§ 6.14 p.m.
§ LORD PORTSEA rose to ask His Majesty's Government whether it is a fact that persons evacuated under war conditions from the Channel Islands are free from liability for British Income Tax on certain war and other investments and in spite of this that all persons evacuated from the Islands have been notified that 355 Income Tax is due from the moment of landing in this country.
§ The noble Lord said: My Lords, while I do not propose to put the first question standing in my name, with reference to the bombing of Guernsey aerodrome, I would ask your Lordships to give me a few moments' attention on the point in my second question, although I am aware that it is a very unfortunate moment at which to ask for anything in the nature of a remission of taxation. But this is a case that deserves attention, and I have no hesitation in bringing it before you. I am not one of those who for a moment would deny that there are tax-dodgers everywhere; but if there are tax-dodgers, I maintain that it is the fault of this Government, and the Government should deal with them. The tax-dodger is not an islander. The islanders do not care for the tax-dodgers in their islands because they only increase the price of everything and disturb the financial position. But there is no question they exist. The fault, as I say, is the fault of the Government, and it is their fault in this way. After the last war the Government had to raise large sums of money, and they raised them in a multiplicity of loans. They characterised some of the loans so that no one who was not resident in the United Kingdom for three months in the year, or was not domiciled in England, should pay Income Tax in respect of them. That was done, of course, to attract huge sums from the Dominions and from the islands, from the States and from foreigners generally.
§ The islanders are poor. There are few rich islanders. They have, I believe, a certain quantity of this non-Income Tax paying loan. At the request, it appears, of the Government a certain number evacuated—and here I should like to say they are not refugees, for a refugee is a person who flies to a foreign country; these persons are evacuees or migrants from Guernsey in large numbers, and from Jersey in smaller numbers, at the request of the Government. On their arrival here they find they cannot draw the money they have in London banks because it is money coming from an enemy-occupied territory. They find that the interest on this loan of which I am speaking and other loans is to be cut at source from the moment of their arrival in England. This seems a breach of faith, 356 and unfair. If these people have not even the money to buy themselves food, they must fall on the resources of this country, so that in every way it is a mistaken policy. It only requires a little generosity—I am sure it will get it—and investigation from my noble friend who is going to reply to find that this tax should be dealt with according to the promise made when the money was subscribed.
§ 6.17 p.m.
§ THE LORD CHANCELLORMy Lords, my noble friend Lord Portsea, who has already more than once engaged the interest and sympathy of your Lordships for the Channel islanders, raises a question now of a financial and taxation kind which I will do my best to answer as clearly as I can. The Income Tax is necessarily a complicated machine. It is altered in some way or other in every Finance Bill. There is nothing in the Income Tax which makes special provision for the Channel Islands. They come under general provisions which I shall briefly describe. The simple way to regard these questions is to keep in mind two propositions. The first is this. Income that arises from a source inside the United Kingdom, broadly speaking, pays Income Tax wherever the recipient, the owner of the income, is situated. As the noble Lord has indicated, there is an exception in this sense. If you take 3½per cent. War Loan, or if you take 3 per cent. War Loan which is redeemable in 1955–59, there are special provisions which exempt it from being subject to tax if the beneficial owner is a person who is not ordinarily a resident in this country. The second proposition which one has to remember is the familiar one that, of course, a resident in the United Kingdom—again, broadly speaking—is called upon to pay Income Tax on the whole of his income wherever the income comes from. There again, there is an exception which I had better just mention. If the individual is not domiciled here, has not his real home here, or if, again, he is a British subject but not ordinarily resident here, then he is not asked to pay on the whole of his income wherever it comes from, but only on so much of his income as is actually received in this country or remitted to him in this country.
357 That is the scheme. It applies to everybody alike. There is nothing special about the Channel islanders which does not apply equally to persons in any part of the world. My noble friend will be glad to be assured that it follows that if his Channel Island friends have come here, and are not what can be described as ordinarily resident here, but on the contrary no doubt want to get back to their own homes as soon as circumstances permit—if that is the situation, then such persons would not be liable to have Income Tax deducted in respect of these Government loans which I have mentioned. As a matter of machinery and method it may be that something has to be done which delays the adjustment. It cannot be assumed in every case that that would be so, and it would be necessary to establish the facts. The bankers or other people who have the business of paying out of course have a duty, generally speaking, to stop the amount for Income Tax and to pay out only what is left. But I can assure my noble friend that in cases such as I have described (and I think those are the ones he has in mind), there is not any intention at all to depart from the general principle of the law, and that in cases where the individual is not ordinarily resident here but has come here temporarily he will enjoy the exemption which the law allows.
I know that some difficulty may have arisen in certain cases because, as a matter of machinery, it has all to be worked out and adjusted, but I hope very much that there will not be undue delay. I hope what I have said will give the noble Lord and those whose interests he so stoutly champions in this House, some relief and encouragement, and on the side of the authorities he may be assured that there will not be any unnecessary delay in adjusting doubtful cases.
§ LORD PORTSEAMy Lords, I tender my humble thanks to the noble and learned Viscount for his very clear and explicit statement.