§ Mr. D. Priceasked the Chancellor of the Exchequer what further consideration he has given to the decision of the Court of Appeal in the case of Commissioners of Inland Revenue v. Hinchy about the meaning of Section 25 (3), Income Tax Act, 1952; and what action he proposes to take with regard to the penalty provisions of the Income Tax Acts.
§ Mr. SimonThe particular point raised by this case is stillsub judice, as the Inland Revenue are appealing to the House of Lords against the decision of the Court of Appeal. My right hon. Friend intends, however, to make a full review of the penalty provisions of the Income Tax Acts.
In the meantime, there is one change in practice which can usefully be made as an interim measure. It may be that some misapprehension has arisen from 149W the fact that in cases involving incorrect Income Tax returns it has been the Inland Revenue's practice to sue in the courts for the full penalty for which, on their view of the law, Section 25 (3), Income Tax Act, 1952, provided, and not for the reduced amount which in appropriate circumstances they were prepared to accept in the exercise of their statutory power to mitigate penalties. The Inland Revenue now propose, in proceedings in the courts for penalties for incorrect Income Tax returns, to sue for the actual sum which they wish to recover by way of penalty, unless there are special circumstances which render that course impracticable.