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Tax Allowances (Entertainment Expenses)

Volume 527: debated on Monday 17 May 1954

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asked the Financial Secretary to the Treasury why he apologised to the Institute of Directors for the action of the Inland Revenue in asking for details about the entertainment expenses of company directors.

The hon. Member is under a misapprehension. I did not apologise because the Inland Revenue asked for details of entertainment expenses. I said that the Board of Inland Revenue regretted that an error of judgment had been made by a particular tax office in demanding in a particular case unnecessarily detailed information on matters which went far beyond entertainment expenses.

Could the Minister differentiate between an expression of regret and an apology, and was not that branch of the Inland Revenue Department carrying out its job in trying to prevent tax evasion, and was it necessary to make this humiliating and grovelling apology when his officers were only doing their duty and helping the Chancellor of the Exchequer?

As I tried to explain in my original answer, the expression of regret was because unnecessary particulars were asked for in this case. On the first part of the hon. Gentleman's supplementary question, I always apologise when I am in error, though that does not often happen.

Yes, but does the Financial Secretary still stand by the undertaking given by the Chancellor on the Third Reading of the Finance Bill last year, that he would back the Inland Revenue in all steps it took to prevent tax evasion?

Nothing I have said in reply to this Question diminishes in any way what my right hon. Friend said on that or any other occasion. This matter, as I have tried to explain, relates solely to an individual case in which it seemed to me that inquisition was being carried definitely too far.

Could the right hon. Gentleman say what were the excessive inquiries made in this case?

They were very long and detailed but, if they would interest the right hon. Gentleman, I will gladly send them to him.

Subject to any view that the authorities may have on the point, I should have no objection.

Can my right hon. Friend say whether this incident arose from an inquiry made by the Inland Revenue as to the number of haircuts a business executive had in New York?

There is nothing about haircuts in it, although I am bound to say it looks rather like a "close shave."

Will the Financial Secretary give an assurance that the Inland Revenue officer concerned, whose zeal the right hon. Gentleman has deprecated, is not being subjected to any disciplinary punishment; in other words, that he will not be penalised for acting in what he conceived to be in good faith in the public interest?

No officer is penalised for acting sensibly and in good faith, but it is a matter of judgment for which Ministers must take responsibility as to how far it is justifiable in this admittedly difficult and delicate matter to press precise details of inquiry and whether they are pressed to a point at which they may well become an undue burden.

The following is the questionnaire:


Information required:—
  • 1. Name of Director.
  • 2. Address of Director.
  • 3. Total expenses paid to each Director.
  • 4. Analysis into: —
  • (a) rail travel.
  • (b) subsistence.
  • (c) entertainment.
  • (d) any other items.
  • 5. Where Company's car used: —
  • (a) make, horsepower, cost and date of purchase.
  • (b) amounts charged in accounts for: —
  • (i) insurance, tax, repairs.
  • (ii) petrol and oil.
  • (c) total annual mileage.
  • (d) business mileage.
  • 6. Area covered by travel.
  • 7. Number of days on which travelling done.
  • 8. Number of nights spent away from home.
  • 9. Towns visited and number of journeys to each.
  • 10. Purpose of journeys and business done.
  • 11. Number of days spent at Company's offices.
  • 12. Entertainment: —
  • (a) type of people entertained.
  • (b) nature of entertainment.
  • (c)reason for entertainment.
  • 13. If any Company asset has been transferred to a Director, particulars should be given.