§ MR. W. ORMSBY GOREasked Mr. Chancellor of the Exchequer, Whether it is true that, notwithstanding the proposal of the Government to increase the present rate of the Income Tax has not become Law, the Bank of England has deducted Income Tax at the rate of £2 4s. per cent on dividends that became due after the 5th of April; and, if so, by what legitimate authority it has done so?
§ THE CHANCELLOR OF THE EXCHEQUERSir, I have not had time to get any very accurate information; but I believe the Bank of England has deducted some sums in this way to a small extent. What I am informed by the Inland Revenue Office is this. The Bank made application to know what rate of interest was to be deducted, as is usual when an alteration of the income tax is contemplated. The Inland Revenue Office informed the Bank of England that the proposal of the Government was £2 4s. per cent, and I believe that has been acted upon in some cases; but the Inland Revenue had no power at all to legitimate such a transaction as this, nor can it have any legal validity. That is, supposing such a sum to have been deducted by the Bank or any other body in a similar situation, it would be no defence to an action brought for the sum after the income tax law of one year had expired, and before the income tax of another year commenced. That is an inconvenience which follows from making the annual Income Tax Act terminate with the financial year; but, as I have said, the deduction made by the Bank has no legal validity, and if there is any error more or less in the amount kept back it will be rectified.
§ MR. CRAWFORDAllow me, Sir, to supplement the Answer given by the right hon. Gentleman. The Bank of England has acted in this case under written instructions from the Board of Inland Revenue. Those instructions were that the deduction of £2 4s. should be made.