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Political Commentary
Page 95
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Sale or Succession
AT any time now, a sudden and transitory importance may attach to the exact price paid for long-distance goods vehicles in 'normal transac
tions during 1947 and a year or two later. The information would particularly interest several hundred ex-hauliers who for nearly 10 years have resisted claims from the Inland Revenue, but must soon (or so it would appear) accept a decision on whether the balancing charges that the Inland Revenue insist on receiving should be based upon the compensation paid for vehicles or upon some other figure that can more accurately be described as their open market value.
Operators may claim that they have been treated badly in comparison with other people. For the most part balancing charges have not been levied on sums paid as compensation for nationalization. Even many hauliers have escaped this particular imposition. It has not been made where operators surrendered their businesses voluntarily, or where a business was immediately absorbed by the British Transport Commission and did not continue for any length of time as a separate entity, or in some cases of partial acquisition.
The reasons differ in each case, and ultimately depend on the wording, not of the Transport Act, 1947, but of the Income Tax Acts. Although not primarily composed to meet the special circumstances of nationalization, these Acts haVe had to provide the basis for deciding whether or not any particular compensation payment attracted taxation. Test cases have gone a long way towards clarifying the legal interpretation, but the situation they have gradually uncovered is strange, even if it happens to be good law
Transfer of Property The key decision seems to have been that of Mr. Justice Danckwerts in October, 1953, in the case of Bramford's Road Transport. The argument was that the transfer of property to the B.T.C. was not a " sale " within the meaning of Section 17(I)(a) of the Income Tax Act, 1945. Although he agreed with this argument, Mr. Justice Danckwerts largely -undid the effect by deciding that there had been a " succession " within the meaning of Section 60 of the Act.
This provides that the vehicles should be treated as having been sold, and "as if the net proceeds of that sale had been the price which that property would have fetched if sold in the open market." Operators not in the Bramford category, who-cart establish to the satisfaction of the Inland Revenue that their transaction was neither a sale nor a succession, had no quarrel with the decision. The others have made, and are still making, every effort to find what the value Was on the open market at the time when their businesses were acquired" on the closed market of the B.T.C.
Bramford's case was supported by the long-distance panel of the Road Haulage Association. As no further steps were taken to pursue the decision in the Court of Appeal or the House of Lords, the assumption is that operators who have not found a way through one of the numerous loop-holes open to the compensated man have resigned themselves to paying something to the Inland Rivenue.
The hope of revised legislation lingered for some time
after the return to power of a Government apparently bent on denationalization. In their approach to the Government, hauliers made much of the anomaly whereby people who sold their businesses voluntarily to the B.T.C. received preferential treatment over those who waited for compulsory acquisition. It was pointed out that the Government were expecting ex-hauliers to buy their way back, and yet were largely depriving them a the ability to pay.
The Transport Act, 1953, ignored their plight. The introduction of a clause in the Act, or in the contemporary Finance Act, retrospectively making ex-hauliers a present of their balancing charges, would have provided wonderful material for an attack from the Opposition. Perhaps that is why the Government did nothing. The hauliers continued to press the Chancellor of the Exchequer. The passage of the latest Transport Act; again with no reference to balancing charges, has no doubt underlined what he has already made clear to them—that there is no chance of a change in the law.
Open-market Value
The only point on which there remains room to manceuvre is the agreement of the amount on which balancing charges will have to be paid. With their habit of getting to the main point directly, the Inland Revenue maintain that the compensation price and the open-market value are the same, so that, so far as they are concerned, the nice distinction between •a sate and. a succession is immaterial.
To the ears of hauliers this sounds cynical, and only what one would expect from the Inland Revenue. They start with the plain man's argument that there would be no point in distinguishing between a sale and a succession if they were legal synonyms. The hauliers go on to ask what price their vehicles would have "fetched if sold in the open market." Not a great deal, in their opinion.
Possible customers at the time would scarcely have included other hauliers, for they were savouring for the first time the bitter flavour of the 25-mile limit and were in no mood to buy vehicles, especially those suitable for long-distance transport. Traders might have absorbed a certain number to operate under C licences, but there would not have been anything like enough buyers for the greater number of the 40,000 nationalized vehicles if they had been put on the market at the same rate at which they were acquired.
Reasoning along these lines is plausible, but unlikely to have any effect upon the Inland Revenue. Before they would even consider telling a sale apart from a succession they would require substantial and substan'tiated evidence of prices that were actually being paid at the time of nationalization. There Must have been some vehicle sales, even if they were mainly to C-licence operators. Dealers and auctioneers must have had some business, and evidence of their activities may remain in the form of price lists, advertisements and so on. Operators hope that, if details are forthcoming, they will prove that the open-market value was much below the terms of compensation. This will reduce the gap between written-down value and selling price, and proportionately reduce the balancing charges. r.29