INCOME TAX (COLLECTION) (Hansard, 18 July 1966)

§ The Attorney-General

My noble Friend the Lord Chancellor has given no instruction to General Commissioners of Income Tax to accelerate the collection of revenue. In April of this year he sent all General Commissioners a Memorandum on their work, which drew attention to a serious increase in the delays in settling appeals against assessments to tax and invited them to give consideration to the remedies open to them. My noble Friend's Memorandum is as follows:

MEMORANDUM

ON THE WORK OF

GENERAL. COMMISSIONERS OF INCOME TAX

The Income Tax Management Act. 1964, enables the Lord Chancellor to alter the boundaries of General Commissioners' Divisions. He has already made changes in the largest Divisions to produce more manageable units, and now has under consideration combining some of the smaller Divisions which do not at present have sufficient work to justify the holding of a reasonable number of meetings. The Income Tax Management Act also removed the limitation on the number of Commissioners that the Lord Chancellor may appoint for any Division, and he is taking steps to appoint further Commissioners to those Divisions which require an increase in their numbers. The Lord Chancellor is always ready to consider any suggestions which Commissioners may wish to make for the alteration of divisional boundaries or for the appointment of more Commissioners.

A main object of these changes is to permit the speedier settlement of appeals against assessments on business profits. In most cases the tax on such assessments is due and payable on the 1st January following the accounts year of the business which ends at some date during the 12 months up to the preceding 5th April. This means that taxpayers have between 9 and 21 months (depending on the date to which their accounts are made up) to send in their accounts before the tax normally falls due. It also means that assessments must he made not later than December so that the tax due can be paid on the 1st January.

There has been a serious increase in the delays in settling appeals against assessments. with consequential effect on the flow of tax to the Exchequer. In January, 1940. 93 per cent. of all business accounts then due had been received by District Inspectors and settlement agreed in 86 per cent. of the cases. In January, 1965 only 65 per cent, of the accounts 32W then due had been received however, and settlement had been agreed in only 57 per cent. of the cases. In April, 1965 the total accounts received had reached only 77 per cent. with settlement agreed in only 68 per cent. of the cases. The scale of the problem is that over the whole country 700,000 Schedule D Cases I and II appeals were outstanding in February, 1965 and 400,000 of these were still unsettled at the beginning of August, 1965.

The Board of Inland Revenue consider, and the Lord Chancellor agrees, that the great majority of appeals against assessments made by the 1st January in any year should be settled by the 31st March of that year. The Lord Chancellor invites the co-operation of General Commissioners in taking steps to eliminate avoidable delays in the settlement of appeals. He recognises that, in view of the present pressures on District Inspectors and on the accountancy profession, the fulfilment of this objective may require some time. It will be in the long-term interest however, both of District Inspectors and of the accountancy profession to be able to avoid the time now necessarily spent in making and appealing against estimated assessments, agreeing payments on account and bringing before the Commissioners the cases in arrear. The Lord Chancellor accordingly invites General Commissioners to give consideration to the following remedies:

(a) the holding of sufficient meetings in the first six months of each calendar year to enable all appeals which are not approaching settlement to be listed for hearing within those months:
(b) the granting of adjournments only on satisfactory evidence of co-opration by the tax-payer in ending avoidable delay:
(c) the readiness to consider adjudication on an appeal when there is evidence of non-co-operation or undue delay;
(d) the consideration in appropriate cases of the issue of precepts for information or the production of documents required for the determination of the appeal.

The Lord Chancellor hopes that, as a result of the changes he is making in the divisions and the further Commissioners he is appointing, the implementation of these proposals will be possible. If, however, any body of Commissioners finds that it cannot conveniently arrange all the meetings required, the Lord Chancellor would be grateful if a report of the difficulties could be made to him at once so that he could consider how they might be removed.

Lord Chancellor's Office,

House of Lords,

S.W.1.

April, 1966.