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New Clause—(Income Tax Arrears Cancellation)

Volume 466: debated on Tuesday 28 June 1949

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If an individual who receives a demand for arrears of income tax in respect of any year prior to the financial year commencing on the fifth day of April, nineteen hundred and forty-five, proves that during the relevant period he was serving in His Majesty's Forces, he shall be entitled to claim that such arrears be disregarded up to the amount of seventy-five pounds.—[ Lieut.-Commander Braithwaite.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

May I commence by disclosing that, should this new Clause be accepted by the Committee and made retrospective, I stand to gain £35. Hon Members must take that fact into consideration in listening to the argument I am about to advance. This matter has been raised on many occasions during recent months by Questions and in an Adjournment Debate initiated by the hon. Member for Streatham (Sir D. Robertson), who asked me to express his regret at being unable to be present owing to bad health; the doctor will not permit him to take part in these barbaric exercises in the middle of the night.

Here is an issue which is simple and easy to understand, in no way technical, and for which I do not need to draw on any documentary inspiration of any kind. Every hon. Member is familiar with the problem that three or four years after demobilisation certain Members of His Majesty's Forces are being confronted with Income Tax demands not based on the current year but going back in some cases so far as 1939–40. In my case they went back to 1941–42 and 1942–43. On demobilisation in 1945, and in some cases later, these gentlemen were entitled to assume that they were leaving the Service in a condition known colloquially as "having their noses clean," but they find that after an interval of two or three year there descends upon them, in many cases from the Departmental Claims Branch, Cardiff, demands for amounts of arrears frequently going up to figures as high as £80 to £100.

In many cases the circumstances of these gentlemen have altered very seriously for the worse, so far as their current remuneration is concerned. We all know how the war often altered circumstances. Men who in civilian life were in subordinate positions, through a flair for leadership reached high ranks in the Service, in which they served with distinction and drew four-figure salaries, and at the end of it they have found themselves reverting to civil life where their circumstances may be very different. To be confronted with Income Tax demands at this time of day comes as a grievous shock to those who receive them. Following the Adjournment Debate which we had on this matter, in which I said a few words, I was surprised at the number of letters I received from all parts of the country showing that these are not isolated instances but that it is a matter of widespread grievance.

4.0 a.m.

The issue is so plain that it can be introduced in these very few words. I have only two comments to make. The first is that these mistakes are the mistakes of His Majesty's Government in the first instance. Whoever was responsible for keeping the accounts—accountant officers on board ship, regimental paymasters or Air Force accountants— should by 1945 and 1946 have cleaned up the Income Tax position for financial years going back to 1940–41. These people left the Services in the belief that their Income Tax liabilities were cleaned up and finished.

My second comment concerns the method by which repayment has been made and settled. In cases where these gentlemen have found themselves confronted with demands for £30 or £40, they have frequently been accompanied by cancelled post-war credit certificates and notification that they had been set off against the debt. That is an extraordinary procedure. On this Committee stage we have not been able to discuss post-war credits as a whole and their further release, but the Government have established the formula "So long as you remain solvent you have no chance of drawing your post-war credits until, if a male, you reach 65 or, if a female, 60, but if you get into debt to His Majesty's Government, you get your post-war credits right away, cancelled." That is penalising the solvent and giving a bonus to those who get into debt, which is a totally improper procedure to adopt.

On the broad issue, the Clause suggests that, in view of the Government's delay in making these claims, the proper and decent thing to do now is to wipe the slate and remove a great anxiety and burden from these gallant Gentlemen now in civilian life.

I support what has been said by my hon. and gallant Friend the Member for Holderness (Lieut.-Comdr. Braithwaite). I am fully aware that people in the Services are usually fairly light-hearted about financial matters—certainly when they are on active service they have not very much chance of being anything else, because in the desert, on the sea or in the air in various parts of the world finance does not seem to matter very much—but I am aware that, strictly speaking, those of us in that position should still be looking after our financial affairs. Everyone is responsible for his own financial affairs, but in the cases which have been put so clearly by my hon. and gallant Friend, the Government Department is really at fault and it is not fair to say, as is sometimes said, that it is the duty of the individual to keep a check on his own affairs. That is, of course, the duty, but these were exceptional circumstances, particularly where men were serving abroad.

The Government's answer will probably be that there are others who should also be considered in this way, but I do not think that, because there are others, the people of whom we are thinking should be denied this act of justice. Even if all the other people who may be in a similar position cannot be dealt with, I hope that we may make a start at least with ex-Service men, who deserve it of their country.

I should like to say a word in support of this Clause and to make an appeal to my right hon. Friend to accept it. I would not do it on the ground just put to the Committee, that there are many other cases and that if we cannot deal with all of them at least we should deal with this one. I would rather put it, as the Mover of the Clause put it, on the ground that this is a special case which we would do well to consider by itself, and not in relation to any other cases of mistakes which ought, or ought not, to be rectified. I think it is a little shabby that four, five or six years after a man has ceased his service he should be faced with a demand for Income Tax which he would cheerfully have met if it had been claimed at the time when it was due on the income he was then earning, but which he has long forgotten, has no means of checking, or even finds it now impossible to pay.

In normal life, of course, the responsibility for sending any return of income on which Income Tax is assessed rests with the taxpayer, and rightly so; but in these cases it does not, and could not, in the nature of things rest with the taxpayer. It is all very well to say that he is a party to the mistake, but I do not think that is so. At the time the man was not thinking about these matters, he had other things to do than to go through his accounts with a fine-tooth comb. If a claim is to be made, it obviously should have been made by the authorities at the time when it fell due. If for no other reason than that the claim is not made under a substantial period afterwards, it is shabby to insist on it now.

It is only in the case of a Crown debt of this kind that the ordinary Statute of Limitations does not apply. If the debt had arisen in other circumstances, the man would be perfectly entitled to say that this was too long ago. While I would not make that kind of claim as regards Income Tax debts as a general rule, or in the ordinary case, I think that in these special classes of cases the Treasury might very well give up, as a gesture of good will, claims that cannot amount to very much and which are nothing but an irritation to people when they are made after such a long delay.

There is a group of ex-Service men who served in Burma and whose pay was miscalculated by the local accountants, some of them Burmese and Indians, and these people were for a year or two overpaid. When they came back from service, perhaps from prison camps, they found claims laid against them which they could not possibly pay back. In many cases the War Office has written them off, in many instances to the extent of £30, £40 or £50. That was the decent thing to do. Can that not be a precedent for the Treasury in these cases? These claims are due to an error. I am absolutely convinced that any private firm which had a young employee who went away to the war and might have left behind him a debt of £30 or £40—even if he knew it, and it was his mistake—would not hold it against him on his return. If it were the firm's fault, and not his, how much more would it be willing to cancel it. I hope that the right hon. Gentleman will do something in this case.

I wonder whether I might venture to give the Committee a few reasons why I submit there will be difficulty in accepting this new Clause. In the first place, it introduces an entirely new principle into the payment of tax in that it is proposed to cancel arrears of tax by reference to a limit on amount and by reference to military service during the war, and without regard to the circumstances of the individual taxpayer, his ability to pay, or indeed his willingness to pay. I submit also that not all these arrears relate to tax on Service pay. The hon. and gallant Member who moved the Clause referred to some arrears which go back as far as 1939–40. Many are arrears of tax on civilian earnings or profits, left unpaid when the taxpayer joined the Forces. They were held in suspense dur- ing military service, and the bill was presented when the man came back, or as soon after as the necessary process could be gone through to discover his whereabouts.

That is not what I had in mind. The claim I mentioned was a definite one from the Departmental Claims Branch, and arose out of service in the Royal Navy.

I accept that, but the new Clause does not distinguish between tax arrears on Service pay and tax arrears held in suspense.

The hon. Member is wrong in saying they were held in suspense. My experience was that the authorities dragged up these arrears and insisted on a man paying them while he was in the Forces.

I am not quite wrong. I am secretary of a large body of Income Tax officials and I am very close to this problem. I know that during the war, for a variety of reasons, tax which was due on pre-war earnings was held in suspense while a person was in the Forces. I can assure the Committee that instructions were issued to collectors of taxes that no pressure was to be brought on a person in the Forces who had left behind arrears of tax on civilian earnings or profits.

I concede at once that these arrears are not the main content of this problem, which is arrears of tax on Service pay. The difficulty of keeping in touch with the pay and location of members of the Forces during the war led to this difficulty. It may have been a mistake, and in my opinion probably was, that Income Tax was levied on Service pay at all during the war, having regard to the wide-flung theatres of war and sudden changes in rank and pay, with corresponding changes in Income Tax liability. At one stage during the war there were 46,000 officers in the R.A.F. whose names—let alone rank and pay—were not known to the Inland Revenue Department. The taxation machine relied entirely on being kept in touch by the Defence Departments with the names, rank and pay of the officers concerned, leading to great complications of administration because of the frequent changes. These officers and other ranks were demobilised in large numbers at the end of the war, thrusting a heavy burden on the Inland Revenue to sort out their tax affairs and tell them how much money they owed. We have not heard of the many cases in which there was a repayment due, which is being made.

The Committee must consider the important question of equity between one taxpayer and another. Many of these taxpayers have been able and willing to pay the arrears, and have done so. Others have reached accommodation with the authorities for the gradual discharge of this liability as part of their current Income Tax. If this new Clause is carried, all these payments will have to be gone over again, all these arrangements will have to be cancelled, and that notwithstanding that in many cases the persons concerned are able to pay. Not in all cases have their circumstances altered unfavourably since the war.

4.15 a.m.

Will the hon. Member say how far he would go. Does he think there ought not to be any time limit?

Generally a time limit is observed in the recovery of arrears, which is longer by a year or two than the period which has so far elapsed between the arrears and the demand for payment. We all regret the circumstances in which these arrears are now demanded, and the inconvenience created—and indeed, the possible hardship created—in many cases where payment of these arrears is being demanded; but I submit to the Committee that it will create as many grievances as it will remove if we adopt the new Clause, and that it will introduce an undesirable principle into the system of taxation if we agree to wipe the slate clean irrespective of the circumstances of individuals, of the circumstances in which those arrears arose, and of the ability of the individual to pay.

Before the hon. Member sits down, perhaps lie will correct one thing. Unwittingly he misled the Committee. He said that the new Clause did not take into account the willingness of a man or woman to pay. That is wrong. All that the new Clause does is to entitle a person to claim.

I do not wish to delay the Committee very long. The hon. Member for Sowerby (Mr. Houghton) said that the proposal would mean an entirely new departure. I suggest to him that war, in itself, is a trifle unusual, and we trust that it will remain so. It has uprooted men completely from their previous surroundings and placed them in other circumstances and in other parts of the world. Therefore, we are considering here a case which cannot be considered side by side with the ordinary run of taxation. The question arises whether these men can be considered to have been a party to the mistake which has been made. It is true to say, I think, that the civilian, by and large, carries out his own Income Tax affairs. That is not true of the Service man. I wonder whether hon. Members have considered the position of a man who has to go to the paymaster, or whoever is working out the system, and argue about his tax assessment. He would not get very far. Virtually, it is impossible for the soldier, sailor or airman to question at any time his Income Tax deductions.

The one point I would like to make is that there is an analogy between this case and cases of overpayment. Where an overpayment is made by a Service Department and it is subsequently pointed out, at this stage after the war the claim is not pressed, certainly not in the case of other ranks, though it is, and can be—I do not know why—in the case of officers. In the case of soldiers, sailors and airmen the claim is not pressed. That shows that the Government accept the moral argument which is being put forward here. I make just these two points; first, that the man is not party to the mistake, which must be laid at the door of the Government, which took on the responsibility for deducting this tax, and secondly, as a result, the Government should accept the mistake in the assessment.

Hon. Members have put a very forcible case, and their proposal is one which must have an initial appeal to all of us. I think that my hon. Friend the Member for Nelson and Colne (Mr. Silverman) did make a case for special treatment, and implied that we are justified in these cases of ex-Service men's arrears in taking special care to spread out the collection over as long a period as possible in relation to the ability of the person to pay—in some cases, over very long periods indeed. That is being done, and special care is being taken; but when we go beyond that and examine the proposal contained in this Clause, I am afraid we do run into difficulties of equity between one taxpayer and another which my hon. Friend the Member for Sowerby (Mr. Houghton) set out to the Committee.

Even if we do not put too much emphasis on the principle that a tax should be written off, there is the additional difficulty that, in this proposal there is no reference to the taxpayer's ability to pay, or his needs at present. There would be the anomaly of a concession to some individual whose present income might be quite considerable, and whose earnings in the Services might have been considerable.

In addition, there is the even greater difficulty, which my hon. Friend mentioned, that a great number of these taxpayers who have incurred these arrears, have, in fact, paid them already since the war ended. A very awkward question of equity would arise as between those to whom the concession was made, and those other ex-Service men who have already paid the tax. As a matter of justice, if the arrears were cancelled for those who have not paid, the Inland Revenue authorities would have to refund amounts paid since the end of the war by other ex-Service men. That would be a very large and difficult task indeed and, in our opinion, one which could not be administratively undertaken after this considerable lapse of time without far too great a strain on the Inland Revenue resources of manpower; one that is without mentioning loss of revenue.

Can the hon. Gentleman tell us how many are involved?

If one went back to all those involved who have paid since 1945, there would be many thousands, perhaps tens of thousands, but I cannot give any figures.

I cannot give the exact figure now, but obviously the number who have paid since the end of the war and to whom repayment would have to be made would be very large.

What amount does the Economic Secretary consider is involved in this proposal in loss to the Revenue?

The amount which would be involved in wiping out arrears of those who have not yet paid would probably not be large, but I could not give the figure because it is not easy to estimate. The figure which would have to be repaid is very large, but I am not resting my case on the amount of loss to the Revenue. That is not a major factor. There is no doubt, and I think that my hon. Friend the Member for Sowerby would agree, that a very large volume of administrative work would be involved in making repayments.

In addition, there is the question whether it would be fair to confine a concession of this kind simply to ex-Service men who had incurred these arrears during the war. No doubt claims could be made for other people who had incurred such arrears during the war or at other times and who had been doing work of national importance. One would get into difficulties as between one class and another.

For all these reasons we think that the right course in fairness to all these different clases of taxpayers, both ex-Service men and those others who are faced with payments of arrears, is to continue the process of assessing and collecting the sums due and to take special care, as we are already doing, to adjust the rate of payment to the individual's present circumstances and needs. When all the complicated factors and balances are taken into account, we feel that this is, on the whole, the best and fairest course.

I only want to make one point. The Economic Secretary rests his case on the fact that if this were granted there would have to be repayment of all payments that have been made by people who have served in the Forces. I happen to be in that class, having served in the Forces. The whole case is that it is exceptional hardship which is involved—the people who suddenly receive demands for which they had not calculated. If one were to receive a demand near the time when one expected it, one would not dream of having a grievance or demanding repayment.

I hope the Economic Secretary will reconsider this matter as to people who have not had claims made against them yet, since it really is hard on them to receive claims after all these years. There comes a claim for what is a very considerable sum in the circumstances in which a man is living and which interferes with his arrangements and his way of living. It is a sudden charge from the years behind, and it causes great bitterness. Surely, this is a time when one could wipe the slate? We all know that, because the Income Tax authorities are under great strain and are understaffed, there are many people who are escaping very large sums of Income Tax which they ought to pay. I cannot believe that taking up these trifling claims of under £75 arising out of the war is really worth the administrative cost. Could we not say now that we will put an end to this? I think it would be quite unreasonable to allow people who have paid to reclaim, we do not want that but I think we should say now that we will not have any more of these claims. I hope the Financial Secretary will favourably consider this proposal.

4.30 a.m.

I was very disappointed with the Economic Secretary's reply. I hope he will not think it offensive when I say that it was a conventional Ministerial answer on a matter in which the Government are not interested. He really should not put forward at 4.30 in the morning, the threadbare and thoroughly unworthy argument that because one cannot do justice to everybody, one should not try to do justice to anybody. It is true that there would be certain inequalities if this Clause were passed, but surely the commonsense view of the matter has been put by the hon. and learned Member for Northampton (Mr. Paget) that it is quite undignified and shabby for a great country to go grabbing after these small sums of money, almost all of which were not deducted at the time because of the error of some Government Department, and years afterwards to use the energy of the overworked Inland Revenue staffs in trying to retrieve these small sums.

To say that he does not know what it would cost is not the way to treat an issue which means a great deal to a small number of very respectable citizens, every one of whom, ex hypothesi, has served his country. I was very surprised by the attitude of the Economic Secretary in view of the answer which the Financial Secretary gave across the Floor of the House as recently as Thursday last. The Financial Secretary will recall a particular case over which I have been in long correspondence with him. I will briefly outline the facts because it is an excellent example of the situation. It is the case of a man who was shot down over Germany while serving in a Lancaster bomber. Tax arrears accrued while he was a prisoner of war and obviously prohibited from taking any care of his affairs, but his widow made an effort at the time to secure that full tax deductions on his pay and her earnings were made.

I am sure the hon. Gentleman would desire to get the facts right. So far as concerns the efforts of the man's widow to get tax deduction on his behalf that, I am informed, is not correct.

The right hon. Gentleman says that. The lady is perfectly clear to the contrary, and is prepared to give a sworn statement to the right hon. Gentleman any time he desires. If he rests his objection on that particular point, which is not a major part of the case, I shall be happy to take up the point if he will undertake to reconsider this whole matter. Let me refer to the answer which the Financial Secretary gave me only a few days ago. In reply to a supplementary question of mine, the effect of which was to ask whether he could not reconsider the matter, he began with these words:

"Unfortunately, I have not the authority to allow arrears of Income Tax to go unpaid."
It is precisely the effect of this new Clause to give to the right hon. Gentleman that authority which he himself said unfortunately he did not then possess. If the right hon. Gentleman was sincere—and I give him credit for that—in saying on Thursday last that it was unfortunate that he did not possess these powers, it is a little ingenuous for him to sit silent at the moment when the Economic Secretary is urging the Committee not to give him these powers.

Would the hon. Gentleman read my reply to a further supplementary question asked by the right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot)?

To oblige the right hon. Gentleman, of course. The right hon. Gentleman said in reply:

"It can hardly be described as a moderate reform, but the point is, if people who owe arrears of tax do not pay, then those who have paid might feel it would be very unfair to them."—[OFFICIAL REPORT, 23rd June, 1949; Vol. 466, c. 51–2.]
I do not know why the right hon. Gentleman wanted me to read that. [HON. MEMBERS: "Oh!"] It expresses what the Economic Secretary said this morning, only it seems that the Economic Secretary put it much better. The Financial Secretary knows perfectly well that when he expressed the view that it was unfortunate that he did not possess the powers, he was not sincere. If he was, how can he oppose the new Clause?

May I put the point by an example? As I understand it, the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) owes £35, and if this Clause is agreed to he will be £35 to the good.

Should this Clause be accepted and be made retrospective, I should benefit to the tune of £35. I have, in fact, made the payment and so should not benefit.

I accept what the right hon. and gallant Gentleman says. Supposing he had not paid it, it would mean that he stood to gain to the tune of £35. One must treat all taxpayers alike—one cannot pick and choose. That is why I say that unfortunately—I repeat, unfortunately—I am positive that there would be some who would feel aggrieved, and ask why they should have had to pay their dues when others had not.

We are in considerable difficulty about this matter, and it is somewhat unfortunate that the Economic Secretary should be dealing with it after the Financial Secretary to the Treasury had been concerned with it. I should have preferred the matter to be referred to the Chancellor of the Exchequer, who, after all, has to take the final decision. Obviously the awkward point is that anything of this kind does to some extent break into the canon of taxation that all taxpayers have to be treated alike. That is a principle which has always been held and which it is important to hold.

On the other hand, there is the fact, which is not denied by Government spokesmen, that this matter has arisen only because of the difficulties of making assessments before. They obviously should have been made years ago, and the information given by the hon. Member for Sowerby (Mr. Houghton) that at one time, so far as he and his friends were concerned in the calculation of taxation, there were 46,000 officers of the Royal Air Force about whom they knew nothing, shows something of the complexities with which they were faced. In spite of that, gallant efforts were made. Now there remains an indeterminate amount. We have not been told either how many outstanding cases there are or what amounts are involved. From the point of view of those who get these demands, it can obviously be a very great hardship where their circumstances have changed. While the figure may not be large in a budgetary sense, it may make quite a lot of difference to a man who has served in the Army and who is now struggling in quite different circumstances.

I understood the Economic Secretary to say, "Oh, yes, we took that into account and we spread out the payments." Does that mean that, having made the claims for £50 or £60, that amount is to be spread over five or six years more? If so, these unfortunate people will begin to think there is no end to this trouble. If it is only a small sum, I agree with some hon. Members who have said that, whatever the canons of taxation and equity are in the matter, in the case of those who have already paid, I do not believe there would be any great sense of grievance amongst these people if nothing was done in this outstanding number of cases. I agree that the Treasury have to give some weight to the possibility that there will be an outcry from hundreds of thousands of people who have paid.

I should have thought that the real end of the story was that we ought to try to get out of this difficulty. Concern has been expressed on both sides of the Committee, and this is the first new Clause which has received such universal support. If the two Secretaries will say that they will put to the Chancellor, who could not possibly have foreseen the strength of feeling on this matter, the general view which has been put from all sides of the Committee, and consider whether in fact there would be such a great demand from people for remission of tax, and note that it is not necessary that the claims should be wiped out altogether, there should be ground for an agreement.

There are many people who might be able to pay when the nation's financial difficulties are so great and if so, they need not take any notice of this Clause, which only says they may make a claim. The best way out is for the two Secretaries to consult the Chancellor and give us an undertaking that they will be able to make a statement before the next stage of the Bill so that if, in the light of their preliminary consideration, we put down an Amendment on this topic, this matter can be discussed again. That might get us out of the trouble.

I think the first observation of the right hon. and gallant Gentleman was right—that it would be dangerous to pass a Clause now or later of the kind on the Order Paper, for the good reasons he gave. There are certain canons of taxation, and one of them is that all taxpayers should be treated alike in like circumstances. What we have here is a matter which has aroused intense sympathy in all quarters of the Committee, and I think among all sections of the community, and it is something that we hope will not recur. It happened because of the war and limits have now been set to it. Obviously as time goes on, in one way and another, the matter will be settled.

It would be wrong for the Committee to try and legislate for this matter rather than to allow the matter to be dealt with administratively, as the Economic Secretary suggested. As he indicated, the Inland Revenue are now treating these cases with the utmost sympathy, but they cannot, under the law, wipe off tax except in certain circumstances, and when these circumstances arise they have to be reported to the Comptroller and Auditor General. If there is any chance that the circumstances of an individual may improve, it is the Inland Revenue's duty under the law to try and collect tax provided they can keep it alive by demands and assessments. In practice, where the circumstances are such that it is obvious the money will never be collected, the Inland Revenue do not press the matter; but where the circumstances show that the money can be paid over a reasonable period, it is the duty of the Inland Revenue to try and get the individual to pay by easy instalments.

4.45 a.m.

A great deal of feeling has been aroused, but not all these cases are on all fours. In some cases the men have quite deliberately evaded the payment of tax due. In other cases, they did not pay because the Inland Revenue, owing to shortage of staff, were unable to trace them. It would be grossly unfair to treat all cases in the same way. We want to do justice by these people and settle this matter in some reasonable way. That can only be done administratively and case by case. I can assure the Committee that the Inland Revenue have every sympathy with these cases and are doing their best in the circumstances facing them to settle them without doing hardship to the men and their families. Of course, I will report to my right hon. and learned Friend what has transpired this morning, but I can assure the Committee that we have looked into this with the utmost care. I know my right hon. and learned Friend's view on this matter, and his decision is the one which my hon. Friend has conveyed to the Committee.

When my hon. and gallant Friend introduced this new Clause, and indeed when the hon. Member for Nelson and Colne (Mr. S. Silverman) spoke, I understood that a very strong argument had been made to show that this was a very special case. Moreover, when the right hon. Gentleman answered the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) the other day, he said he was not able to deal with these special cases by administrative action. He is now telling us that he may be able to deal with every individual case—there are thousands of them, I do not know how many and the right hon. Gentleman does not know either—by administrative action. This is very unsatisfactory, particularly after this Debate, in which it has been made clear to the Government Front Bench that this is a very special case of hardship.

I should preface my remarks by saying that I am one of those who have received claims, to a slightly larger amount than my hon. and gallant Friend. I think the Government spokesman will acquit me of having my own personal interest at the back of my mind in what I shall have to say. I should like to remind the right hon. Gentleman of the circumstances in which these arrears accrued. Officers and men serving overseas were in no position to check either the exact amount of their pay or the changes in the tax laws; but they did know that there was an obligation on the pay authorities to deduct tax at source, and when back pay was given as a result of promotion or changes in pay, every one of us serving overseas must have noticed that there was a great increase in the amount of tax deducted.

I remember noticing on a number of occasions what an enormous amount of tax seemed to have been deducted in a particular month. I understood from the inquiries which I made—a lot of other people made similar inquiries—that the pay authorities were trying to keep up month by month with the actual tax due and that if they fell behind at all, at the end of the year or from period to period they made greater tax deductions from the monthly pay. From that point of view, most officers and men who have recently received these claims for arrears were satisfied when they were demobilised that they had paid all the tax they owed and that their account was clear.

Hon. and right hon. Gentlemen opposite may have at the back of their minds that savings may have been made from time to time and that at any rate there was the gratuity with which demobilised men went into civilian life. If they have, they should also remember that those savings were used in many cases for establishing a home and cannot be called upon to answer the claims of the Inland Revenue, and that, therefore, there is great hardship. I speak not from my own point of view but from that of many constituents and others about whom I know.

I beseech the right hon. Gentleman to speak again to the Chancellor, pointing out that there is strong feeling about this and a real case of hardship. If he feels some difficulty about the suggestion that claims put in, say, last year should be let off, let him at least answer the request of the hon. and learned Member for Northampton (Mr. Paget) that no more claims for arrears shall be sent to unsuspecting former officers and men of the fighting Services. Let us close this matter now and have no more of this treatment, which was rightly described by the hon. Member for Nelson and Colne (Mr. S. Silverman) as shabby treatment of ex-Service men. I put that request as strongly as I can, and I ask the Financial Secretary to speak again to the Chancellor and ask him to reverse his decision.

I want to reinforce the plea made to the Financial Secretary. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) put his suggestion to the Financial Secretary very fairly. In the absence of the Chancellor, no one expects the Treasury representatives to give the Committee any firm commitment, and no one asks for that, but in view of the feeling in the Debate, the Committee—if the whole proceedings are not to become a farce—are entitled to ask that the course of the Debate and the feeling shown shall be reported to the Chancellor of the Exchequer. I was disappointed when the Financial Secretary said that the matter had been talked over, the Chancellor had made his decision and it was no good telling him anything more. When he thinks that over, he will realise that that is not really treating the Committee properly, because although a provisional decision may have been made, it is possible that a report of the opinion of the Committee may have the effect of changing that decision.

Nobody wants to make this difficult matter, in which we all feel a great deal of sympathy, a matter of party politics or a Division. We want to find some way out of it, but if we can get no satisfaction we have no remedy except that of the Lobby. However, we do not want to do that as long as there is a chance of getting a satisfactory solution. Will the Financial Secretary accept the suggestion of my right hon. and gallant Friend in the spirit in which it was made and say that he will report—if he once says he will do so, I know that he will do it genuinely and with sincerity—the strong feeling of the Committee to the Chancellor? I think that we are also entitled to ask that the Chancellor, if he feels he can do something, will make an announcement, and if he cannot do anything, will equally tell us, so that at a further stage the matter can be raised again. That is not an unreasonable suggestion, and I hope the Financial Secretary can accept it.

I said what I did about the Chancellor's views in reply to the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank). He asked whether the Chancellor had any view on this, and I told him that the Chancellor had not only considered it but had come definitely to the view expressed so well by the Economic Secretary. Having cleared the ground, I went on to say that most certainly my hon. Friend and myself would see that the Chancellor was apprised of what has happened this morning, and we will convey to him the feeling that has been evinced on both sides of the Committee. Whether as a result of that the Chancellor will feel that he can make any change, or even announce he cannot make a change, I do not know. That will be for him, but what I will see is that he is fully apprised of what has happened in the last three-quarters of an hour. Then the decision he takes will have to be his. I can make no promises one way or the other.

I had hoped the Financial Secretary would have advanced rather more firmly on the bridge built for him by my right hon. Friend. However, he has just told us the matter will be placed before the Chancellor on his return from Paris. One question of procedure arises. We shall put down on the Report stage an Amendment on this matter. There is, however, no certainty, in view of the length Debate we have had, that it will be called. Should the Chancellor, on reconsideration of this matter, come to the conclusion that there is something which he would like to tell, can we have an undertaking that the Government will put down their own Clause, which is certain to be called, and may be an improvement on ours? I think that would be a very satisfactory position.

Of course, if the hon. and gallant Gentleman and his friends were minded to put down an Amendment on Report, that would give the Chancellor a peg on which to hang any statement he might care to make. Such an Amendment, of course, might not be selected, and if the Chancellor had something positive to say, he would find it difficult to indicate his conclusions. It was in order to safeguard him that I said what I did. I think we can leave it there. We will see the Chancellor and fully apprise him of what has been said, and I do not think I can be expected to go further.

The object of my intervention was to improve the chance of our Amendment being called on Report. Because those words are now on record, Mr. Speaker may well be influenced by the fact that there might be a possible statement by the Government. In view of the fact that we are in the fifteenth hour of our deliberations, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.