Balancing Tricks
Page 55
If you've noticed an error in this article please click here to report it so we can fix it.
COMPLICATION follows complication in the legal battle to escape balancing charges, waged by those hauliers whose busineSses were acquired compulsorily under the Transport Act, 1947. Guided by their expert advisers, the hauliers twist and turn like guineapigs trying to escape from a maze, but at the end of each oath they find the tax collector barring the way.
Much was thought to depend upon the decision of the House of Lords in the Hudson case. This established, or appeared to establish, that acquisition was not a sale, according to the Meaning of the word within the context of Section 17 of the Income Tax Act, 1945. Another appeal, in what is generally known as the Bramford case, gave the ruling that, although there was no sale, there was a succession, another word that must be construed in accordance with the 1945 Act.
The distinction between a sale and-a succession is nice, and neither word has the necessary magic to free the haulier who lost his business compulsorily from the obligation to pay balancing charges. If there is a sale. the amount of the tax is calculated on the compensation received; if a succession, the relevant figure is the
open market value. .
Faced with the possibility of paying something whatever happens, hauliers have preferred to argue that there was no sales but that the British Transport Commission succeeded to their undertakings. When nationalization was taking place, the open market value of the kind of vehicles that were being acquired was likely to be low. The Comitission were virtually the only potential buyers. Most other operators, forced to have regard to the 25-mile-limit, were more concerned with restriction 1han expansion.
Replacement Value
The open market value at the time, say the hauliers, was, on account of the artificial situation, much less than the compensation to which they were entitled for their vehicles. The starting-point in calculating the payment was the replacement value, that is to say the cost of a new vehicle (which after July 1, 1950, included onethird purchase tax on the chassis price). Deductions were made from the replacement value according to the age and condition of the acquired vehicle, and the answer to the sum was the compensation price.
There is a strong likelihood that, in the freak conditions prevailing, the haulier would have been able to get nothing like this price in the open market. Unfortunately, nobody had the forethought to test the market at the time, so that any figure put forward can be only a guess, belonging to what Mr. Justice Danckwerts has somewhat poetically called "a dim world peopled by the indeterminate spirits of fictitious or unborn sales.'
To avoid what begins to look like a descent into the underworld, the Road Haulage Association have suggested that the income-tax authorities should accept a formula that would fix the open market value approximately midway between the scrap value of an acquired vehicle and the compensation price. It would now appear that the authorities have no intention of making a compromise. As far as they are concerned, the open market value and the compensation price are the same, there is no practical difference between a sale and a succession, and the Bramford case was fought in vain. Having wrestled with the subject for so long, the hauliers are not likely to give up easily. Their forces are being mobilized, and the R.H.A have asked operators and their accountants for details of outstanding cases. There will possibly be renewed appeals to the Commissioners of Inland. Revenue and beyond, with the object of establishing that in as many categories as possible there has been neither sale nor succession', so that no tax has to -be paid, and that where, as in the Bramford: case, suecession must be acknowledged, the open market value is agreed rat'C figure substantially
below the compensation price. •
Even. when every legal trick has been played, there remains the political approach. The R.H,A. have -asked the Chancellor of the Exchequer to -receive a deputation, and they have some strong argurrients to put forward. The long-drawn-out dispute with the income-tak authorities had its roots in the nationalization policy of the Labour Party. When the -1947 Act was passing through Parliament, little or no consideration was given
to the question of balancing charges. If there were protests, they were drowned by the clash of the guillotine
Taxation Anomalies
Very likely, in fact, the Socialists, anxious to press on with their ambitious programme, did not consider the
possibility of taxation anomalies.included in, the Act a provision whereby ultimately a number Of operators sold their businesses to the Commission through negotiation, thus by-passing the normal acquisition
procedure. Such operators usually received a better price than if they had waited for compulsion, and none of them had to pay balancing charges. This state of affairs, it is charitable to think, was not cold-blooded calculation on the part of the Socialists. They presumably had no preference for the larger operators, who were principally concerned in the manceuvre, and any concession deliberately given to those operators should in justice have been extended to cover other volunteers, the offer of whose undertakings was refused because the Commission did not need them at that early stage.
The Conservatives fought against the nationalization of transport, and have championed the hauliers to the extent of practically reversing the process. In view of the fact that, propably without conscious design, balancing charges are not due from the volunteers, from operators who lost a part only of their businesses, and apparently from some other ex-hauliers, the Government would no doubt like to see every operator exempt.
The gradual unfolding of one legal case after another strengthens the impression that, under the law as it stands at present, some categories of ex-haulier at least will be liable to balancing charges. Should the impression become indelible, the hauliers must again shift their ground, and argue that the law should be changed. The approach to Mr. Butler no doubt has this end in view. No reproach need be made against the ex-hauliers who offered their businesses voluntarily in order to secure better treatment for themselves or their shareholders. It is plainly inequitable, however, that the operator who lost the whole of his ‘business through-C compulsory acquisition should alone be called upon to -pay hack to the Stale part of his compensation.