Abbildungen der Seite
PDF
EPUB

Tuesday, 8th March, 1927.

Mr. Briggs,

Mr. Ellis,

Mr. Gillett,

Sir Robert Hamilton,

Colonel Vivian Henderson,

MEMBERS PRESENT:

Sir John Marriott, Mr. Pethick-Lawrence, Major Salmon,

Sir Fredric Wise

SIR FREDRIC WISE IN THE CHAIR.

Sir MALCOLM RAMSAY, K.C.B., Mr. F. PHILLIPS, and Mr. A. E. WATSON, C.B.E., called in; and examined.

REVENUE DEPARTMENTS APPROPRIATION ACCOUNTS, 1925-26.

On VOTE 2.

INLAND REVENUE.

Sir RICHARD HOPKINS, K.C.B., called in; and examined.

Chairman.

106. Sir Malcolm, have you any explanation to make to the Committee on the last part of paragraph 5 of your Report, dealing with the inquiry that was addressed to the Department?-(Sir Malcolm Ramsay.) I have not had an answer to that inquiry. We noticed some cases which we thought should have been included in the Schedule but were not SO included, or only partially included, and we asked the Inland Revenue about them. Those are cases of rather a special type, in which arrangements have been made to remit duty or interest. They were cases largely of shipping companies where, if the full liability had been enforced, the companies would probably have gone into the Bankruptcy Court and duty would have been prejudiced if not lost. We thought they ought to have been included in the list.

the

107. Have you anything to say, Sir Richard? (Sir Richard Hopkins.) I hope to have a reply to send to Sir Malcolm within a few days on that inquiry. The Committee may like to know

the line of thought we are following. The companies to which Sir Malcolm has referred were insolvent companies which were unable to pay very large sums of duty charged against them. The arrangements we made were arrangements which appeared to us to be the best possible arrangements for securing the main part of the money over a long period of time. So far as there was any remission it was a remission by reason of the duty being irrecoverable; not by reference to any dispensing power on the ground of equity or otherwise. You will probably allow me to take that up with Sir Malcolm, and if he is not satisfied the matter will come up on another occasion.

Mr. Gillett.

108. May I ask for some further particulars about the £65,000? Are those the cases you have just been mentioning? -No. Those are all cases which have been submitted to the Treasury in the ordinary course.

109. I do not quite understand the case of a man who has a director's fee

8 March, 1927.]

Sir RICHARD HOPKINS, K.C.B.

and cannot pay the income tax on it?If he has the fee he can pay income tax upon it, and I am afraid he does pay income tax upon it. But these were assessments made in respect of fees which at the time the assessment was made had not been paid, and which the Board were satisfied never would be be paid. The director had received no income, and it would not be possible to ask him to pay income tax in respect of an income he had never received. (Sir Malcolm Ramsay.) The point being that once an assessment is made, even if it is wrongly made, it stands, and it has to be collected, or discharged, under proper authority.

110. The words at the end of paragraph 5-" directors' fees which the Board of Inland Revenue were satisfied would never be paid "-mean that the salaries and directors' fees would never be paid? -Oh yes. The word "which" qualifies

66 fees."

Mr. Ellis.

111. These remissions you speak of with regard to certain companies are not really remissions at all but irrecoverable duties?-(Sir Richard Hopkins.) That is the view I was going to put to Sir Malcolm.

112. It would be worth while to make the distinction?-There is a very clear distinction. Remissions are never made by the Department; they are submitted to the Treasury. I think Sir Malcolm had not fully appreciated, I will not say the facts, but our view of the facts. (Sir Malcolm Ramsay.) It is a fine point whether the people were bankrupt, or would have been bankrupt very shortly.

113. Whether there were any assets at all from which you could recover?-(Sir Richard Hopkins.) The point was this. There were plenty of assets, but the whole of the assets would have been taken by the bank which was ahead of us.

Chairman.

114. Would you explain, Sir Malcolm, "educational charities" mentioned in paragraph 6?-(Sir Malcolm Ramsay.) That is a reference to the debate in the House of Commons when the Chancellor of the Exchequer made an announcement on the Brighton College Case, that educational charities would not, though hence

[Continued.

forth treated as liable for certain surplus income, be assessed retrospectively.

the

115. What is the position on statutory basis?-With regard to the statutory basis, so far as I know-Sir Richard will correct me if I am wrong— it rests with the District Commissioners to make the assessments, and as far as I am concerned I never see the particulars of the assessments at all, and they are quite outside my purview except those which are made on quarterly taxpayers by the Inland Revenue.

116. Have you anything to say on that, Sir Richard? (Sir Richard Hopkins.) Perhaps I might begin by saying that the impression might have been drawn from what the Comptroller and Auditor General has said upon this matter, that the action taken by the Department was contrary to law, or, at any rate, was extra-legal. I hardly think it really was

So.

The course taken was a little unusual, but I think it was not in conflict with the law. Moreover, being a little unusual, it was announced in the House of Commons at the time. If the Committee feel any difficulty or hesitation about the action taken in this case and would like me to go into the matter in some detail and try to explain it, I would try to do so. I am quite in the Committee's hands.

Mr. Ellis.] I would like to suggest that the Members of the Committee may not think it worth while, because the Chancellor of the Exchequer has agreed to reconsider this in the next Budget.

Sir Robert Hamilton.] Seeing that it is rather a peculiar position, I think we might hear the explanation.

Chairman.

117. The Chancellor of the Exchequer made his statement in the House of Commons?-Yes.

Mr. Ellis.

118. I understand your view is that, whatever the position, you were entitled to take that action in law at that time? -Yes.

119. It was a question of interpretation rather than anything else?—Yes.

Chairman.

120. Perhaps we might hear your explanation? Yes, perhaps it would be best

8 March, 1927.]

Sir RICHARD HOPKINS, K.C.B.

[Continued.

if you would bear with me and I will try to make the matter clear. The statement made by the Chancellor of the Exchequer and before this Committee I take full responsibility, of course-related to the assessment to Income Tax of the profits of Public Schools for certain past years. The Chancellor was also being requested to grant an exemption for the future, in regard to which he asked for time to consider. That does not arise. This was all relating to the assessments of certain Public Schools in the past. Now the situation, as I understand it, was this. A decision had recently been given by the House of Lords in the Brighton College case which said those profits were liable to assessment.

That,

in fact, merely confirmed the practice of very many years, but it was not, I think, widely familiar to members of the public. Feelings were expressed in the House of Commons that, as a result of this decision having been given in the House of Lords, Inspectors of Taxes who were Revenue officials would have their minds very specially directed to this subject, and would proceed to rake over the past and examine for past liability in the hopes of finding cases where assessments which should have been made had not been made, and bringing them into assessment. There was, I think I am right in saying, a feeling exhibited in many quarters of the House that it would be unfortunate if that position arose. The announcement that the Chancellor of the Exchequer made was not, of course, that assessment in past cases would not be made; that rested upon the discretion of the local Commissioners of Taxes, who are alone the authorities to make assessments. All that the Chancellor said was that the energies of Inspectors of Taxes would not be diverted from their more usual duties into this particular sphere. There is, 1 think, nothing contrary to law in that, and if I may say so, I think the Committee is familiar with the considerable pressure of work in the Department and the kind of subjects to which we have to devote our attention in the main part. The actual practical situation is this. So far as an Inspector of Taxes is not occupied with his current commitments, he is far more profitably occupied in searching for past liabilities in other very much richer quarters than those of impecunious Public Schools; and therefore the Chancellor's announcement, while it met the wishes of the House of

Commons, did not alter the substance of what would occur in the ordinary business of the Department, nor did it conflict with the law.

121. Have the Treasury anything to say on the matter?-(Mr. Phillips.) No. We are entirely in agreement with the Inland Revenue statement.

Sir Robert Hamilton.

122. I understand this class of profit from the Public Schools would, but for the Chancellor of the Exchequer's announcement, have been subject to assessment in the collection of taxes?Not quite. The position is this. So far as Public Schools in past years have made profits, they have always been held by the Department to be liable to assessment, and recently the House of Lords have said that that view was right. The great mass of Public Schools who have made profits have undoubtedly been assessed in the ordinary course. There were to my knowledge a few cases which were not caught at the time, and we have not raked over the past for the purpose of discovering them and ascertaining their precise liability and bringing them into

[blocks in formation]

8 March, 1927.]

Sir RICHARD HOPKINS, K.C.B.

[Continued.

announce it in the House of Commons if I had thought so.

126. Was not the legal position after the decision of the House of Lords that these Colleges-and personally I sympathise with them-were liable for assessment?-Yes, and before the decision was given that was also the case.

127. Virtually what the Chancellor of the Exchequer announced was that he would attempt to see that the law was not put into force?-Well, I have done my best to explain the matter, and perhaps I might just repeat very briefly what I have said. The Chancellor did not say that assessments should not be made in any cases which happened to be missed; he merely said that the activities of the Inland Revenue Department would not be devoted to raking over that particular class of case. In fact, whether he made the announcement or not, the activities of the Department would have occupied in other directions.

been

128. I should like to put it to you. that that has nothing to do with the point. The real point is that there is a legal liability, and you have a statement in the House of Commons which was virtually accepted by the friends of the schools as an undertaking that the Chancellor of the Exchequer and his Department would make an effort to see that that legal liability was not put into force. I put it to you that you have created a very undesirable precedent?-With great respect I should not have said there was any question of our making an effort not to put it into force. The question had been raised in the House of Commons, and many Members felt great apprehension that the past would be raked over, and it is quite true that the past could have been raked over in this particular if we had made an unusual effort in that direction. All that the Chancellor did was to make this announcement in circumstances which were very unusual.

There was a strong feeling, not in any way divided by the political parties in the House, that something should be done. He merely made an announcement which was within the limits of the law and did not alter the practical effect of what would have occurred under any circumstances.

129. It was obviously taken as of some value by the supporters of the shools?It was undoubtedly. A great number of Members of Parliament were greatly afraid that certain schools would be made

the subject of a great retrospective examination, and the Chancellor took this opportunity of allaying that apprehension.

130. Why did the Chancellor of the Exchequer say there was no danger?Mr. Chairman, perhaps it is not for me to say. I think the Chancellor of the Exchequer might have a fear that an announcement made in that form would not have carried quite the same conviction as the similar announcement made in a slightly different form.

he

131. I put it to you that the impression created in the House was that the Chancellor was in some way going to divert his Department's energies so that the law would be got round. Your explanation, with all due respect to you, is really far worse than the original thing. It seems to me you are trying to justify what was a bad course to be taken, by trying to make out something else would happen. If anything was to happen, why did not the Chancellor say so? I have endeavoured to answer the question.

132. May I put it to you that the Chancellor believed something was going to happen?-Oh no.

133. Otherwise I suggest to you he would not have made such a statement, that he thought, along with the schools, that they would be liable, and therefore he gave this undertaking?-Well, may I just say one final word? In the House of Commons the Chancellor of the Exchequer has the responsibility, but before this Committee the responsibility is mine, and I do not in the least desire to shirk it. If you decide that in the view that I venture to put before you I was wrong, I shall of course accept your ruling, but I confess I speak as a man not with a great sense of guilt upon me. I would like at any rate to make this observation. Supposing you rule I was quite wrong, and that we did an act which in your judgment was contrary to the law, we did at any rate announce it in the House of Commons. It may possibly be accounted for some mitigation of evil that we acted in the most public and open manner that was possible.

134. My view is that the argument put up here is that what the Chancellor of the Exchequer did was legal. Personally I entirely sympathise with the schools, and I have no objection to what the Chancellor did in the House of

8 March, 1927.]

Sir RICHARD HOPKINS, K.C.B.

Commons, but I do think he created a very dangerous precedent, and I think the defence put up here in trying to make out it was legal makes it in a sense worse than it was before.

Mr. Pethick-Lawrence.

135. How many years are you entitled to go back to collect taxes of this character?-For six years.

136. Do you not think it really amounts to this, that those schools which you were already down upon paid for the whole of those six years, and those that you had omitted to tax have escaped the whole of the six years? So far as there were any, yes.

137. So that the effect of this attitude is that you differentiate between the schools you had already been on to, and those you had not been on to? I am afraid the answer to that is that we are continually doing so. We are always missing liabilities. It is quite impossble to hope that we are going to collect every liability from every taxpayer, and it is well known we do not succeed in doing so.

138. Is there any other case where you have made a principle of not going back for certain taxpayers while you have collected from others?-Oh, no. While saying that the course taken in this case was perfectly legal, I have said from the outset that it was unusual. It was designed to meet an unusual set of cir

cumstances.

Mr. Ellis.

139. Would it not be true to say without any offence that what really happened in that decision made the Department turn, I will not say in its sleep-that would be unfair but at any rate in its bed, so far as these particular claims are concerned. It had been the custom for a certain number of Inspectors to let these claims go by, and that had not been questioned?-I think not.

140. If you tell me that as a matter of fact, I will accept it. I was rather speaking from experience, but I do not want to put my own experience forward. I only want to get at what the process was. In the ordinary course, as a result of a decision at law which settles anything which might have been considered doubtful, the Department puts all its Inspectors on the qui vive for that particular position?-Of course, all legal de

[Continued.

[blocks in formation]

141. I think you will admit that even an Inspector of Taxes is a human being and may make a mistake; and in these cases mistakes had been made, and the position was that, as the decision made out, certain amounts which were collectable after that decision had not been collected?-Yes.

142. As a result of that, the Institutions concerned became alarmed, and then went to see the Chancellor of the Exchequer, and as a result of that the Chancellor said in the House of Commons that he would not cause any undue collection to be made. That is to say, the Department would not rake the past in any extraordinary way to get these sums back. Is not that the real position?Yes, I think so.

Chairman.

143. I should like to ask you Sir Richard with regard to a matter which I took up last year, namely, securities accepted by the Commissioners of Inland Revenue. Could you give us some account of what has happened since 12 months ago with regard to that matter?-In the intervening 12 months a certain number of new securities have had to be accepted in the same conditions as forced us to accept them before. But opportunities have occurred for the sale of some very considerable holdings of the less speculative, or at any rate the less worthless paper that we hold. We have sold considerable holdings in the Ottoman Railway, the Benguella Railway, the Bahia Stock, and so on. The result is that the total amount of paper we hold at present is estimated to be of the value of £100,000, and the sales made during the year are in the region of £120,000.

Chairman.

144. Would the Committee like to have a few more details with regard to this

« ZurückWeiter »