Purchase Tax Hysteria
Page 31
Page 32
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THERE is likely to be, in the near future, a-test case concerning purchase tax, the result of which will be awaited with acute anxiety, if not trepidation, by a considerable number people in the commercial-vehicle industry.
Those who may be affected are engaged in the reconditioning for sale of the classes of goods vehicle which, if new, would now be liable to the infliction of this iniquitous tax on the tools of trade and industry, but at the time they were first sold were not subject to• the tax.
According to information made available to The Commercial Motor, officers or agents of the Customs and Excise have been paying visits to premises all over the country where such work is carried out. These uninvited guests, after proving their authority, wander around and perhaps see a vehicle which has just been overhauled and repainted. They have then been heard to make such remarks as, "That looks a fine job, it should be subject to purchase tax." of Heavy Tax After Sale These officials are not engineers, in fact, some have even admitted that they do not have driving licences, yet it seems that upon their reports the Customs and Excise decide that these used and old models should be made subject to tax.
In a letter dated August 23, received from the Customs and Excise by the proprietor of a wellknown firm who do a large business in the vehicles in question, reference is made to "the manufacture and sale of goods vehicles by you, prior to the date of your registration for purchase tax." It is also pointed out that investigations by the Commissioners of Customs and Excise had been completed and the arrears of purchase tax due had been assessed at £3,662 5s. 3d. This sum was stated to represent, in their opinion, tax at the rate of 331 per cent. of the wholesale value (as defined in the Finance (No. 2) Act, 1940, section 21), on the chassis o131 vehicles which had been described on a schedule furnished by the "victim" on June 9, 1953.
It was further requested in the letter that pro posals for payment of the amount should be communicated to the Commissioners within the next six weeks.
It seems that all the vehicles concerned are ex-W.D., ex-B.R.S., or have been purchased from other operators as being in need• of overhaul. Log books were supplied with them and their ages ranged from 1942-50. The chassis, which in this particular case were all Bedford, have the old-type crash gearboxes. During renovation they were supplied with factory-rebuilt engines and although, when new, the vehicles would have cost about £1,400 each, they were sold at £600-£800.
• In some cases chassis frames had to be replaced but no new ones were bought. Those used came from vehicles which had been dismantled and had been in use before the purchase tax was required in the case of new vehicles.
Years of Hesitation What makes the case so blatantly unfair is that the reconditioner in question had been asking the Customs and Excise ever since 1951 as to his position in relation to purchase tax, and this letter was the first official intimation to him that he was considered liable in this respect.
All the vehicles for which tax is demanded were sold by him long ago, now he is expected to pay, practically on the nail, approximately £118 on each, with little hope of being able to recover this from the buyers. This is retrospective taxation with a vengeance, which would result not only in absorbing the profit on the sales, but cause a loss. Unless the Board of Customs and Excise can give a satisfactory explanation of their conduct and agree to drop the matter, it should be the subject of a question in Parliament.
If the reconditioning of goods vehicles not originally liable to purchase tax is to make them subject to this, various other possibilities and complications arise. The operator who dares to submit units of his own fleet to any extensive overhaul might well receive a demand, on the assumption that the vehicles had been "renewed."
What does reconditioning mean? According to the Oxford Dictionary it is "overhaul and refit" In the aforementioned 31 vehicles, the fitting of new components represented only £6O-7O but. and here is another problem, purchase tax had already been paid on these parts. In a great many cases also such vehicles have retreaded tyres, otherwise their cost would be much higher.
Another argument against the imposition of purchase tax on such vehicles is that the sales catalogues of the Ministry of Supply and the tender forms for vehicles of British Road Services, carry statements to the effect that the vehicles referred to are free from purchase tax. Some of the M.o.S. vehicles are sold without log books and do not even bear registration letters and numbers.
It is important that the Customs and Excise should be brought to realize that the vehicles for which purchase tax is now demanded are not in any way additional, all have been in use on the road for years.