HL Deb 11 February 1958 vol 207 cc623-36

6.12 p.m.

LORD SILKIN rose to ask Her Majesty's Government what is the estimated loss of revenue to the Exchequer by the growing practice not to give stamped receipts for sums of £2 and over, and what action(if any) Her Majesty's Government propose to take to prevent this loss of revenue. The noble Lord said: My Lords, after the momentous discussions we have had on world affairs, I feel that perhaps I ought to apologise for raising this relatively minor domestic matter but it is of considerable interest to a number of people. On December 10 I had a Question down on this subject, and afterwards a number of noble Lords from all sides of the House spoke to me about it and indicated that they were not entirely satisfied with the answers. I thought it right, therefore, to raise this matter again. The Question as it stands is a simple one: I am asking what is the loss of revenue through people no longer giving 2d. stamps on receipts. I do not know whether the Government will be able to give me a figure to-day—probably not. We can all make our own guess, and I would say that the loss to the Revenue runs into several millions of pounds. I take it that the Government would not willingly sacrifice at the present time a loss of revenue running into that kind of figure.

One of the things that rather puzzle me is that when I last put the Question, the noble Marquess, Lord Lansdowne, who replied, said that the Government had foreseen that there would be a loss of revenue. But if he is going to say this afternoon (as I gather he is) that he does not know how much, is it not rather reckless for the Government to have foreseen a loss of revenue yet not be able to forecast the amount? I do not know whether it is £50 million or less, but we have had resignations in respect of figures of that order. If the loss is of that kind of figure it is a serious matter, although probably it is not as high as that. But at this stage, for the Government complacently to accept the fact that they are prepared to lose revenue because it is a matter of convenience to certain traders, is something that I fail to understand.

The position is quite simple. Under Section 101 of the Stamp Act, 1891, every person who receives a sum of £2 or upwards is required to give a stamped receipt. The Stamp Act, 1891, is still in force the law has not been changed, except possibly by implication under the Cheques Act, 1957, which came into operation last October. I say "possibly by implication" because the position is by no means clear. The Cheques Act provides that An unindorsed cheque which appears to have been paid by the banker on whom it is drawn is evidence of the receipt by the payee of the sum payable by the cheque. Therefore, a person who does not give a receipt would have some cover in that provision. It is rather odd that that fact should not have been foreseen at the time and adequately dealt with so that there could be no possible doubt that the law has not been changed, and that the fact that an unendorsed cheque is evidence of payment will not absolve people from giving stamped receipts as they did heretofore. There has been a loss of revenue which we can ill afford—whether it is for a large sum or a small sum—and this loss has been the indirect result of the passing of the Cheques Act. It was not contemplated by most of us, and if it had been intended to change the law as regards receipts then it should have been done in terms and not in this indirect manner.

I wish to say a few words on another aspect of the matter altogether, and that is the effect on small people who keep their own accounts—those who pay out perhaps a dozen cheques a week; who have no auditors or accountants, except for the purpose of preparing their annual accounts for the year, and who have otherwise to keep their own records. The inconvenience to them has been quite considerable. People have adopted all kinds of devices and methods for not giving receipts. Some do not give receipts at all, and in such cases a person who pays by cheque is in some difficulty. He has no means of knowing whether the cheque has duly reached the person to whom it was paid, except after some interval or if he gets a second statement for the amount. When he does get the statement, if it has been paid he has no receipt and has to rely on the cheque itself which, on the face of it, is evidence that some sum has been paid. But that has to be related to the statement itself, and involves the payee in considerable labour in sorting out these cheques and attaching them to the statements. Generally, it is a matter of considerable inconvenience.

I have brought along half a dozen of the latest receipts I have had, none of them stamped. Some people have just put, "Received with thanks"—these are quite reputable concerns. Another has a special form of receipt; the next one the same; the next one has nothing—it just returns the account. Another simply returns the account, and another one says "Settled." All that is most unsatisfactory. I realise that the noble Marquess who is to reply may say that those who acknowledge that the amount has been paid should, by law, have put on a 2d. stamp. I do not think they are trying to evade the law. But is one to accept the situation or report them all to the Inland Revenue? The object of my Question is to get a clear and unequivocal statement as to what the position is. Are the noble Marquess and the Government turning a blind eye to the absence on receipts of 2d. stamps? Are they accepting the position? If so, I submit that they ought to regularise it by legislation and not leave it to implication or to a statement in this House. I hope that we may have some satisfaction in this matter to-day, which we did not have on the occasion of the last Question.


My Lords, may I ask this question?—I ask it from observation in my own particular area. Have the Government any intimation from the banks about the working of this new system? What complaints have they from, say, local authorities? So far as I can see, neither party seems to be satisfied with the result of what has been done, and I should like to ask whether there has been any intimation from any of these great organisations since this thing came into operation.


My Lords, I should like to support what the noble Lord has said from this side. There is a state of absolute confusion on this matter. We are constantly receiving receipts without stamps. My wife asked why, and I said it was supposed to have been made quite clear in the House of Lords that tradesmen had got to put the stamps on. If they do not, it is an infernal nuisance for everybody. The payers have to wait till the cheques come back. This needs a very clear statement. Most people are not putting on the 2d. stamp.

6.23 p.m.


My Lords, I should like strongly to support what the noble Lord, Lord Silkin, has laid before the House. He has performed a useful public service in so doing, because untold confusion exists, as has been observed. We have all suffered from it, and when one reads the debate of December 10 one does not really know what the situation is. I am not surprised there is some confusion. I have put down here (I have given private notice of this to the noble Marquess) a suggestion in the form of a question, to meet the difficulty: Are Her Majesty's Government not contemplating the introduction of a provision in the next Finance Bill which will eventually stop this obvious gap in our legislation by providing a legal obligation upon the tradesman to supply a receipt to any customer who pays him by post, with a revenue stamp for 2d, upon it whenever the account is for £2 or upward? I understand that that is, in fact, a repetition of what the present law says. It may be what the present law says, but it is completely ignored by tradesmen, and even when one writes and asks for a formal stamped receipt one gets a curious bit of paper back without a 2d, stamp. I should like to support strongly the proposal put forward by the noble Lord, Lord Silkin.

6.26 p.m.


My Lords, I rise to make only a brief intervention because as the sponsor in your Lordships' House of the Cheques Act, 1957, I wish to make it quite clear that I have no sense of guilt in respect of the loss of revenue to Her Majesty's Government which is arising now from the growing practice of firms not to give stamped receipts. The fact is that the Cheques Act, 1957, is not in itself responsible for this practice of not giving stamped receipts. Since 1880, as a result of the decision in the case of Egg v. Barnet, traders could have adopted exactly the same course in regard to endorsed cheques—and then all cheques had to be endorsed by the payee—as is now being done by traders in respect of unendorsed cheques; and to-day the bulk of cheques in circulation are unendorsed.

I think the explanation is that the arguments and debates in your Lordships' House and in another place drew the attention of traders and their legal advisers to the existing state of the law, which had been so for over 150 years. I quite appreciate that no Government likes losing a source of revenue, because obviously it has to find another source of revenue to make up for the loss. In this case, however, I hope that Her Majesty's Government will allow this particular loss to continue, because it is more than com pensated for by the great decrease in unproductive work in industry, shops, commerce and the banks. This argument, of course, was one of the great arguments put forward for the Cheques Act when it came before this House.

Like most of your Lordships, I have had a great many letters on this subject of stamped receipts not being given. Although it annoys me every time I see the heading "Cheques Act, 1957," which to me is misleading, I can see the point of view of the firms if they do not expect to return the bill when you pay a cheque. But some traders, I am afraid, are not out to save labour but to save tax. I have a statement here from a firm of wine merchants, one with which I think the noble Lord, Lord Silkin, also deals, and it says: We shall be obliged if you will continue to return our statements when remitting in settlement of an account. The statement will be returned to you with an impressed acknowledgment that your cheque has been received. Whether an impressed acknowledgment should attract a 2d. stamp I should not like to say, but perhaps the noble Marquess when he gives the reply will give us his view on the matter. Personally in this case I have written and asked for a stamped receipt for this particular account and all future accounts. As the noble Lord, Lord Silkin, rightly said, I am entitled to do so under the Stamp Act, 1891. If such receipt is not given to me, the firm can be fined up to a penalty of £10. This firm is not saving any labour; it is not saving any postage; all it is doing by giving what they call an impressed acknowledgment is saving a 2d stamp.

I am sure your Lordships will be grateful to the noble Lord, Lord Silkin, for raising this matter. I am sorry that Lord Chorley is not here, because he is a great expert on this particular branch of the law and I think his views would have been most helpful. Finally, I am glad to have had this opportunity of defending the Cheques Act, 1957, which is perfectly sound in principle, although it has made some traders suddenly sit up and appreciate the state of the existing law and find some means of avoiding a little tax.

6.30 p.m.


My Lords, I do not think that my noble friend Lord Jessel need apologise in any way for the Cheques Act. So far as I understand the law, the Cheques Act has nothing whatever to do with the matter. I am surprised that the noble Lord, Lord Silkin, made the suggestion which I think is too generous to the trader, that there was some implication in the section which he quoted that altered the law regarding receipts.


My Lords, I did not mean to say it altered the law. I said that a person, not a lawyer, reading it might be excused for believing that he need no longer give a receipt.


I am much obliged to the noble Lord. But I think it is important that the House should realise that the law is as stated by my noble friend Lord Jessel. An endorsed cheque was always evidence of receipt and the Cheques Act most reasonably provided that, when endorsement was no longer necessary, then the unendorsed cheque would have the same effect as the endorsed cheque had hitherto had. That is as I understand the law to be, and therefore the Cheques Act has nothing whatever to do with this change in practice on the part of traders. The law regarding receipts has not been changed in any way.

Many of us have been placed in a difficulty by the problems put to us by firms and companies with whom we have long dealt, who wish to be spared a good deal of trouble and expense by not putting on stamps which they are not bound to put on and by not involving themselves in unnecessary correspondence. The thing that astonishes me most about so many of these companies is that, while they have seen an advantage in saving themselves some trouble, they have not hesitated to give the customer quite a lot of trouble. My noble friend Lord Jessel did not much like the action of his wine merchant, but the wine merchant at least said what he was going to do. He did at least say that, if you paid the account and sent it back, the document would then be returned to you. A great many people are left in complete doubt as to what will happen if they return the account with the cheque.

Another suggestion of how the convenience both of the trader and of the customer can be met has been made, I think, by one of the bodies that advise companies. It is that their statement of account should be accompanied by a second document, or possibly by a perforated part that can be torn off, and that the customer should keep the account and return the section with his cheque. That is a not inconvenient method. If that is done, the customer can write out his cheque, send it with the portion of the account the trader desires to be returned with the cheque, and keep the remainder himself, writing on it "Paid by Cheque". In due course he will have the evidence from his bank that that precise sum has been received. That does not solve the question of revenue, on which I do not in any way wish to forecast the Government reply; but at least it is quite convenient from the point of view of the customer and it is also convenient to the company or firm.

I was astonished, a day or two ago, to get from a most reputable company a statement of account with a perforated portion to be sent back with the cheque, with the insolent demand that I should fill it up with various particulars of date of invoice and so forth. I will not give the name of the company, but it was a company with which I am on most friendly terms. I wrote back to say that I did not know why the customer should be expected to fill up a form which they could quite well have filled up before they sent it out; that I had been much tempted to demand a receipt, and that the Cheques Act gave no cause or excuse for the trader to put the customer to any new trouble whatsoever. Whatever other result this debate may have—the revenue aspect will of course be dealt with in the Government reply—I hope that it will have the result that traders who desire to escape unnecessary expense, both as regards the stamp and as regards correspondence, will take the necessary steps to save the customer from trouble. That could quite easily be done by the method I suggest.

6.37 p.m.


My Lords, I will address myself straight off to the Question of the noble Lord, Lord Silkin, without referring to the other questions which I will endeavour to answer later. This matter was raised on December 10 by the noble Lord by a Question in similar terms, and on that occasion I said that it was anticipated that at the time of the coming into force of the Cheques Act there would be a certain loss of revenue. The noble Lord, Lord Silkin, said that he wondered what that loss of revenue might be—could it be in the order of £50 million? Well, I can assure the noble Lord that it is nowhere near in the order of £50 million; but it is of the order of £5 million. The figures that I have been able to obtain for 1956–57 are that this source of revenue yields a figure in the neighbourhood of £5 million; and to the best of my knowledge that is the highest figure that has ever been obtained from this particular source of revenue. So much for that part of the noble Lord's Question.

As regards the second part of the Question, quite clearly, as the noble Lord realises, I cannot anticipate anything that my right honourable friend the Chancellor of the Exchequer is likely to put into his Budget statement. The noble Lord, Lord Silkin, reaffirmed that the Stamp Act has not in any way been changed, and I think perhaps there was some slight misunderstanding—I wrote down the words the noble Lord used. He said that perhaps, possibly by implication, there had been a suggestion of change. Well. of course, there is no change whatsoever, as I said before, either by implication or in any other way. It is simply that traders have discovered how the law stands and how the law has, in fact, stood—not since 1880, as I think Lord Jessel said, but since 1800 so that for 158 years the law has been exactly the same.

As regards the effect on the small people, I fully appreciate the point made by the noble Lord. Like him, I myself have had a degree of inconvenience as a result of the passing of the Cheques Act. Though the Act should not have brought this result, it has done so and we accept the fact. I suggest to the noble Lord and others who have suffered inconvenience, that they should adopt the suggestion of the noble Lord, Lord Lucas of Chilworth. It is perfectly simple, and surely no great inconvenience to write on a bill that you require a receipt. Only two words are needed: "Receipt required". The moment those two words have been written you are entitled by law to a stamped receipt, and that is the end of all the trouble. Surely there is no great inconvenience in writing two words on the bottom of a bill. A trader is then obliged by law to supply a stamped receipt. There is, therefore, no question of a blind eye being cast upon this practice, for the situation has not changed. It is exactly the same as it was before.


My Lords, there are these receipts.


My Lords, it is a little difficult exactly to define the law about what is and what is not an official receipt, and I should be risking getting into difficult legal complications if I attempted to do so. My own view would be that the impressed acknowledgment would, in fact, call for a 2d stamp; and really the noble Lord, Lord Jessel, is under an obligation to report this to the Commissioners of Inland Revenue.


My Lords, I have asked for a stamped receipt.


My Lords, I am much obliged to the noble Lord. That is the position.

With regard to the question addressed to me by the noble Lord, Lord Lawson, so far as I have been able to ascertain there has been no unusually large number of complaints. I use those words advisedly. But there has been a very large number of inquiries, and for that reason the operation of this Act is being carefully watched. The noble Earl, Lord Attlee, repeated a suggestion made in the previous debate, that there was a degree of confusion. I hope that I have been able to dispel some of the confusion, for I feel that there is no reason whatsoever for it. I believe that it has been rather exaggerated by articles in the Press which have now made the issue sound rather more complicated than in fact it is. But the receipt position is exactly the same as before.


My Lords, I doubt whether any of our local traders read the Report of our proceedings.


My Lords, perhaps in this case it is a great pity they do not.

I believe that I have already largely replied to the question of the noble Lord, Lord Killearn, of which he was good enough to give me advance notice, in my reply to the noble Lord, Lord Silkin. I was very grateful to the noble Lord, Lord Jessel, for making the situation as clear as he did. His contribution was helpful, and even if I have been unable to make things any more clear, his contribution has certainly done so. I can only give the noble Lord, Lord Conesford, my sympathy in the unfortunate treatment meted out to him. I very much regret that he should have suffered these unpleasant demands on the perforated portion of his accounts but I suggest, with respect, that the solution would be to write the words "Receipt required", and then there would be no further trouble.


My Lords, may I ask the noble Earl one more question. I understood him to say to the noble Lord, Lord Jessel, that if he had some indication that payment had been made it was more or less a public duty, in theory, to report to the Commissioners of Inland Revenue that payment of 2d. had been evaded. If that amount has been evaded, surely it is up to the Commissioners of Inland Revenue to take steps to see that it is not missed, rather than leave it to public-minded members of the general public. Is there any substance in that point? Can the noble Marquess help?


My Lords, I really do not think there is any substance in the point. The obligation is purely a legal one: if a trader sends an unstamped receipt we are all under a legal obligation to report that fact to the Commissioners of Inland Revenue; but it is perfectly possible to call the trader's attention to it, and no doubt the normal trader would at once correct it.


My Lords, I am not quite sure that the noble Marquess is right on the last point about a legal obligation. In my profession it has long been the position that one never takes a stamp objection in court, and I cannot think that the whole legal profession has been disobeying the law all these years. Perhaps the noble and learned Viscount on the noble Lord's right will enlighten him.


My Lords, I am afraid that the noble Lord is not quite right about this. I do not want to detain the House with personal reminiscences, but the position is that every officer and judge of the court is under an obligation to take a stamp objection. As regards the profession of the Bar, the obligation is some what different. The matter arises only in litigation, owing to the subsidiary rule in the Stamp Act that certain documents, of which a receipt is one, although not invalidated by the absence of a stamp, cannot be adduced in evidence without the presence of one. The duty of the profession has always been held to be to leave the protection of the Revenue to the officer of the court, because he has a duty to the requirements of justice as well as to the requirements of the Revenue. If, in fact, the payment has been made, the requirement of justice, as seen by the profession, is that people should know it has been made and it should have been established to have been made. The ditty of the court is to exact the penalty which is the price of putting in the receipt. That is the division of labour usually adopted as a convenience between the parties. It is considered by members of the legal profession other than an officer of the court to be a mean and also dishonourable thing to try to prevent proof of a statement of fact disadvantageous to one's own client, and which has in fact taken place, simply because the requirements of the Revenue are that duty should be paid. But it certainly has nothing to do with the point with which my noble friend is dealing. It is a nice point of legal professional etiquette which most of us have argued in our time.


My Lords, it has not been made clear whether a person accepting an unstamped receipt without protest is himself committing an offence.


My Lords, I should like notice of that question, but so far as I know he is not.


My Lords, I will give the noble Marquess notice.


My Lords, while I am on my feet, I will, with your Lordship permission, try to clarify something I said earlier. My attention has been drawn to a possible misconception I may have given. I gave a figure of £5 million. That figure was £5 million of revenue; that is to say, the maximum that could be lost if no receipts at all were given would be £5 million. I hope that is now clear.


My Lords, would the noble Marquess forgive me if I asked him one other question, because I am not clear about the position? I understood from what the noble Lord, Lord Jessel, said that he was responsible for the Cheques Act, and he would not admit that there was any disadvantage to the Government in losing this £5 million. He thought it was saved in other ways. The noble Marquess suggests that we should write "Receipt required" on our bills. Most of us do not pay our own bills; others do it for us. Does the noble Marquess wish all people to adopt that plan, and to try to save the Government £5 million by putting "Receipt required" on bills; or does he wish to leave it as an advantage to industry not to pay it?


My Lords, I am not in the same happy position as the noble Lord, Lord Kinnaird; I have to pay my bills myself.

But I still claim that the sensible way of setting about this problem is to put on bills "Receipt required".


My Lords, may I clear up one point? The advantage to industry has nothing to do with receipts, but lies in doing away with the requirement for endorsement of cheques.