions at every stage. I do not see why it felt compelled to handle the matter in this way. It would not have been difficult for it to have accumulated enough information, through discussions with the unions and inquiries at individual tax offices, to come up with a more reasonable suggested figure of, say, £10. That figure would still be challenged by many postmen, who do not get any tips if they are not in direct contact with the public, or who get hardly anything.

The new clause argues that the Christmas boxes and gratuities are, as has been argued by a judge in a court case, different from the regular tips that form part of the understood income of some people. That is so. We are not talking about the way that some people's incomes are made up by regular tips. I wish that that were not so.

It remains a degrading feature of our society that some categories of people still depend on tips for their basic income. We should try to cure that in our society. Everybody should be able to rely on his pay packet to give him a decent living wage. Whether somebody is a waiter, a buffet car attendant on a train or a hairdresser, to have to rely on tips and then get into a haggle with the Revenue about what he is actually receiving is not a fair way for somebody to be remunerated for a fair day's work.

That is a different issue from Christmas gratuities, which are much more limited than they may have been at one time in some parts of the country, and are confined to a limited number of people. Such gratuities are not confined to postmen, and the new clause opens up other questions. The other category of regular house callers that comes to mind is dustmen. They serve us the year round doing an extremely unpleasant job and many people try to give them some recognition of that at Christmas.

If we pass the new clause, such other categories may be involved. I hope that the Minister will, as the hon. Member for Workington (Mr. Campbell-Savours) suggested, address his mind not to those whose income is substantially made up from tips but to those who often get only a tiny extra gratuity at Christmas from grateful customers, and on a scale about which we need hardly need be talking.

In my constituency, such tips are so small that they cannot be compared with the tax-free benefits that many other people enjoy, such as company cars, allowances available to Members of Parliament, or all sorts of things on which tax provisions are relatively generous. If a postman gets under £15 at Christmas by way of gratuities, the Revenue should not be involved. I hope that the Minister will be able to say that that will be so.

I hope, too, that the Minister will be able to bring some apology to postmen for the way in which the Revenue initially handled this matter. There should be some recognition that for most of the postmen, as for dustmen and others who occasionally get a Christmas tip, this is but a small bit of extra generosity from a limited number of people with which the Revenue should not be bothered.

Mr. John Golding (Newcastle-under-Lyme)

I hope that the Minister's officials do not listen to me tonight, because I have a confession to make. Every Christmas, I go around my constituency and see constituents whom I have helped in the previous year. I have an estimate here which shows that last year I received 45 mince pies, 12 pieces of Christmas cake, four jellies, two trifles and three glasses of ginger wine. I have not declared them in my income tax return.

My case is that the Chancellor of the Exchequer has not declared his Christmas boxes either. My guess is that he received his Japanese calendar, his Marconi calendar and his Boots desk diary, and if one looks at his tax return nowhere will one find those items recorded. He will say that these were Christmas boxes. He will say, "They were given to me because of my personal qualities." He deludes himself on that as he deludes the country on everything else. He will say, "I received those because of my personal qualities such as faithfulness, consistency and a readiness to oblige." There is no end to his ability to deceive himself and others. They are not taxable.

If I am wrong, may the Financial Secretary rise and say, "I have seen the Chancellor's tax returns and I know that every Christmas box he received has been duly entered and tax has been paid on it." But we know that is nonsense. We know that those in industry, those in high positions, do not record their Christmas boxes. They do not call them tips. When the Chancellor receives tips from different companies through the Members' post, he does not regard them as tips.

10.15 pm
Mr. Sedgemore


Mr. Golding

The right hon. Gentleman does not regard them as backhanders. He regards each gift as a friendly gesture, a Christmas box, not to be put down and itemised in a column of figures to return to the Inland Revenue. He would regard himself as a Scrooge if he did that. He looks upon it as a friendly gesture and that is what the Christmas box for the postman is about. The postman is in a different category from the dustman. There are people who give the dustman a Christmas box because they think that more of their rubbish will be taken away. There are those who tip waiters. I can tell the House of my experience as a waiter, how I extorted tips from customers. People sometimes give tips to waiters because they are afraid of them, because they are embarrassed when they are with lady friends and do not want to be shown up by the waiter.

With the postman it is entirely different. There is no fear of not receiving service from the postman. You cannot buy additional service in this way, because the law says very specifically that your mail must be delivered. No discretion is given to the postman as to whether he delivers your letters. Does the Chancellor even think of giving the postman a tip? Mail is still delivered, free Christmas gifts and all, because the law says to the postman that he must deliver your mail. Therefore, there is no question of fear.

People give Christmas boxes to the postman because of the feeling of good will of the season. A payment for service is irrelevant. Those who argue that perhaps the assessment should be £10 are making an error. There should be no assessment at all. People give a Christmas box to the postman because it is part of our pattern of life. Gratuities are given to certain people at Christmas and they are given to the postman because he is "the friendly postman." People give them to a friendly familiar face; it has nothing to do with service.

The Government should accept the new clause and admit that it is niggardly, miserable and Scrooge-like to continue to tax Christmas boxes.

Mr. Harry Ewing (Falkirk, East)

I declare an interest as a sponsored Member by the Union of Communication Workers and as a former postman.

Mr. Golding

A friendly face.

Mr. Ewing

As my hon. Friend says, a friendly face. I shall bring all my years of experience to the debate. My hon. Friend the Member for Workington (Mr. Campbell-Savours) got it right with his mixture of seriousness and farce. The hilarity that has entered the debate is appropriate, because the Government's proposal is a farce. For the Inland Revenue to suggest that postmen get anything like £150 at Christmas is one of the greatest farces I have ever heard of.

It may not be known to hon. Members that officers working in the post office in our Central Lobby were assessed as receiving £150 in tips. I see the Financial Secretary smiling; he obviously knows what happened. It was outrageous.

I am glad that my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) took up a point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith). It is obvious that the prospect of power is beginning to affect alliance Members — not that that prospect will ever materialise. I note that the hon. Member for Berwick-upon-Tweed moved away from his previous position of objecting to taxing the tips of postmen and postwomen and said that an assessment of £10 or £15 would be acceptable. The hon. Gentleman is obviously looking—

Mr. Beith

The hon. Gentleman misquotes me.

Mr. Ewing

The hon. Member said it. If he wishes to correct the record and to rescue himself, I will give way to him.

Mr. Beith

The hon. Gentleman misquotes me. I said that reasonable behaviour by the Inland Revenue in the first place might have been to offer an estimate of £10 or £15 and not £150. My argument was that £10 or £15 for the Revenue is not worth bothering about.

Mr. Ewing

The hon. Gentleman has confirmed the point that I was making, which was that £10 or £15 would be acceptable to him.

Mr. Beith


Mr. Ewing

The hon. Gentleman suggests that that would have been reasonable behaviour. That suggests to me that the hon. Gentleman, who is not an unreasonable man, would not oppose what he regards as reasonable behaviour. The Liberal party has shifted its position.

As my hon. Friend the Member for Workington pointed out, Celia Mills has never had a tip from the Chancellor who is imposing this policy on postmen and postwomen throughout the country. I have experiences of Christmas tips and Christmas boxes. My tips did not amount to £150 in all the years that I worked for the Post Office — let alone total that amount in one year. I vividly remember one Christmas when I was on a rural delivery. My Christmas gifts amounted to one chicken which had been accidentally run over, 14 turnips, the promise of a load of manure for my garden — a promise which was never delivered. My other gifts included three pairs of socks and five dozen eggs. That was all after a year of running the farmer's children to the road end so that they could catch the school bus. Yet the Chancellor of the Exchequer suggests that postmen receive £150 each year in tips. The proposal is outrageous.

If the Financial Secretary has any common sense, he will throw away his silly briefing, which will undoubtedly be couched in highly technical language. It will no doubt argue that these are not tips or gifts and that the House should oppose the new clause. He should tell his civil servants to go and have an early night, and the Inland Revenue to concentrate more on the Lord Vesteys of this world. It is no wonder that the Chief Secretary is not replying to the debate. He congratulated Lord Vestey on defrauding the Inland Revenue of millions of pounds, yet he tells postmen that they must pay tax on tips of £150 a year.

Although we have treated the subject lightheartedly, postmen and women do not. Hundreds of them have had their weekly earnings reduced by £1 or £2 a week because of the Government's policy. It is nonsense to suggest that post office staff get tips all year round, because they do not. At Christmas and New Year they receive gifts, and the Inland Revenue has no right to tax them. I urge the Minister to exercise common sense, to speak for only a minute, and to accept the new clause.

Mr. Randall

My speech will be brief. The Inland Revenue has made a great big blunder on the issue of tips for postmen, and the way in which it deals with their tax assessments.

The role of the Union of Communication Workers in protecting its members is to be commended. It has done an extremely good job in bringing the matter to everybody's notice. I am impressed by the way in which it has pressed the case and made the appropriate representations. We are concerned with a group of people on low incomes, who deliver mail in all weathers, often through snow and ice, and who often work through the night. They provide a good service and are admired by the British people. Yet the Government wish to tax a once-a-year gift which is given voluntarily in recognition of their wonderful service.

How did the Minister arrive at £150? I am sure that any assessment of tips would reveal an enormous discrepancy between those received in Guildford, which is in the affluent south-east, and those received in my constituency. How many postmen's rounds were considered? How many interviews with householders were conducted? The £150 is so arbitrary that I cannot see how the Minister justifies it.

10.30 pm

Is geography to be taken into account in tax assessments? The Government have muddled postmen with workers such as taxi drivers, hair dressers and people who work in restaurants, who regard tips as part of their regular income. It is inequitable of the Inland Revenue to include the once-a-year gift in the same category. Where will it end? If the Government go ahead with this outrageous step, what will happen to milkmen, and dustmen? I hope that the Minister will seriously reconsider the matter. People will regard these proposals as extremely unfair. The sum makes no difference to the Revenue, and no point of principle in financial terms is involved. I hope that the Minister will accept new clause 10.

Mr. Austin Mitchell

The main surprise of the debate is that the Financial Secretary has not already said that he will withdraw this provision so that we can avoid the necessity of voting against it and bringing down the Government and so that we can go home by 11 pm, content that we have saved the country.

The other big surprise is that, in the serried ranks of aspiring Parliamentary Private Secretaries, none has come out and defended what is being done. That is amazing for a party that will defend any iniquity and any folly. Treasury briefs have gone unread. What is being done here is an example of the Government's desperate trawl for money, which starts at the top with the flogging off of national assets and finishes at the bottom with the taxing of workplace nurseries and imaginary postmen's tips.

This is the thin end of the wedge. Where will it stop—dustbinmen's tips, milkmen's tips, the Parliamentary Private Secretary's tip from a grateful Minister at Christmas? Will it stop with presents for secretaries from Members of Parliament? The £150 has been plucked out of the air. I hope that the Financial Secretary will tell us what it is based on. Were postmen followed round by Inland Revenue officials counting every burp and estimating every mince pie and its value, counting every hiccough and estimating how many drams of whisky went into producing it and counting the amount of money that postmen are seen putting in their pockets as they come out of houses? How was this done? There is no evidence that 150 is anything like the figure that postmen receive. Were Treasury Ministers asked whether they gave enough to balance the Chancellor's meanness? If the Chancellor gives any tip at all, it is simply despair. That is the appropriate tip to give when one considers his economic policy.

Mr. Sedgemore

It is done by MORI polls.

Mr. Mitchell

I shall not comment on MORI polls. It is ludicrous to set this figure because not all postmen receive Christmas boxes of any kind. The size of the Christmas box depends on the area that the postman serves. My experience as a postman is that the better Christmas boxes came from the humble working-class areas. In the middle class areas one would get a glint from steel-rimmed glasses and a mincepie handed over with forceps from some distance. The estimate must be calculated by area.

I believe that the tips should not be taxed. New clause 10 is worded to reflect the legal judgement in the case of Seymour v Reid in 1927 in the Appeal Court. A professional cricketer in the service of Kent county cricket club was threatened with taxation, but the judgment held that a sum given as a present in appreciation of the recipient's personal qualities, such as faithfulness, consistency and a readiness to oblige—the type of PPS qualities that the Government esteem — would not be taxable. Since the new clause has been cleverly worded by my hon. Friend the Member for Workington (Mr. Campbell-Savours) to reflect all those characteristics and that judgment, postmen's tips are better not taxed. I hope that the Financial Secretary will say that he will withdraw the proposal. It is petty and wrongly based, wrongly researched and bears no relation to the nature of the job. Has the great experiment of Conservative tax reform under the Chancellor come to these petty methods?

Dr. McDonald

My hon. Friend the Member for Falkirk, East (Mr. Ewing) described the realities of a postman's life at Christmas. That contrasts sharply with the letter from the inspector of taxes in Guildford saying: The estimate of £150 for tips in the codings was calculated as 30p per house on a round of 500 homes over a 15 day period. That assumption is absurd when postmen are given gifts in kind, promises of gifts which do not materialise and perhaps the odd pound. It does fit the sums, and the Chancellor did not chip in with his 30p contribution, but I shall not embarrass the Financial Secretary by asking him to comment on that story.

The Government's proposal also conflicts with the provisions in clause 42 which raise the limit for business gifts from £2 to £10. More exemption is allowed for a business than for postmen receiving a gift in recognition of the service that they have rendered and the qualities that they have shown throughout the year. That is utterly mean. It involves almost £1 per week in tax for postmen who have not thought to challenge the £150 assessment or whose appeals against it have failed.

The Financial Secretary knows that there is plenty of case law clarifying the amounts of money which count as gifts and are not subject to tax because they are given to help someone out or in recognition of personal qualities and distinguishing between cases of that kind and tips. All that the Financial Secretary has to do today is to say that he will end the nonsense of assuming that postmen receive 30p per house on a round of 500 homes over a 15-day period and insist that any benefits received by postmen — bearing in mind that they are not allowed to solicit gifts or to receive gifts at any time other than Christmas —are regarded as gifts in recognition of the postman's personal qualities and friendly face and that they are not tips.

If the Financial Secretary will give us that undertaking we shall not need to divide the House and the matter will have been settled very quickly.

Mr. Moore

The charm of the hon. Member for Thurrock (Dr. McDonald), combined with the endearing comments of the hon. Member for Falkirk, East (Mr. Ewing) and others are an enormous temptation but Treasury reality holds me back. If hon. Members who are desirous of voting on this will listen to my explanation they may question whether they really want to vote for the new clause.

The new clause seeks to establish exceptional tax treatment for tips received by postmen at Christmas. I will deal with the technical defects of the amendment separately so as to help the hon. Member for Workington (Mr. Campbell-Savours) in any attempt that he may wish to make to return to the subject on a future occasion. First, however, I shall deal briefly with the arguments of principle.

It is difficult to see why postmen should be singled out for special tax treatment and not be taxed on their tips when other employees who receive tips at Christmas continue to be taxed on them. I shall come on to the assumptions in a minute, but in general tips are a form of income and as such it seems right that they should be taxed in the same way as the rest of the employee's income.

We would be unwise not to say so even if we did not believe it, and I certainly do believe it, but we all value the efforts of our postmen to get the post through in difficult conditions, especially at Christmas. The recollections of the hon. Member for Falkirk, East will live long in my memory. Nevertheless, it would not be right not to tax one form of income received by one group of people while others have to pay tax on all their income.

The amounts can be substantial. Some postmen clearly receive very modest amounts—I shall not go into details on an individual basis — but others have declared amounts of more than £250. [Interruption.] I am simply putting the facts on record as I am sure that the hon. Member for Workington would wish. Exempting that kind of income from tax would put postmen at an advantage compared with other employees.

As the hon. Member for Workington has said, the new clause arises as a result of the action taken by certain tax offices earlier this year to include an estimate of tips in some postmen's coding notices for 1985–86. I had hoped that the House would recall my reply on 1 April to a question from my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Merchant). I reported that in February some 15 of the 100 or so tax offices dealing with postmen had included an estimate of £150 for tips in 1985–86 coding notices. I am sorry to say that that was done without first checking with the postmen concerned whether tips were received and, if so, what amount. I very much regret the inconvenience and worry that that action caused the people concerned and I apologise once again on behalf of the Inland Revenue and myself. It was particularly unfortunate as long-standing guidelines make it clear that adjustments to coding notices in respect of tips should not be made until every possible attempt has been made to find out the facts. The Inland Revenue is sorry that the offices concerned acted contrary to those instructions and has apologised. It has also taken steps to rectify the position by approaching the postmen concerned or their representatives to establish the facts and, where appropriate, to issue revised coding notices. Tax offices have been reminded of the instructions on taxing tips.

Mr. Fisher

Will the hon. Gentleman give way?

Mr. Moore

If the hon. Gentleman will forgive me, I shall not give way as I have been asked to be as brief as possible.

I shall not go into the relative position of other roundsmen such as milkmen, dustmen, and so on, but will deal with the essential point that the hon. Member for Workington raised so clearly and specifically at the beginning of the debate. Apart from the principles involved, the clause is defective and redundant. It seeks to exempt postmen's tips from tax but it is technically defective in the way in which it defines the tips that it seeks to exempt. The hon. Gentleman referred to one court case, but there are many others. The courts have already noted in cases dating back to the 19th century — [Interruption.] I am trying to put the facts on record in a matter which affects many men and women in this country.

10.45 pm

The courts have already noted in cases dating back to the 19th century that gifts and presents, as the hon. Member for Workington rightly said, given because of the personal qualities of an individual as an individual, are not taxable. They do not arise out of the employment, but because of the personal qualities of the person himself. But tips are usually given to postmen or other employees in return for being postmen. They are an extra reward for delivering the post, in a pleasant and helpful manner. I understand that the clause as worded probably would not exempt those tips. It would simply give statutory backing to the exemption under the ordinary rules of schedule E. As the hon. Member for Workington rightly said, the taxpayer has the commissioners and the courts to test that. That is what the courts of our land are for. The exemption is already enshrined in case law, for the non-taxability of the very few tips given because of a person's personal qualities.

Therefore, in essence, the new clause seeks to exempt what is almost certainly already exempt, while leaving—this is the critical point—taxed what I assume it seeks to relieve. I trust that the House will, while recognising the apology that I gave and the relevant facts in the past, not push the new clause to a Division.

Mr. Campbell-Savours

I do not wish to detain the House, but I have to say to my hon. Friends that the Minister's reply was spiced with the subjunctive mood of doubt. All the time he said, "might", "perhaps", or "could". That is not good enough. I call upon my hon. Friends to support my new clause in the Lobby.

Question put, That the clause be read a Second time:—

The House divided: Ayes 172, Noes 244.

Division No. 267] [10.46 pm
Alton, David Barnett, Guy
Ashdown, Paddy Barron, Kevin
Ashton, Joe Beckett, Mrs Margaret
Atkinson, N. (Tottenham) Beith, A. J.
Bagier, Gordon A. T. Bell, Stuart
Banks, Tony (Newham NW) Benn, Tony
Bennett, A. (Dent'n & Red'sh) John, Brynmor
Bermingham, Gerald Jones, Barry (Alyn & Deeside)
Bidwell, Sydney Kennedy, Charles
Blair, Anthony Kilroy-Silk, Robert
Boothroyd, Miss Betty Kirkwood, Archy
Boyes, Roland Lambie, David
Bray, Dr Jeremy Leighton, Ronald
Brown, Gordon (D'f'mline E) Lewis, Ron (Carlisle)
Brown, Hugh D. (Provan) Lewis, Terence (Worsley)
Brown, N. (N'c'tle-u-Tyne E) Litherland, Robert
Brown, R. (N'c'tle-u-Tyne N) Lloyd, Tony (Stretford)
Brown, Ron (E'burgh, Leith) Lofthouse, Geoffrey
Bruce, Malcolm McDonald, Dr Oonagh
Buchan, Norman McKay, Allen (Penistone)
Caborn, Richard McKelvey, William
Callaghan, Jim (Heyw'd & M) McNamara, Kevin
Campbell-Savours, Dale McTaggart, Robert
Carlile, Alexander (Montg'y) McWilliam, John
Clark, Dr David (S Shields) Madden, Max
Clarke, Thomas Marek, Dr John
Clay, Robert Marshall, David (Shettleston)
Cocks, Rt Hon M. (Bristol S.) Martin, Michael
Cohen, Harry Mason, Rt Hon Roy
Coleman, Donald Meacher, Michael
Concannon, Rt Hon J. D. Meadowcroft, Michael
Cook, Frank (Stockton North) Michie, William
Cook, Robin F. (Livingston) Millan, Rt Hon Bruce
Corbett, Robin Miller, Dr M. S. (E Kilbride)
Cowans, Harry Mitchell, Austin (G't Grimsby)
Cox, Thomas (Tooting) Oakes, Rt Hon Gordon
Craigen, J. M. O'Brien, William
Cunliffe, Lawrence O'Neill, Martin
Davies, Rt Hon Denzil (L'lli) Park, George
Davis, Terry (B'ham, H'ge H'l) Parry, Robert
Deakins, Eric Patchett, Terry
Dewar, Donald Pavitt, Laurie
Dobson, Frank Pendry, Tom
Dormand, Jack Penhaligon, David
Douglas, Dick Pike, Peter
Dubs, Alfred Powell, Raymond (Ogmore)
Duffy, A. E. P. Prescott, John
Dunwoody, Hon Mrs G. Randall, Stuart
Eadie, Alex Redmond, M.
Eastham, Ken Rees, Rt Hon M. (Leeds S)
Ellis, Raymond Richardson, Ms Jo
Evans, John (St. Helens N) Roberts, Allan (Bootle)
Ewing, Harry Roberts, Ernest (Hackney N)
Fatchett, Derek Robertson, George
Faulds, Andrew Robinson, G. (Coventry NW)
Field, Frank (Birkenhead) Rogers, Allan
Fields, T. (L'pool Broad Gn) Rooker, J. W.
Fisher, Mark Rowlands, Ted
Flannery, Martin Sedgemore, Brian
Forrester, John Sheerman, Barry
Foster, Derek Sheldon, Rt Hon R.
Fraser, J. (Norwood) Shore, Rt Hon Peter
Freeson, Rt Hon Reginald Short, Ms Clare (Ladywood)
Garrett, W. E. Short, Mrs R.(Whampt'n NE)
George, Bruce Silkin, Rt Hon J.
Gilbert, Rt Hon Dr John Skinner, Dennis
Godman, Dr Norman Smith, C.(Isl'ton S & F'bury)
Golding, John Snape, Peter
Gould, Bryan Soley, Clive
Gourlay, Harry Stott, Roger
Hamilton, James (M'well N) Strang, Gavin
Hancock, Mr. Michael Straw, Jack
Hardy, Peter Thomas, Dafydd (Merioneth)
Harman, Ms Harriet Thompson, J. (Wansbeck)
Harrison, Rt Hon Walter Thorne, Stan (Preston)
Hart, Rt Hon Dame Judith Tinn, James
Haynes, Frank Torney, Tom
Heffer, Eric S. Wainwright, R.
Hogg, N. (C'nauld & Kilsyth) Wareing, Robert
Holland, Stuart (Vauxhall) Weetch, Ken
Home Robertson, John White, James
Hughes, Dr. Mark (Durham) Williams, Rt Hon A.
Hughes, Robert (Aberdeen N) Wilson, Gordon
Hughes, Roy (Newport East) Winnick, David
Hughes, Sean (Knowsley S) Woodall, Alec
Wrigglesworth, Ian Tellers for the Ayes:
Young, David (Bolton SE) Mr. Don Dixon and
Mr. John Maxton.
Aitken, Jonathan Favell, Anthony
Alexander, Richard Finsberg, Sir Geoffrey
Amery, Rt Hon Julian Fletcher, Alexander
Arness, David Forman, Nigel
Ancram, Michael Forsyth, Michael (Stirling)
Ashby, David Forth, Eric
Aspinwall, Jack Fraser, Peter (Angus East)
Atkins, Robert (South Ribble) Gale, Roger
Atkinson, David (B'm'th E) Garel-Jones, Tristan
Baker, Rt Hon K. (Mole Vall'y) Gilmour, Rt Hon Sir Ian
Baker, Nicholas (N Dorset) Goodhart, Sir Philip
Baldry, Tony Gorst, John
Banks, Robert (Harrogate) Gower, Sir Raymond
Batiste, Spencer Grant, Sir Anthony
Beaumont-Dark, Anthony Greenway, Harry
Bellingham, Henry Gregory, Conal
Bendall, Vivian Griffiths, Sir Eldon
Bennett, Rt Hon Sir Frederic Grist, Ian
Bevan, David Gilroy Grylls, Michael
Biffen, Rt Hon John Gummer, John Selwyn
Biggs-Davison, Sir John Hamilton, Hon A. (Epsom)
Blaker, Rt Hon Sir Peter Hamilton, Neil (Tatton)
Body, Richard Hampson, Dr Keith
Bonsor, Sir Nicholas Hargreaves, Kenneth
Boscawen, Hon Robert Harris, David
Bottomley, Peter Hayhoe, Rt Hon Barney
Bottomley, Mrs Virginia Heathcoat-Amory, David
Bowden, A. (Brighton K'to'n) Heddle, John
Bowden, Gerald (Dulwich) Henderson, Barry
Boyson, Dr Rhodes Higgins, Rt Hon Terence L.
Brandon-Bravo, Martin Hind, Kenneth
Bright, Graham Hirst, Michael
Brinton, Tim Howard, Michael
Brown, M. (Brigg & Cl'thpes) Howell, Rt Hon D. (G'ldford)
Browne, John Jenkin, Rt Hon Patrick
Bruinvels, Peter Jones, Robert (W Herts)
Bryan, Sir Paul Knight, Greg (Derby N)
Burt, Alistair Knowles, Michael
Butcher, John Lang, Ian
Butler, Hon Adam Lawler, Geoffrey
Butterfill, John Lawson, Rt Hon Nigel
Carlisle, John (N Luton) Lewis, Sir Kenneth (Stamf'd)
Carlisle, Kenneth (Lincoln) Lightbown, David
Carlisle, Rt Hon M. (W'ton S) Lilley, Peter
Carttiss, Michael Lloyd, Ian (Havant)
Cash, William Lloyd, Peter, (Fareham)
Chalker, Mrs Lynda Lord, Michael
Chapman, Sydney Luce, Richard
Churchill, W. S. Lyell, Nicholas
Clark, Hon A. (Plym'th S'n) McCrindle, Robert
Clark, Dr Michael (Rochford) McCurley, Mrs Anna
Clark, Sir W. (Croydon S) Macfarlane, Neil
Clarke, Rt Hon K. (Rushcliffe) MacKay, Andrew (Berkshire)
Clegg, Sir Walter MacKay, John (Argyll & Bute)
Cockeram, Eric McNair-Wilson, P. (New F'st)
Colvin, Michael McQuarrie, Albert
Coombs, Simon Madel, David
Cope, John Major, John
Corrie, John Malins, Humfrey
Couchman, James Malone, Gerald
Cranborne, Viscount Maples, John
Currie, Mrs Edwina Marland, Paul
Dickens, Geoffrey Marlow, Antony
Dorrell, Stephen Marshall, Michael (Arundel)
Douglas-Hamilton, Lord J. Mates, Michael
Dover, Den Mather, Carol
du Cann, Rt Hon Sir Edward Maude, Hon Francis
Dunn, Robert Mawhinney, Dr Brian
Durant, Tony Maxwell-Hyslop, Robin
Eggar, Tim Mellor, David
Emery, Sir Peter Merchant, Piers
Evennett, David Miller, Hal (B'grove)
Eyre, Sir Reginald Mills, Iain (Meriden)
Fairbairn, Nicholas Mills, Sir Peter (West Devon)
Fallon, Michael Miscampbell, Norman
Mitchell, David (NW Hants) Raison, Rt Hon Timothy
Moate, Roger Rees, Rt Hon Peter (Dover)
Montgomery, Sir Fergus Rhodes James, Robert
Moore, John Rhys Williams, Sir Brandon
Morris, M. (N'hampton, S) Ridley, Rt Hon Nicholas
Moynihan, Hon C. Ridsdale, Sir Julian
Mudd, David Rifkind, Malcolm
Murphy, Christopher Robinson, Mark (N'port W)
Neale, Gerrard Roe, Mrs Marion
Needham, Richard Rossi, Sir Hugh
Nelson, Anthony Rost, Peter
Newton, Tony Rumbold, Mrs Angela
Nicholls, Patrick Ryder, Richard
Osborn, Sir John Sackville, Hon Thomas
Ottaway, Richard Sayeed, Jonathan
Page, Sir John (Harrow W) Shaw, Giles (Pudsey)
Page, Richard (Herts SW) Shaw, Sir Michael (Scarb')
Parris, Matthew Shelton, William (Streatham)
Patten, Christopher (Bath) Shepherd, Colin (Hereford)
Patten, J. (Oxf W & Abdgn) Shepherd, Richard (Aldridge)
Pawsey, James Shersby, Michael
Portillo, Michael Silvester, Fred
Powell, William (Corby) Sims, Roger
Powley, John Skeet, T. H. H.
Prentice, Rt Hon Reg Smith, Tim (Beaconsfield)
Price, Sir David Speed, Keith
Speller, Tony Tracey, Richard
Spencer, Derek Trotter, Neville
Spicer, Jim (W Dorset) van Straubenzee, Sir W.
Squire, Robin Vaughan, Sir Gerard
Stanbrook, Ivor Wakeham, Rt Hon John
Stanley, John Walker, Bill (T'side N)
Steen, Anthony Walker, Rt Hon P. (W'cester)
Stern, Michael Wall, Sir Patrick
Stevens, Lewis (Nuneaton) Waller, Gary
Stevens, Martin (Fulham) Ward, John
Stewart, Allan (Eastwood) Wardle, C. (Bexhill)
Stewart, Andrew (Sherwood) Watson, John
Stewart, Ian (N Hertf'dshire) Watts, John
Stokes, John Wells, Sir John (Maidstone)
Stradling Thomas, J. Wheeler, John
Taylor, John (Solihull) Whitfield, John
Taylor, Teddy (S'end E) WoIfson, Mark
Temple-Morris, Peter Wood, Timothy
Thompson, Donald (Calder V) Yeo, Tim
Thompson, Patrick (N'ich N)
Thorne, Neil (Ilford S) Tellers for the Noes:
Thurnham, Peter Mr. Tim Sainsbury and
Townend, John (Bridlington) Mr. Michael Neubert.

Question accordingly negatived.

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