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Income Tax Law

Volume 643: debated on Tuesday 4 July 1961

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asked the Chancellor of the Exchequer if he has noted the statement of the Master of the Rolls in a recent case concerning the operation of Schedule D and Schedule E expenses; and what action he proposes to take to deal with the problem.


asked the Chancellor of the Exchequer if his attention has been drawn to the recent statement by the Master of the Rolls in the Court of Appeal to the effect that the Income Tax law, as now enacted, is such as to bring the law into disrepute with consequent detriment to the welfare of society; and what measures he proposes to remedy this situation.


asked the Chancellor of the Exchequer if he will amend the Income Tax law following the comments of the Master of the Rolls in the Court of Appeal on 26th June last.

I will bear the comments in mind when I am considering any relevant change in the Income Tax law.

Is the Chancellor aware that the learned judge referred to Income Tax as

"a sort of game, a battle of ingenuity unrelated to any principle or commonsense or ethical consideration, … extremely bad for respect for the law"
"seriously damaging to its prestige and consequently to the welfare of society"?
Is he aware that on many occasions we on this side of the House, and some of his hon. Friends, have pressed on him the entirely anomalous situation arising from Schedule D and Schedule E expenses but that he has failed to legislate about this? Will he take early action to get rid of this discrimination which the learned judge said was degrading for this country?

I will certainly consider the matter. I agree with the hon. Member that it is desirable that the tax system should be as simple as possible. What the learned judge said is one reason for not embarking on new experiments in taxation, for example, with regard to capital gains.

Does the Chancellor recollect that as long ago as 1936 these anomalies were adversely commented on by the Macmillan Committee appointed by his predecessor, my right hon. Friend the Member for Woodford (Sir W. Churchill)? Does he recollect that the Committee produced a draft of a new Income Tax Statute in comprehensive and lucid terms? Does he not think that the time has come when that might be enacted in place of the present chaotic jumble of archaic enactments, amending laws, judicial decisions and Departmental practices through which the taxpayer has to grope his way?

If my hon. Friend is good enough to read what I said in my Budget speech, he will see that I have considerable sympathy with his point of view but, as I said then, since reaching the Treasury I have become aware that simplification is not quite as simple as it sounds.

Is the Chancellor aware that counsel for the Inland Revenue, the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), who since this case has become a junior Minister, said that had the present case come under Schedule D the result might have been different, and indeed it would have been different? Is he aware that the learned judge, having made these statements, asked counsel to bring this to the attention of the Inland Revenue and that counsel replied in terms which suggested that the Inland Revenue was well aware of the indefensible position? Will the Chancellor take action about it?

I am glad that the right hon. Gentleman asked that question. What learned counsel said was misreported. He did not say what he was reported as having said.