Cases I and Ii of Schedule E

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 13 June 1974.

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Photo of Mr Terence Higgins Mr Terence Higgins , Worthing 12:00, 13 June 1974

One or two of my hon. Friends have apologised for delaying the Committee, but although we are discussing this matter on the Floor of the House we should not be in any hurry to dispose of it. Certainly, if we were in Committee upstairs, we should probe the matter thoroughly, and I believe that we should also carry out that process when we are discussing matters on the Floor.

I find myself sandwiched between two accountants and one lawyer. I speak in these matters as a humble economist. Perhaps it is rare for economists to admit that they are humble, but in the middle of this discussion I feel that I can do so without any fear of embarrassment.

The Chief Secretary should consider whether the Law Officers could help on this occasion. It is a brave man who tells my hon. and learned Friend the Member for Dover and Deal (Mr. Peter Rees) that he does not understand a matter of this kind and does not understand the way the onus of proof should go in a particular case. I think we might well have the Law Officers' views on this topic.

It seems to me that the Chief Secretary got perilously close to saying that neither the taxpayer nor the Inland Revenue will be able to prove what is at issue, and that therefore the onus should be on the taxpayer. That is a rather dangerous situation in which to find oneself.

My hon. and learned Friend said that, whether or not we accept these amendments, the onus is always on the taxpayer, except where the matter may be out of time. He further argued, as I understood him, that that would be the case regardless of whether the amendments were accepted. I am not clear whether the Chief Secretary agrees with that point of view. We should be clear whether that is the point at issue and the Chief Secretary should make his position clear. I understood the hon. Gentleman to disagree with my hon. and learned Friend. If that is the case, I believe that we should have the advice of the Law Officers.

I am not clear whether there is a distinction between deciding whether the onus of proof is on the taxpayer to show whether a claim is just and reasonable, or whether he has to prove that he has paid that amount regardless of whether he has a home company. Perhaps I did not express that very clearly. There are two things that a taxpayer or the Inland Revenue may be asked to prove. They are either that the amount that has been received abroad is just and reasonable or, alternatively—and it is alternatively, because it is not the same thing—that the amount he is paid is such that he would have been paid that amount even though he had no base, that is to say, no home company. I agree with the view which was implicit in one thing that the Chief Secretary said, that the time apportionment basis might not be right. Let us take the simple case of a highly qualified surgeon. He may go abroad and conduct a particularly difficult operation the pay for which reflects his expertise as a doctor rather than the length of time he spends abroad. That case could not be dealt with purely on a time apportionment basis.

May we have an answer on the specific point made by my hon. and learned Friend the Member for Dover and Deal? If that is the difference between us, we need to resolve it.