HC Deb 11 November 1999 vol 337 cc771-2W
Mr. Llwyd

To ask the Chancellor of the Exchequer what representations he has received as to the fairness and legality of the tax treatment of former tenants of the Land Settlement Association in respect of the settlement of their litigation against the Ministry of Agriculture in 1991; and if he will make a statement. [98082]

Dawn Primarolo

Representations have been made querying the raising of tax charges by the Inland Revenue in respect of out of court compensation paid by MAFF to a number of former tenants of the Land Settlement Association. It has been explained that a compensation payment received for personal hardship is not liable to income tax, but a compensation payment received for the loss of trading profits is taxable as trading income, and that the nature of a compensation payment in an out of court settlement depends on the terms of the settlement read in the light of the pleadings.

It has also been made clear that Ministers do not intervene in individual cases. The Inland Revenue's independence from Treasury Ministers in the handling of individuals' tax affairs must be scrupulously observed. Where disputes continue between taxpayers and the Revenue it is for the Appeal Commissioners and the Courts to determine how the law is to be applied.