§ Mr. Danceasked the Chancellor of the Exchequer whether he is aware that when Purchase Tax on motor cars was reduced recently many dealers had in stock new cars on which, under the terms of their agreements with the manufacturers, they had to pay tax at the old higher rate; and whether he will authorise on this occasion a refund or waiver of the difference in tax.
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§ Mr. du CannIn the motor trade "consignment" or "sale-or-return" agreements provide that the property in any motor vehicle sent out on these terms by the manufacturer passes to the buyer when the buyer adopt the transaction by buying or otherwise appropriating the vehicle; for example, by retaining it beyond an agreed time limit. Purchase tax is payable by the manufacturer at the rate in force at the date of adoption of the transaction. This rate may be higher or lower than that in force when the vehicle was first sent out, but there must a firm date for tax changes, and there is no legal provision for any surcharge or rebate on vehicles appropriated before the operative date of the change in taxation.
This matter was exhaustively considered by the independent Hutton Committee (Committe on Tax-paid Stocks) who reported in 1953; their Report (Cmnd. 8784) was accepted by the Government. Their firm conclusion was that when rates of tax or duty are reduced compensation should not be paid at the expense of the Crown to traders holding tax-paid stocks, nor, in the converse case of tax increases, should additional tax be charged. My right hon. Friend cannot therefore consider a refund or waiver of tax on this occasion. I am sure, however, that any immediate losses which may be sustained will be more than offset by the continuing long-term benefits to the motor industry of the tax reduction.