PREFERRED DEBTS (Hansard, 22 July 1985)

§ Mr. Millan
I beg to move amendment No. 35, in page 79, line 12, leave out 'twelve' and insert 'six'.

Mr. Deputy Speaker
With this we shall discuss Government amendments Nos. 36 to 38, and the following amendments: No. 39, in page 79, line 29, leave out 'twelve' and insert 'six'.
No. 40, in page 79, line 38, leave out 'twelve' and insert 'six'.
No. 41, in page 79, line 43, leave out 'twelve' and insert 'six'.
Government amendments Nos. 43 and 44.

§ Mr. Millan
The amendment deals with the question of preferred debts. I intend to say little about this, not because the matter is not of considerable importance—it is one of the most important matters in the Bill—but because we dealt with it in Committee and again on the Report stage of the Insolvency Bill last Thursday.
Whatever the quality of the arguments that I put forward, the Solicitor-General will simply say that we must be consistent with the Insolvency Bill and that he cannot accept my amendments. I want to put on record that I am glad that the Government have accepted their defeat on VAT and reduced the preference from 12 to six months. I shall not embarrass the hon. and learned Gentleman by quoting back at him some of the things that he said in Committee about VAT and PAYE. However, it is not logical that the Government have accepted the reduction in preference on VAT from 12 to six months, yet are not willing to accept the reduction in preference on PAYE and national insurance contributions—which would be the effect of my amendment. I know that the Government will not accept it because they turned down a similar amendment on the Report stage of the Insolvency Bill.
It is a pity that, having given way more or less gracefully on VAT, the Government have not accepted the logic of the matter and reduced the preference on PAYE. I do not hold out any hope that there will be a conversion at this late stage, unless the Solicitor-General takes a bold step and says, "I do not care what happened with the Insolvency Bill, this is such a powerful argument that I shall accept it." On past behaviour, I do not think that he will do that.
I simply record my disappointment that the Government have not accepted the logic of the position and reduced preference in a way that ultimately will be to the benefit of small firms, which are the ordinary creditors. For a Government who are anxious to say how much they support small firms and want to help them in every possible way to deny themselves the opportunity to give them help by reducing Government preference in bankruptcy is, to say the least, unfortunate.
I wish to place on record that I have been consistently trying to reduce the ravages of Government in bankruptcies in favour of small firms and ordinary creditors.

§ The Solicitor-General for Scotland
I would have been quite happy if the right hon. Gentleman had referred to what I had to say; I doubt whether anyone else would have been at this stage.
The purpose of the Government amendments is twofold. First, they reduce the preference period for VAT debts to six months, bringing the Bill into line—as the right hon. Gentleman appreciates—with the Insolvency Bill. Secondly, they clarify the six months period relating to VAT charged on supply of goods and services made prior to the date of sequestration, even though, because of the VAT accounting arrangements, payment need not at that time have been made to Customs and Excise. A similar clarificatory amendment has been inserted in the Insolvency Bill.
As the right hon. Gentleman said, during the course of the two Bills at various stages, and in another place, the matter of Crown preference was discussed exhaustively. A position has been adopted in the Insolvency Bill, and it appears that, at this stage, there is little purpose in pursuing the matter further.