TERRITORIAL FORCE SECRETARIES AND INCOME TAX.

HL Deb 17 July 1918 vol 30 cc957-62

THE EARL OF DARTMOUTH had the following Notice on the Paper—

To ask His Majesty's Government for information with respect to the claim of secretaries of Territorial Force Associations for relief under the Finance Act, 1916, on account of the military character of the work they are engaged on; and to ask whether, in view of the facts—

1. 1. That the Commissioners of Inland Revenue insisted upon a "case" being stated for the decision of the Higher Courts;
2. 2. That a revised case was so stated and forwarded to the Solicitor of the Department on 17th April;
3. 3. That letters were subsequently written on 29th April, 6th May, and 24th May, asking if the revised case was approved;
4. 4. That, as no reply to any of these letters was received, a final letter was written on 3th June asking if the appeal was abandoned;
5. 5. That no reply has been vouchsafed to this letter;

it may be assumed from this continued silence that the case has been abandoned.

The noble Earl said: My Lords, I do not propose to repeat the arguments that I brought forward when this matter was considered on February 20, but I should like to emphasise the fact that our contention is, that as under Clause 30 of the Finance Act, 1915, certain benefits are contemplated to those engaged in work of a military character, secretaries of Territorial Force Associations are entitled to those benefits. That is our contention.

I understand from the debate which took place that this claim is questioned by the Inland Revenue Department, answered for by the noble Lord opposite. He went on to say that it is not for the War Office to demand Income Tax; that is entirely a matter for the Inland Revenue, and their view is that the duties of secretaries are mainly of a clerical, or secretarial, kind. I venture to suggest that it does not require the King's Bench to tell your Lordships that the work of a secretary is secretarial. What we claim is that the work of the secretaries of Territorial Force Associations is distinctly military in character, and we claim further that it is the War Office which ought to say what is work of a military character. We must bear in mind that the Territorial Force Associations are statutory bodies, set up to give effect to military plans, inaugurated by the military authorities in the War Office for military purposes, and they have to carry them out without any discretion of their own. I am quite sure there is no president, or chairman, of a Territorial Force Association who would not bear me out in saying that without the assistance of these secretaires it would have been impossible for us to do the work we were called upon to do.

Since the debate—I am not going back on the arguments, because they were fully stated on that occasion—what has taken place is this. On February 27 I wrote a letter to Lord Derby, who was then Secretary of State for War, stating distinctly our position. In that letter I emphasised the point that in view of the fact that we, the Council of the Territorial Force Associations, did not consider it fair to put the onus on the shoulder of the individual secretary, we, as a Council, were taking up the question. I gave various reasons, to which I have refereed, and I received subsequently a letter from Lord Derby, written on March 7, in which he proposed a solution of the difficulty. His proposal was that the War Office and the Board of Inland Revenue should draw up a joint case to lay before the Law Officers of the Crown for their decision, as the point at issue was really one of law. We were quite prepared to accept that; but subsequently, on April 8, I received another letter from Lord Derby, in which he pointed out that the Board of Inland Revenue, having considered this proposal, found themselves unable to accept it. Meanwhile a case has actually arisen in connection with the claim of a secretary of a Territorial Force Association for the allowance of the special rate of Income Tax. It will be observed that it was owing to the action of the Board of Inland Revenue that the proposal of Lord Derby, then Secretary of State for War, which we were prepared to accept, was turned down.

I understand that there has been a little misunderstanding about my Question. I gather that they have been looking in the Inland Revenue Offices for letters written by myself. Well, they will not find them, because when you transfer your business into the hands of a solicitor you do not continue to take part in the matter yourself, and the corrrespondence which has taken place, as I think must have been made clear from the terms of my Question, has been between the solicitor of the Council (who was the original solicitor of the individual) and the solicitor of the Board. In view of what has taken place, in view of our debate, and in view of the subsequent letters, it appears to me rather an extraordinary thing that no reply should have been received to any of those letters.

The noble Lord, in the course of the debate to which I have referred, said that the matter would be shortly brought before the King's Bench. That debate took place on February 20; to-day is July 18, and I should like to know what interpretation the noble Lord puts upon the word "shortly." We have had reference in the debate that has just taken place to another expression which means the same thing. My only experience of the word "shortly" in connection with a Government Department was an occasion on which I asked a rather important question, and was told that the matter was "under consideration." I waited six months, and wrote again. I was told the matter was under consideration, and that I might shortly expect an answer. I asked further what interpretation I could put on the word "shortly." I got no answer. But I was able to deduce that with a Government Department "shortly" means anything between eighteen months and two years.

In this matter the actual amount involved is a very small sum. Nevertheless the secretaries of Territorial Associations are not very wealthy men, and it is a question of principle. To them the question is one of considerable moment; therefore I think that, in view of what has taken place, the matter should not be held up by the Inland Revenue themselves, and that we should receive an answer as to the position in which the matter really stands. I am perhaps inclined to be optimistic, and I have assumed in the last line of my Question that silence gives consent. I do not know whether I am too optimistic or not. If silence is not accepted as consent, might I suggest that in any case the Government should secure that this matter shall be decided by the High Court as one of urgency before the Courts rise for the Long Vacation on August 1; or, failing that, will the Government authorise the payment of Income Tax on the scale appropriate to serving officers without prejudice to the further payment if the High Court's decision should rescind that? If the noble Lord can give me an assurance that the matter is really going to be shortly settled it will give considerable satisfaction to those who are interested.

LORD HYLTON

My Lords, the question that the noble Earl has brought before your Lordships this afternoon is one which was raised in this House on February 20 last. I was instructed at that time to inform the noble Earl that the Department concerned hoped that the case would soon be brought before the Law Courts. As events have turned out, it appears that we were rather too sanguine in hoping that the case would be heard as speedily as at the outset we had anticipated. I will not trouble your Lordships this afternoon by going into the question between the noble Earl and the Department which I represent here (debated on a previous occasion) as to whether the matter is one which concerns the War Office or whether it is one for the Inland Revenue. The noble Earl on that occasion contended, as of course he was quite entitled to do, that it was a question which ought to be decided by the War Office. On the other hand the Treasury, of which I am the humble mouthpiece in this House, held the diametrically opposite view, that it was a Treasury question. If, therefore, the noble Earl has any complaint either against Lord Derby or against the present Secretary of State for War, he must address his remonstrances to the present Secretary of State or to my noble friend Lord Stanhope, who, I have no doubt, will give him every assistance they can in the matter. But I have no responsibility for the War Office in this or in any other matter.

The draft case as to whether these officials are or are not entitled to be relieved from Income Tax being deducted from their salary has been the subject of careful consideration both by the solicitor for Colonel Simpson, who I believe is the officer concerning whose salary a test case is being taken, and the solicitors of the Inland Revenue, and this draft case was transmitted, I am informed, to the Clerk of the Commissioners in an approved form on the 11th of this month. The case, I am told, will be brought before the Courts with as little delay as possible, and I hope that my noble friend will be glad to hear that the Crown is willing to bear the costs of the action in the Divisional Court whether the event goes in favour of the Inland Revenue or not. I much regret that delay has taken place in having this case decided. The Treasury are in no way, I believe, responsible for the delay, A legal question is involved, and everybody knows that when lawyers are concerned it is quite impossible, according to the experience of most of us, to got anything speedily settled.

With regard to Question No. 3 of the noble Earl, inquiring about certain letters which were written on April 29, May 6, and May 24, asking if the revised case was approved, I naturally, before coming down to the House, endeavoured to supply myself with as full an answer as I could to the noble Earl, but the Department to which I applied was placed in some dilemma, for it did not appear from the wording of the noble Earl's Question by whom or to whom these letters were written. I wrongly assumed that they had been written by the noble Earl, who was good enough to inform me privately that he had not written them, and I then inquired as to whether letters had been received by the solicitor to the Inland Revenue from Mr. Hunt, who, it appears, is the solicitor of Colonel Simpson. I am told I hat the last letter received by the solicitor to the Inland Revenue from Mr. Hunt was on March 14—that is, prior to the dates mentioned in the noble Earl's Question. The Department has hitherto. I am sorry to say, been unable to discover any trace of the later letters. I am bound to tell the noble Earl it is quite out of my power to give him any promise that the case will be heard and decided in the High Court before it rises for the Long Vacation. I have no power whatever to say when the High Court shall hear or decide any particular case.

THE EARL OF DARTMOUTH

With regard to the statement that the noble Lord has made, I stated very clearly in my second Question that the revised case was forwarded to the Solicitor of the Department on April 17, and I do not understand how the date to which he refers comes in, because the information I have received was most definitely that stated in the Question. I went through the revised case myself before it was forwarded. I went through it in the early part of April, and it was certainly forwarded, as far as I know, on the date given, and these letters were subsequently sent on the dates set out in the Question. I do not understand how they have gone amiss, or that the last letter received was one written some tune in March.

LORD HYLTON

I am afraid I can add nothing more to the answer I have given.

THE EARL OF DARTMOUTH

Then as the noble Lord cannot give any definite answer, I shall assume that I can inform these unfortunate secretaries that they can pay the Income Tax at the lower rate, without question.