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Special Committee Corporation Tax Bill, 1975 debate -
Tuesday, 2 Mar 1976

SECTION 116.

I move amendment No. 33:

In page 109, subsection (1), lines 8 and 9, to delete " , or by section 27 of the Finance Act, 1974 " and to substitute " or section 17 ".

This is a drafting amendment. For corporation tax purposes the restriction of the relief for losses in farming or market gardening is made by section 17 of this Bill and not by section 27 of the Finance Act, 1974.

Amendment agreed to.
Question proposed: " That section 116, as amended, stand part of the Bill."

This section provides for group relief in respect of trading losses, capital allowances, expenses of management and charges on income. In essence, it is the main relieving section. Where for an accounting period a surrendering company has incurred a trading loss, the loss may be set off against the claimant company's profits for a corresponding accounting period.

Has the Minister had any representations on this section, with particular reference to subsection (9), about the time of applying this? I understand it has been suggested that it could provide that any company which is a member of a group on 6th April, 1976, should be deemed to become a member of the group on that day and that there should be an amendment to that effect. The difficulty seems to be that the relief will be only in respect of accounting periods beginning on or after 6th April, 1976. If an amendment along these lines were adopted, existing groups would enjoy the relief from 6th April, 1976. Has the Minister had any representations along these lines? If he is not prepared to accept them, perhaps he would give us his reasons.

I have received representations but I do not have them to hand. I dealt with this on the Second Stage when I said that Deputies may be aware that it was not feasible in the past to frame legislation to give group relief because of different bases of assessment for income tax and corporation profits tax. Likewise, it would be even less feasible to frame legislative provisions to provide group relief for accounting periods or parts of accounting periods falling before 6th April, 1976, since income tax and corporation profits tax as well as corporation tax would have to be comprehended.

The Revenue Commissioners have assured me that they will consider sympathetically any particular cases which might be put to them for the grant of group relief in respect of accounting periods or parts of accounting periods falling before 6th April, 1976. Such an administrative solution would not, of course, mean a departure from what is set out in Part XI of the Bill with regard to either qualification for group relief or the nature of the relief allowed. Obviously, it would be necessary to have any such claims supported by all the relevant facts in relation to the companies concerned. I received representations about a group situation which has enjoyed such relief and who have written expressing their appreciation of relief granted in that form. Statutorily we would be creating a great deal of verbiage if we tried to handle the three different taxes as existing before, or deeming them to exist before, the 6th April, 1976.

From a number of things the Minister said in the House on other Bills recently, I am a little confused as to the exact position of the Revenue Commissioners, where statute and where discretion are concerned. I do not want to plunge into this too deeply nor do I want to inject anything that is going to restrict discretions, but on one point in one of the other debates, in reply to a plea to give discretion, the point was made that it would be better to have the law because the law was binding on everybody including the Revenue Commissioners. Although the Revenue Commissioners can have a lot, I do not think they can have it both ways. The question is: is there any clearly defined norm for judging when is it a case for exercising discretion, and when is a case rigidly bound by statute as far as the Revenue Commissioners are concerned?

I would say there is no clearly defined division.

Is this not the case? Traditionally, the Revenue Commissioners have a large body of discretion, but very often if they wish to enforce something, they find when they come to court that they need statutory authority, and this is really the reason for the Finance Acts amendments and several other things. Is that a rough and ready correct assessment of the situation?

It would.

I am anxious that this legislation will be in relief of the Revenue Commissioners because in the last analysis, they have to have this discretion. The more we legislate the more we appear to be putting them in a straitjacket. What I am mainly concerned with here is that that kind of discretion will be able to continue notwithstanding all this legislation. Everything I am saying is going on the record and I do not want to push it too far.

In appropriate areas, the Deputy will recall that the Revenue Commissioners are charged in general and in particular statutes with the care and management of the tax code. In exercise of that obligation they from time to time give extra-statutory concessions of a general nature.

In other words, they have the power of the Executive?

That is right. As soon as the opportunity offers these concessions are put into statutory form. Here, clearly, you are in the transitional period on a very complex tax code. There is a great deal to be said for the Revenue Commissioners having such powers to grant concessions. When you get into a more final situation such as you would be in when you would pass the legislation then there is something to be said for such discretion not being so liberally exercised.

This is the point I am making. Let me put it this way. Can we still assume that going back to the very early days, their origins and that, that the Revenue Commissioners will still be deemed to have some of the prerogatives of the Crown that go with the Executive as well as the statutory constriction of the legislation?

Is the Deputy suggesting that the quality of mercy is not strained to the Revenue Commissioners?

It has not been, in fact, to be fair to them.

No, but the Revenue Commissioners exercise this discretion within the spirit of the law sometimes because legislators cannot foresee everything. They have to leave something to interpretation and to——

I do not want to get confused on a discussion on this section. I am merely making this point because a representation has been made and if it has been considered and the Minister has come to a conclusion, I will leave it at that.

Question put and agreed.
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