HC Deb 15 April 1913 vol 51 cc1881-901

  1. (1) Any payment or deduction made on account of a temporary tax within one month after the date of the expiration of the tax shall, if the payment or deduction would have been a legal payment or deduction if the tax had not expired, be deemed to be a legal payment or deduction, subject to the condition that if a Resolution is not passed by the Committee of Ways and Means of the House of Commons within that month for the renewal of the tax, any money so paid or deducted shall be repaid or made good, and that if the tax is ultimately renewed at a different rate, or with modifications, any amount paid or deducted which could not properly have been paid or deducted under the new conditions affecting the tax shall be repaid or made good.
  2. (2) Section ninety-five of the Finance (1909–10) Act, 1910, shall have effect with respect to any duties imposed by the Finance Act of this or any previous year, with the substitution of a reference to that Finance Act, for any reference in that Section to "this Act."

Mr. CASSEL

Before we proceed with Clause 2, I beg respectfully to submit that it ought not to be proceeded with until fresh financial Resolutions have been obtained. The point is rather complicated, but I submit it is one of very great general importance. The effect of Sub-section (2) is, by anticipation, to incorporate Section 95 of the Finance Act of 1909–10 in the Finance Act that is to be. It incorporates the same Section retrospectively into every Finance Act there has ever been. I believe the first time that the actual expression "Finance Act" was used was in 1884, but whether the words would be limited to the words "Finance Act," or apply also to Customs and Inland Revenue Acts of previous years, is doubtful. For my purpose it is sufficient to say that Sub-section (2), Clause 2, applies retrospectively as far back as 1884, and that the effect is to legalise all acts done in connection with the collection of taxes. The effect of the Section is to legalise retrospectively all collections of duty made, whether in the way of deductions or actual collections by Revenue officers, before the Act of Parliament by which they were imposed came into force. It has a retrospective effect in that way, not only in regard to machinery, but in regard to actual deductions at a specific rate and collections at a specific rate. Similarly the present Bill, if carried into law, would have the effect of legalising retrospectively all acts of collection unlawfully done in anticipation of the Finance Act of 1913. On that ground I submit that it is not merely a matter of machinery, but a matter of actual collection. The moment you get a rate and deduct it, you are not dealing with mere machinery. You are dealing with collection. It would have been absurd to legalise mere matters of machinery so far back. The object is to legalise actual collection from 1884 onwards. If there is any doubt upon that point, I would like to quote what the Solicitor-General said in the Debate on the Second Reading, so far as it relates to the Finance Act of 1913. He said:— Coming to the third question asked by the hon. Gentleman opposite on Sub-section (2) of Section 2, that Sub-section is the one which deals with the matter in which the bankers have been acting as between the 5th April and the present time. That was in answer to my hon. Friend the Member for the Uxbridge Division (Mr. Mills) who was concerned with the question whether the effect would be retrospective. The hon. and learned Gentleman also said:— The effect of that Sub-section is, and is intended to be, that in so far as there has been a deduction, for instance, by the bank between the 5th April and the time the Bill received the Royal Assent that this deduction in so far as may be stall be retrospectively legalised and the banks rendered sale from the possibility of action. I submit that the legalising of an exaction from people, which otherwise would have been an illegal act, is not a matter of machinery. It is a matter of the actual collection of the charge. I submit alternatively that, even if it were a matter of machinery and not a matter of charge, a Resolution would still be necessary. It has been the invariable practice wherever alterations have been made even in the machinery of collecting taxes to have a Resolution that it is expedient to amend the law of Customs and Excise. Sir Michael Hicks-Beach (now Lord St. Aldwyn), when Chancellor of the Exchequer, endeavoured to avoid that Resolution in order to abbreviate discussion, but he found himself compelled to introduce such a Resolution in May, 1897. The Resolution was agreed to by the House. I submit that such a Resolution is necessary, for this reason: In the case of a Bill which is founded on a Resolution, the leave to bring in the Bill is limited by the Resolution, and unless you have a fresh Resolution which authorises you to amend the law of Customs and Excise, even in the matter of machinery, you are going beyond the title of the Bill.

7.0 P.M.

It has been suggested that Section 95 of the Finance Act of 1909–10 did not have any Resolution on which it was founded. That is an error. Section 95 was based, so far as it was a charging section, upon a Financial Resolution which preceded the Finance Act. The Finance Act of 1909–10 was passed on 20th April, 1910. The Resolution was itself retrospective in imposing the Income Tax in April, 1909, at the rate of 1s. 2d., so that in so far as it was a charging section, it may be said to have been founded on that retrospective Resolution. In so far as it was a machinery section, it was founded on the Resolution that it was expedient to amend the law of Customs and Excise which preceded the Finance Act. Therefore no argument can be drawn from that. Moreover, attention was never called to the point in 1909 or 1910. The Clause was passed with a batch of other Clauses in the Finance Act of 1909–10. The Clause may have been put in per incuriam. I ask that it should be tested in this way: If this Sub-section in the Bill now before the Committee had been the whole Bill, could such a Bill have been introduced without a Resolution? That is the test by which I wish my point to be determined. I wish to deal with the further point, that the actual Resolution upon which this Bill is founded is not sufficient to cover this particular Section. On that point I wish to call attention to the fact that all the three branches of the Resolution are in the future. They use the word "shall," and do nothing to authorise retrospective application. Under this Section it is proposed to give retrospective application, not only with regard to the period from 5th April up to the passing of this Bill, but in the words "previous years" it gives retrospective application to the time of the flood, if you can find a Finance Act, retrospective application of the widest extent possible, and no retrospective application is contemplated here. There are authorities, with which I have no doubt you will be familiar that you cannot ante-date a Resolution, that you cannot give it an effect outside that which it properly and grammatically bears, because that would be increasing the charge or going beyond the words of the Resolution. To give a Resolution which in its words contain the words of a Statute so wide a retrospective effect is outside the Resolution.

Moreover, it gives a retrospective effect of the very worst possible kind, because the effect, if passed, would be to enable the Bank of England to sue Mr. Bowles again for the very sums which it has been decided that the Bank of England was not entitled to deduct. That would be under Sub-section (4) of Section 95. It is outside the Resolution also, because it deals with cases where there has been no Resolution at all. By anticipation it legalises any and every tax which may be imposed by the Finance Act of 1913, though no Resolution has yet been passed, although that Resolution may yet be delayed. It is true, we are told, that it is going to be brought in immediately, but there is nothing in the Bill to say that, and even assuming that the Budget of this year is not introduced until August, it would legalise in anticipation of the Budget all collections made previous to that date. That, moreover, applies not merely to temporary taxes, so that Sub-section (3) would not be sufficient to help out of the difficulty, but it applies to permanent taxes as well. The third ground on which it is outside the Resolution is that it authorises payments and reductions on account of temporary taxes for a longer period than two months. Take the year 1911 as an example. It would authorise all the deductions made on account of, say, Income Tax between the expiry of that tax on 5th April, 1911, and its renewal by the passing of the Finance Act of that year in December, 1911, which is a period exceeding the two months, which are specifically named in Sub-section (c) of the Resolution. On those grounds I submit that it is outside these Resolutions, and that it needs a Resolution itself, because, if it was the whole Bill, it would require a Resolution. Therefore I submit that this Bill ought not to be proceeded with until a fresh Resolution is passed.

The CHAIRMAN

The point of Order which the hon. and learned Member has submitted is obviously one of considerable importance, and naturally I have clone my best to look into the matter, he having courteously informed me of the form in which he intended to raise it. I feel myself a little incompetent to meet him on purely legal grounds, not being a member of his profession; but I have a clear perception of what my duty is as Chairman, and from what it is that I must protect the Committee. It is of course against any imposition of a tax not made by due process of our Rules of Procedure. I have considered the points that the hon. and learned Member has just made, and it appears to me that they are not matters which require me to rule that this Clause ought not to proceed. If he looks at Sub-section (2) of this Clause, he will see that it applies Section 95 of the Finance (1909–10) Act, 1910 with respect to "any duties imposed by the Finance Act of this or any previous year." That is to say, before any imposition upon the subject is legal, it requires the passage of a Finance Act, and therefore it only comes into effect in so far as the submission of the subject to the temporary deduction is a voluntary one or not objected to by the subject. Therefore I am not able to hold that in that respect it is the imposition of a new charge. It may perhaps be put in this way, that if I were to hold otherwise it would mean two Ways and Means Resolutions for the same purpose. With regard to the reference in this Sub-section to Finance Acts of any previous year, those taxes have been in due course legalised by the passage of those Acts. The other point which the hon. Member raised was that this was outside the Resolution, and that it ought to have been set forth in the Resolution or that a new Resolution should be brought in to support it. With regard to that, I can only repeat what Mr. Speaker said last week when the matter was raised before him, that it is not necessary that every provision of the Bill should be set out in the Resolution. Otherwise we should have two identical Committees, one on the Resolution and another one on the Bill. It is, I think, sufficient protection for the House and for the subject that the Resolution on which the Bill is founded should cover the essential proposals, so that neither the House nor the subject is taken by surprise. In my opinion Sub-section (2) of Clause 2 can proceed because it does not make any imposition on the subject which is out of order according to our Rules.

Lord HUGH CECIL

To elucidate what you have just said may I put this? I understand that your interpretation of Sub-section (2) of this Clause is that no payment that was not legal before the passing of Finance Acts of previous years would be made legal by the operation of this Sub-section. Take the actual illustration of my hon. Friend. I understand that it would not be possible for the Bank of England to recover again from Mr.. Bowles the money which he recovered from them by his action, because it is evident that if by the operation of this Sub-section a tax was imposed on Mr. Bowles and he was obliged to pay money which without this Sub-section he would not be obliged to pay, a charge would be put upon the subject. I want to know if I have correctly understood your ruling that this Sub-section does not have that effect?

The CHAIRMAN

The charge on Mr. Gibson Bowles was legalised when the Act of that year finally passed, and I imagine recovered from him at the later date when it was legally due, and this Section adds nothing to that.

Mr. CASSEL

If it was not for this Section no action could be brought. The position then would be that he would have to make a return under Schedule D, and it would have to be recovered in that way. The result of this Section is this, that it calls attention to Sub-section (4) of Section 95 of the Act of 1909–10, which says this:— also in a case where a person could have made a legal deduction if this Act had been in force on account of any duty imposed by this Act, but has not made it the person who has made or could have made the deduction as the case may be shall be entitled if there is no future payment from which the deduction may be made to recover the same as if it were a debt due from the person to whom the original deduction had been made good, or as against whom the deduction could have been originally made. So the Finance Act of 1912 alone would not have given the right of action against Mr. Bowles, but the result of the retrospective incorporation of this Section in the Finance Act of 1912, is to give that right, the right of destroying the fruits of his industry, which the Government declared it was not their intention to do on the 26th August.

The CHAIRMAN

That is a point which possibly might be argued on the Bill, but after the Act finally passed in that year it legalised the charge on Mr. Bowles, though the result was as the hon. and learned Member has correctly said that the process would be by Schedule D rather than by deduction.

Sir F. BANBURY

On a point of Order. I should like to know, Sir, what your ruling is on the subject to which I wish to call attention, though I am not sure whether I am not too late. I maintain that this Sub-section is beyond the scope of the title of the Bill, which says that the Bill is to give statutory effect to Resolutions imposing, varying, or renewing taxation, and to make provision with respect to payments and deductions made on account of any temporary tax between the dates of the expiration and renewal of the tax. To be within the scope of the title of the Bill it ought to have gone on to say, "or vary the Finance Act of 1909." Sub-section (2) does nothing with regard to the Resolution, but it does vary the Act which was passed in the year 1909, and therefore either the title will have to be amended or the Sub-section will have to be withdrawn. As a matter of fact, I ought to have raised this on the Second Reading, but as it is an important point I should like to know, Sir, whether you agree with me.

The CHAIRMAN

As to the point raised by the hon. Baronet in regard to the title of the Bill, if he claims that the Bill cannot proceed on account of insufficient title, it ought to have been brought forward before the Second Reading. If it is some point in which the title ought to be amended it is open to the hon. Gentleman to move an Amendment of the title. The Sub-section does not invalidate the Clause or Bill in Committee on account of title.

Mr. CASSEL

I beg to move, to leave out Sub-section (2).

I have already indicated some of my objections to this proposal, in speaking on the point of Order. It is to have effect firstly with regard to the Finance Act of "this year." We are asked, before we know in the least what the duties in this Finance Act may be, already to give them some effect. We are asked before we know what kind of a Budget the Chancellor of the Exchequer is going to introduce, blindly to give effect to any or every duty that may be imposed, and incorporate them in the Act of Parliament. I suggest that this is a course absolutely unprecedented. With regard to a Bill of which we know nothing, and with regard to duties of which We know nothing, we are already preliminarily and by anticipation giving them some effect. The result we really do not know and cannot appreciate, so far as the Finance Act of this year is concerned. If the Government want that effect secured by the Finance Act of this year, why do they not do it by that Finance Act instead of this Bill? They can do it equally well in that Act, and they could not operate so far as the Finance Act of this year is concerned until, according to Mr. Whitley's ruling, that Act is passed. What is the purpose of putting it in here in anticipation, instead of putting it into the Finance Act of the year? In regard to the words, "the Finance Act of this year," the Chancellor of the Exchequer, on a previous point of the Bill, urged the strongest possible reasons against the use of those words, because, he said, there might be two Finance Acts. But now he uses the words himself so far as the Finance Act of this year is concerned.

According to the ruling, it would have no greater effect than the Finance Act itself. I submit that this is a monstrous piece of retrospective legislation in regard to the action which has been decided in the Courts, and it is done in this covert manner without any allusion to it in the Resolution—in a manner so concealed that nobody, unless he had gone most carefully into the question, could know that you are giving to the Bank of England the right of action against Mr. Bowles to recover directly from him. Apart from this Section, Mr. Bowles could only have been made liable under Schedule D, because he no longer holds the stock, so that there is no longer any payment upon which the deduction could be made by the Bank of England. Under Section 4 you are giving to the Bank of England a new remedy in regard to the very subject-matter of the action. Apart from that, what are we really doing? We are giving some retrospective effect to all the Finance Acts that have ever been. That is really what we are asked to do. What was the defect in these Finance Acts which we are being asked to remedy? It was that in those Finance Acts there was no provision under which deduction could legally have been made prior to the passage of the Acts into law. I suppose there is some apprehension that somebody might bring an application to reclaim the sums which have been deducted. I do not know whether that is the reason, but, if it is, I submit that to legislate retrospectively in regard to Finance Acts of the past is a most undesirable thing to do, and it is particularly undesirable to legislate retrospectively in regard to the result of proceedings in Court.

Sir RUFUS ISAACS

All that is proposed to do by this Sub-section is to incorporate the machinery of Section 95 of the Act of 1909–10. A charge upon the subject must be imposed in accordance with the provisions of this Bill, and it must be followed by the Finance Act of the year. Meanwhile what is provided and what is attempted by the Resolution and by the Bill and by the first Sub-section of Clause 2, which has been passed, is that there shall be a continuation of the practice which has hitherto existed, and which was challenged by Mr. Gibson Bowles, of making deductions in respect of Income Tax, notwithstanding that the Income Tax has actually not been legalised by the passing of the Finance Act. That is the point that was raised, and the effect of this provision is, by one short Sub-section, to incorporate the whole of the provisions which it was thought wise to insert into the Act of 1909–10, in order to provide machinery requisite for the purpose of making the collection. The duty must be imposed by the Finance Act. There is nothing done here; this Bill imposes no duty at all. If, for example, our Finance Act did not impose the Income Tax—if such a thing could happen—the consequence would be that Section 95 of the Act of 1909–10 would come into operation. If you do impose the duty, if you first pass a Resolution, if the Resolution is reported and is then incorporated into a Bill, and the Bill passes through Committee and the Third Reading, then all that has taken place meanwhile is that you have imposed your duty by means of the machinery which we have provided for the purpose of deducting the Income Tax at the source. That is the intention; it is with that object we passed the Resolution, and it is for that purpose we have introduced the Clause as it stands now. It does not do any violence to the subject in any way; it merely provides machinery. The hon. and learned Gentleman seems to think that this is something which has been devised for use against Mr. Gibson Bowles. If hon. Members have listened to his argument, I think they will have found that he regards this particular paragraph to which he has directed so much of his criticism, Sub-section (4), as having been introduced only for the purpose of attacking Mr. Bowles; whereas it was introduced in the Act of 1909–10 for the purpose of meeting exactly the kind of case which is in contemplation. All we have done is to repeat that in this Act; and all we are doing is to provide machinery which it is absolutely desirable that we should have in order that Income Tax may be collected in the ordinary way.

Mr. AUSTEN CHAMBERLAIN

As regards the future Act and its application to the case of Mr. Bowles, if there had not been a Sub-section of the Act authorising the deduction to be made, Mr. Bowles could not have been charged under the present Bill with that Income Tax. As the Attorney-General said, what we are doing is to include all the provisions of Section 95 and of the earlier Acts. Still, I should like the right hon. Gentleman to look more particularly at Sub-section (4):— Where any deduction which would have been a legal deduction if this Act had been in force has been made on account of any duty imposed by this Act, and the sum deducted has subsequently been made good by the person making the deduction, that person shall not be prevented from again making the deduction. The Bank of England, in the case of Mr. Bowles, made a deduction which was then refunded and afterwards legalised by the Finance Act. Therefore the Bank may make the deduction again. The Act has been in force for some time, and in all probability, though I speak without any information, the tax has been deducted through Mr. Bowles being called upon to make a return.

Sir RUFUS ISAACS

It is difficult to deal with a set of facts of which one has no definite knowledge, but I understood—I speak with doubt about it—that Mr. Bowles had sold his stock, and that there could be no deduction.

Mr. AUSTEN CHAMBERLAIN

In the next paragraph, Section 95 goes on to say that if there is nothing on which to make a deduction the amount may be recovered as if it "were a debt due." I do not for a moment suggest that the Inland Revenue would do anything of the kind. All I suggest is that you are incorporating the Section in another Act of Parliament with respect to future and retrospective matters, and you ought not to put it in the power of anybody to deduct twice over, when in fact Mr. Bowles was only liable to pay once. I suggest to the Attorney-General that these words would give the right to the bank, even if Mr. Bowles had already paid his tax, either to deduct the tax from him again, or alternatively to recover it from him as a debt, and I do not know what remedy he would then have.

Mr. POLLOCK

I think the Committee is likely to make a mistake if we discuss this Sub-section too closely in relation to the hypothetical facts of the case of Bowles v. The Bank of England. The Attorney-General will, I think, agree with me in saying that it is not very easy to know exactly what did happen there, and so I pass that case by to ask what is the meaning of this Sub-section. The answer of the Attorney-General did not cover the point of my hon. and learned Friend that this Sub-section says that Section 95 is to have effect with regard to new duties imposed by the Finance Act of this year or any previous year. What is the necessity of passing a Clause in this Bill of that kind? The words "Finance Act" first appeared in a Bill in the year 1894, and we have got something like seventeen Finance Acts since that time, and now we have this beautiful Clause, which is to apply Section 95 to all of them. There was once a learned Common Serjeant of London who raised the merriment of all people at the time and of all lawyers since, by saying with reference to a case that was before him, "There never was a worse case than this case, and if there ever was a worse case than this case, then this case is that case." That is exactly what this Finance Act says. Section 95 is to apply to this Act or to that Act, and if ever there was a Finance Act which was not this Act or that Act, then it shall apply to this Act or that Act. If ever there was a wicked piece of legislation, though I do not impute any motives, and a really had piece of legislation, by reference, surely this case is that case. What is any subject to understand? In any dispute reference will be made to Finance Acts, and somebody will say, "Oh, you must look at another Act; you must look at the Provision and Collection of Taxes Act, and then you must look at Section 95 of the Act of 1910."

I really do ask the Attorney-General does he think he has given sufficient explanation to make us pass what is really a piece of ridiculous legislation? As to the case of Bowles v. The Bank of England, if I understand the facts rightly, if Income Tax has not been deducted at the source, of course the subject still has to pay. There is no question that it is for the convenience of the banks and the subject that it should be deducted at the source. In the beautiful yellow form, with its delightful rules and regulations, the subject is asked to make a return in respect of all dividends which he has received. Mr. Bowles will no doubt make a return of his income on that form, and will pay the Income Tax for which he was liable at the time. I do not myself know as to the facts of that case, but I have no doubt the Inland Revenue will deal with it. If anyone expects to get a clear opinion as to what his liabilities will be after this Sub-section is passed, I shall be very much surprised. I dare say Somerset House may have some suggestion to make, but I have no doubt every judge before whom this might come would say that it was wholly inexplicable, and that he did not understand what it meant. On those grounds I support my hon. and learned Friend, and say that this ought not to be included in this Clause.

Sir RUFUS ISAACS

I do not think that the learned judge who has to construe this Clause will find it so difficult as my hon. and learned Friend suggests. I should have thought it was clear enough and not difficult to understand. Let me put this case. Suppose there had been a deduction made by a bank in respect of money paid either on a dividend or on a coupon, and supposing a suit is brought against the bank for the recovery of that money, the bank would immediately claim indemnity from the Treasury, and the Inland Revenue might have to return the money. In legalising this practice in previous years, what we want is to protect the Treasury against actions of that kind. If an action of the kind were brought by a man who was abroad, and if there was no answer, the money would have to be returned. What we are seeking to do is to take care that such a person shall not escape paying Income Tax.

Mr. POLLOCK

If the man goes abroad would he leave his coupons here?

Sir RUFUS ISAACS

I was putting the case of a man who two years ago had his coupons here and had a dividend to receive, and from which the Bank, following the practice which hitherto existed, has made a deduction. Now it is held that the Bank could not make that deduction in consequence of the Gibson Bowles judgment. The person is living abroad and says to the Bank, "Give me back the money you illegally deducted." The Bank say, "No, we cannot do that. We have handed it over to the Treasury." He then says, "You must," and brings an action. If we pass this Clause there would be a complete answer, and nobody will have to pay Income Tax who is not liable, and nobody will suffer any injury, and we shall be legalising the practice which hitherto existed.

Lord HUGH CECIL

I confess I have the very greatest difficulty in following the discussion on either side of this matter, because it is a queer mixture of law and metaphysics. Do I correctly understand the Attorney-General to say that at this moment, without this Bill, anybody may bring an action against any bank for any money that has been deducted during any of the years in which money has been deducted in respect of the Income Tax, because the process of deduction was illegal under Resolution, and is this Sub-section the only thing that stands between us and a whole series of actions to recover that money? I have very great difficulty in believing that to be the case. If it is I cannot conceive why the Government did not put it right in last year's Finance Act.

Sir RUFUS ISAACS

The difficulty applies to a person who has gone abroad, for if the person remains here there are other ways. You could either get the money under Schedule D, or deduct again on the next occasion, but in the case of a man abroad who has nothing left here, if he were to bring an action, while I am not going to say for one moment what the result would be, yet it might be that the Bank sued would have no answer except an indemnity from the revenue.

Lord HUGH CECIL

The Attorney-General apparently suggests that any taxpayer might bring an action in respect of past Income Tax imposed perhaps five years before and of the accumulated interest. If that is so, it is an incredible interpretation of the law, and Bumble was more justified than ever. I should have thought, at any rate, that the reference to previous years altogether unnecessary. Does the Attorney-General know of any contemplated action?

Sir RUFUS ISAACS

I will not say that I know of any action, but I know of applications to the Bank.

Lord HUGH CECIL

In respect of deductions made under previous Finance Acts? I now understand for the first time why these words are in the Bill. In regard to its application to the Finance Act of this year, I do not understand what difference it makes. If this process of deduction is illegal without statutory authority, there is nothing in this Bill which gives statutory authority to the deductions until the Finance Act passes. Therefore, in the interval between now and the giving of the Royal Assent to the Finance Act, there will be no statutory authority for the deductions, and therefore the Bank may be proceeded against.

Sir RUFUS ISAACS

I did not say that.

Lord HUGH CECIL

The right hon. and learned Gentleman said that there was no statutory authority for the deduction. I am speaking now of the three weeks or the month before the giving of the Royal Assent to the Finance Act this year. Either this Bill gives the Bank a legal right to deduct it or it does not. If it does not, these words mean nothing and have no application whatever. If the Bank is given a legal right to deduct, a tax is imposed under this Clause, and the Chairman has given his ruling under a misapprehension. I shall be glad to hear how the Attorney-General gets out of that dilemma.

Sir RUFUS ISAACS

There is no difficulty about it. There would be no tax imposed until the Finance Act is passed. Meanwhile money is coming into the hands of the Bank. It is intended that the Bank should have this authority to deduct if it chooses, and if a tax is subsequently imposed the deduction is legalised. But you cannot legalise a deduction by the Bank if the tax is not subsequently imposed by the Finance Act.

Lord HUGH CECIL

I quite understand what the Attorney-General contemplates, but I do not understand whether the action would he legal or illegal. Suppose the Bank makes a deduction next Monday. I understand that on Monday that would be illegal; but apparently by this proposal the legality is, so to speak, thrown back by anticipation. That is an incredible way of dealing with legislation. I suggest that this is a juggle. The Attorney-General is driven into a position which, however interesting as an intellectual exercise, cannot be accepted merely because he desires to uphold the ruling of the Chair on the one side and to get his money on the other. He wants to persuade the Chairman that there is no imposition of a tax and at the same time to make the subject "stump up." He says that a future Act, which may never come into existence, legalises something at the present moment. That is an incredible proposition. How can you have a tax imposed by an Act of Parliament until the Act of Parliament comes into existence? If this Clause said that the proposal should apply to the Resolutions on which the Finance Act of this year is to be founded that would mean something.

Sir RUFUS ISAACS

Has the Noble Lord read Section 2, Sub-clause (1)?

Lord HUGH CECIL

That does not seem to have any bearing on the point with which I am dealing. What would happen between now and the giving of the Royal Assent to the Finance Act if this Clause were negatived? We should lose a lot of money. Therefore you are imposing a tax. What is a tax but money legally taken under the authority of Parliament? The Attorney-General suggests that banks will be lawfully entitled to do what is illegal. We are issuing, as it were, a letter of marque to all banks to conduct piracy under legal circumstances. We are driven to all these grotesque consequences because the Attorney-General is anxious to save the time of the House in passing another Resolution. The right hon. and learned Gentleman has put forward a preposterous doctrine which would not impose on the most credulous regiment of Horse-marines.

Mr. CAVE

I do not wish to discuss either law or metaphysics; I simply want an assurance on two points. I follow the Attorney-General's last answer, which really comes to this—that we do not want any more Gibson Bowles actions. But it may be that actions have been brought upon the footing of the Gibson Bowles action. Is it a fact that this Clause will not affect those actions, so as to make actions which were proper when they were commenced improper now? If so, that ought to be made clear. It is not fair to affect pending litigation. I know of none myself, but the Attorney-General suggested that he knew of some claims.

Sir RUFUS ISAACS

I said applications made to the Bank.

Mr. CAVE

I want it to be made quite clear that no action is affected by this Clause. Perhaps the Attorney-General will give that assurance, or, if necessary, insert words on Report. If this Clause had been law last year Mr. Gibson Bowles' action could not have been brought. I hope it will be made clear that the Clause will not have the effect either of robbing Mr. Gibson Bowles of the fruits of his action or of laying him open to some sort of counter-action. I want yes or no to that.

Sir RUFUS ISAACS

Of course, it will not.

Mr. CASSEL

Does the Attorney-General claim that under Section 95 the Bank of England would not have a right of action?

Sir RUFUS ISAACS

Mr. Gibson Bowles, like everybody else, has to pay his Income Tax, and I have not the slightest doubt that, notwithstanding the fact that he has won his action, either he will have paid or somehow or other he will have to pay his Income Tax. He cannot escape having to pay his Income Tax by having set aside this practice. That is the only point with which I am concerned. I do not suppose for one moment that the Bank of England has any idea of suing Mr. Gibson Bowles. I should think they would say to the Inland Revenue, "It is your business to make Mr. Bowles pay. We tried to do so, but we have been sued, and have had to pay it back." I have no doubt that the Inland Revenue authorities will find a way.

Mr. CAVE

We think that some words should be put in to the effect that the Clause shall not affect any litigation which has been determined or commenced.

Mr. WATSON RUTHERFORD

It is clear that if we incorporate Section 95 of the Finance Act of 1909 it will make the collection of the money by the Bank of England from Mr. Bowles perfectly legal now, although it was not legal before. But it is a pity to discuss a particular action on a Clause of this kind, except merely as an illustration of its effect. My objection to this Sub-section is that it is so exceedingly ambiguous and adds so much to the difficulties of dealing with such a complicated question as the Income Tax. With, perhaps, the exception of the Attorney-General and one or two other leading lawyers, I do not suppose that any Members have any idea how complicated the Income Tax is in all its bearings. In this piece of legislation by reference we are going to make it more complicated than ever. The words of the Sub-section are exceedingly objectionable. It is sought to be enacted that the provisions of Section 95 of the Finance Act of 1909 shall practically he incorporated in this Bill. If that Section were made a part of this Bill we could understand it. We could also understand it if it was proposed that that particular Section was to be read as incorporated in every future Finance Act. But if it is to be incorporated into the Finance Act of all previous years, it passes the wit of man to understand what the effect will be. One result is obvious nonsense. One of the previous Finance Acts is the Act of 1909 itself. How can you by Statute put Section 95 of the Finance Act, 1909, back again into the Finance Act, 1909? I imagine that even the Attorney-General could not tell me how to do that. I do not think that even the Attorney-General himself could reinsert into the Statute of 1909 the elaborate Clauses which are already there. It is ridiculous! It is also sought to put this Section 95 into the Finance Act of 1908. With what object? I do not think the Attorney-General, who has been challenged several times from these benches on this point, has made the slightest attempt to tell us what can be the object of putting Section 95 of the Finance Act of 1909 into the Finance Act of 1908. What is the idea?

The whole object of this Clause and of this Bill is to get over the difficulty which arises between the suggestion of the tax in the Resolution and the actual passing of the Bill. Are there any difficulties outstanding with respect to 1908, 1907, 1906, or the twenty-nine previous Finance Acts that have been passed? I think the Attorney-General should tell us if there are any such difficulties, so that we may see whether there is any sense in it, or any necessity for passing this Section in this form? My objection, therefore, to the passing of this Sub-section (2) is two-fold. Firstly, that it is a most objectionable method of adding complications to one of the most difficult subjects in the world, namely, the law relating to the present Income Tax in this country; secondly, that it is confused and involved, and creates a number of supposititious difficulties; that it would be ridiculous in regard to the Finance Act of 1909 that has already got this Section in it; that no case has been made out by any suggestion from the Attorney-General, or from anybody else representing the Government, that there has been the slightest difficulty in regard to taxes under any previous Act which would call upon us to perpetuate this piece of confusion. For these reasons I join with the hon. and learned Gentleman objecting to this Sub-section.

Mr. CASSEL

Before this Amendment goes to a Division, and for the sake of other Amendments, may I point out to the Attorney-General that a real and practical difficulty arises. In this way: That there may be a defence under Schedule D as in a case like that of Mr. Gibson Bowles. In fact, I could give him a reason why Schedule D may be inadequate. There is the argument that a man may not be liable under Schedule D. Notwithstanding that you now retrospectively make him liable with reference to the very thing on which Mr. Bowles won his action. It has not been the practice of Parliament to do that.

Sir RUFUS ISAACS

Has he to escape payment of his Income Tax then?

Mr. CASSEL

The contention is that Schedule D does not apply in a great many cases, and in a great many cases deductions are made in which the people are not liable, and the people never recover the money. In many cases people, whose incomes are under £160, have Income Tax deducted, and they never go to the trouble to recover it. Mr. Gibson Bowles' contention was that Income Tax was deducted from income which was not liable under Schedule D. By reason of this Section you are retrospectively going against him with reference to the very point on which he won, and I say it is contrary to the principle and tradition of this House. With regard to this specific Amendment, the Attorney-General has given us no answer. If you wanted this power with regard to the duties of the Finance Act of this year why did not you put it into the Finance Act of this year. It cannot have any effect until that Act is passed, because it only applies to duties imposed by the Finance Act of this year. Why not put it in? I do attach a very great importance to the point that we should not retrospectively legislate with reference to the very subject matter of litigation in which the subject was successful.

Question put, "That the words 'Any payment or deduction made on account of' stand part of the Clause."

The Committee divided: Ayes, 248; Noes, 107.

Division No. 49.] AYES. [8.8 p.m.
Abraham, William (Dublin, Harbour) Goddard, Sir Daniel Ford Meagher, Michael
Acland, Francis Dyke Goldstone, Frank Meehan, Francis E. (Leitrim, N.)
Adkins, Sir W. Ryland D. Greenwood, Granville G. (Peterborough) Middlebrook, William
Agnew, Sir George William Greig, Colonel J. W. Millar, James Duncan
Alden, Percy Griffith, Ellis J. Molloy, Michael
Allen, Arthur A. (Dumbartonshire) Guest, Hon. Major C. H. C. (Pembroke) Molteno, Percy Alport
Baker, Joseph A. (Finsbury, E.) Gulland, John William Mond, Sir Alfred M.
Balfour, Sir Robert (Lanark) Gwynn, Stephen Lucius (Galway) Montagu, Hon. E. S.
Barnes, G. N. Hackett, John Mooney, John J.
Beale, Sir William Phipson Hall, Frederick (Normanton) Morgan, George Hay
Beauchamp, Sir Edward Hancock, J. G. Morison, Hector
Beck, Arthur Cecil Harcourt, Rt. Hon. Lewis (Rossendale) Morton, Alpheus Cleophas
Benn, W. W. (T. Hamlets, St. George) Harcourt, Robert V. (Montrose) Muldoon, John
Bentham, G. J. Hardie, J. Keir Munro, R.
Bethell, Sir J. H. Harvey, T. E. (Leeds, West) Murphy, Martin J.
Black, Arthur W. Haslam, Lewis (Monmouth) Needham, Christopher T.
Boland, John Pius Havelock-Allan, Sir Henry Neilson, Francis
Booth, Frederick Handel Hayward, Evan Norton, Captain Cecil W.
Bowerman, C. W. Hazleton, Richard Nuttall, Harry
Boyle, Daniel (Mayo, North) Hemmerde, Edward George O'Brien, Patrick (Kilkenny)
Brady, Patrick Joseph Henderson, Arthur (Durham) O'Connor, John (Kildare, N.)
Brocklehurst, W. B. Henderson, J. M. (Aberdeen, W.) O'Connor, T. P. (Liverpool)
Brunner, John F. L. Henry, Sir Charles O'Doherty, Philip
Bryce, J. Annan Higham, John Sharp O'Donnell, Thomas
Buckmaster, Stanley O. Hinds, John O'Dowd, John
Burns, Rt. Hon. John Hobhouse, Rt. Hon. Charles E. H. O'Grady, James
Burt, Rt. Hon. Thomas Hodge, John O'Kelly, Edward P. (Wicklow, W.)
Buxton, Rt. Hon. Sydney C. (Poplar) Hogge, James Myles O'Kelly, James (Roscommon, N.)
Byles, Sir William Pollard Holt, Richard Durning O'Malley, William
Carr-Gomm, H. W. Horne, Charles Silvester (Ipswich) O'Neill, Dr. Charles (Armagh, S.)
Cawley, Sir Frederick (Prestwich) Hudson, Walter O'Shaughnessy, P. J.
Chapple, Dr. William Allen Hughes, Spencer Leigh O'Shee, James John
Clancy, John Joseph Illingworth, Percy H. Outhwaite, R. L.
Clough, William Isaacs, Rt. Hon. Sir Rufus Palmer, Godfrey Mark
Clynes, John R. Johnson, W. Parker, James (Halifax)
Condon, Thomas Joseph Jones. Rt. Hon. Sir D. Brynmor (Swansea) Parry, Thomas H.
Cornwall, Sir Edwin A. Jones, Edgar (Merthyr Tydvil) Pearce, William (Limehouse)
Cotton, William Francis Jones, H. Haydn (Merioneth) Phillips, John (Longford, S.)
Cowan, W. H. Jones, J. Towyn (Carmarthen, East) Pointer, Joseph
Craig, Herbert J. (Tynemouth) Jones, Leif Stratten (Notts, Rushcliffe) Ponsonby, Arthur A. W. H.
Crawshay-Williams, Eliot Jones, William (Carnarvonshire) Price, C. E. (Edinburgh, Central)
Crooks, William Jones, W. S. Glyn- (Stepney) Priestley, Sir W. E. (Bradford)
Crumley, Patrick Jowett, Frederick William Pringle, William M. R.
Cullinan, John Joyce, Michael Radford, G. H.
Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) Kellaway, Frederick George Raffan, Peter Wilson
Davies, David (Montgomery Co.) Kelly, Edward Reddy, M.
Davies, Ellis William (Elfion) Kennedy, Vincent Paul Redmond, John E. (Waterford)
Davies, Timothy (Lincs., Louth) Kilbride, Denis Redmond, William Archer (Tyrone, E.)
Dawes, J. A. King, J. (Somerset, North) Richardson, Albion (Peckham)
Delany, William Lambert, Rt. Hon. G. (Devon, S. Molton) Richardson, Thomas (Whitehaven)
Denman, Hon. Richard Douglas Lambert, Richard (Wilts, Cricklade) Roberts, Charles H. (Lincoln)
Devlin, Joseph Lardner, James C. R. Roberts, G. H. (Norwich)
Dillon, John Lawson, Sir W. (Cumb'rld, Cockerm'th) Robertson, J. M. (Tyneside)
Donelan, Captain A. Leach, Charles Robinson, Sidney
Doris, William Levy, Sir Maurice Roche, Augustine (Louth)
Duffy, William J. Lewis, John Herbert Rose, Sir Charles Day
Duncan, J. Hastings (Yorks, Otley) Lough, Rt. Hon. Thomas Rowlands, James
Elverston, Sir Harold Lundon, Thomas Rowntree, Arnold
Esmonde, Dr. John (Tipperary, N.) Lynch, A. A. Runciman, Rt. Hon. Walter
Esslemont, George Birnie Macdonald, J. M. (Falkirk Burghs) Russell, Rt. Hon. Thomas W.
Farrell, James Patrick McGhee, Richard Samuel, Rt. Hon. H. L. (Cleveland)
Fenwick, Rt. Hon. Charles MacNeill, J. G. Swift (Donegal, South) Samuel, J. (Stockton-an-Tees)
Ferens, Rt. Hon. Thomas Robinson Macpherson, James Ian Scanlan, Thomas
Ffrench, Peter MacVeagh, Jeremiah Schwann, Rt. Hon. Sir Charles E.
Field, William M'Callum, Sir John M. Scott, A. MacCallum (Glas., Bridgeton)
Fitzgibbon, John M'Kean, John Sheehy, David
Flavin, Michael Joseph McKenna, Rt. Hon. Reginald Shortt, Edward
Furness, Stephen M'Laren, Hon. H. D. (Leics.) Simon, Rt. Hon. Sir John Allsebrook
Gelder, Sir W. A. M'Micking, Major Gilbert Smith, Albert (Lancs., Clitheroe)
George, Rt. Hon. D. Lloyd Manfield, Harry Smith, H. B. L. (Northampton)
Gill, A. H. Markham, Sir Arthur Basil Smyth, Thomas F. (Leitrim)
Gladstone, W. G. C. Marshall, Arthur Harold Snowden, Philip
Glanville, H. J. Mason, David M. (Coventry) Strauss, Edward A. (Southwark, West)
Sutherland, J. E. Wadsworth, J. Wiles, Thomas
Sutton, John E. Walsh, Stephen (Lancs., Ince) Williams, Llewelyn (Carmarthen)
Taylor, John W. (Durham) Ward, John (Stoke-upon-Trent) Wilson, John (Durham, Mid)
Taylor, Theodore C. (Radcliffe) Warner, Sir Thomas Courtenay Wilson, W. T. (Westhoughton)
Taylor, Thomas (Bolton) Watt, Henry Anderson Winfrey, Richard
Thorne, G. R. (Wolverhampton) Webb, H. Wing, Thomas
Thorne, William (West Ham) White, J. Dundas (Glasgow, Tradeston) Young, W. (Perthshire, E.)
Toulmin, Sir George White, Sir Luke (Yorks, E.R.)
Trevelyan, Charles Philips White, Patrick (Meath, North) TELLERS FOR THE AYES.—Mr. G. Howard and Captain Guest.
Ure, Rt. Hon. Alexander Whittaker, Rt. Hon. Sir Thomas P.
Verney, Sir Harry Whyte, A. F. (Perth)
NOES.
Agg-Gardner, James Tynte Flannery, Sir J. Fortescue Middlemore, John Throgmorton
Amery, L. C. M. S. Fletcher, John Samuel (Hampstead) Mills, Hon. Charles Thomas
Ashley, Wilfrid W. Gibbs, George Abraham Morrison-Bell, Capt. E. F. (Ashburton)
Astor, Waldorf Gilmour, Captain John Newdegate, F. A.
Baird, John Lawrence Glazebrook, Capt. Philip K. O'Neill, Hon. A. E. B. (Antrim, Mid)
Baldwin, Stanley Gordon, Hon. John Edward (Brighton) Orde-Powlett, Hon. W. G. A.
Baring, Maj. Hon. Guy V. (Winchester) Goulding, Edward Alfred Paget, Almeric Hugh
Barlow, Montague (Salford, South) Gretton, John Pease, Herbert Pike (Darlington)
Barnston, Harry Guinness, Hon. W. E. (Bury S. Edmunds) Peel, Lieut.-Colonel R. F
Bathurst, Charles (Wilts, Wilton) Hall, Frederick (Dulwich) Pollock, Ernest Murray
Beach, Hon. Michael Hugh Hicks Harrison-Broadley, H. B. Rolleston, Sir John
Bennett-Goldney, Francis Henderson, Major H. (Berks) Rothschild, Lionel de
Bigland, Alfred Hewins, William Albert Samuel Rutherford, Watson (L'pool, W. Derby)
Bird, Alfred Hibbert, Sir Henry F. Salter, Arthur Clavell
Boyle, William (Norfolk, Mid) Hills, John Waller Sanders, Robert Arthur
Bridgeman, W. Clive Hill-Wood, Samuel Smith, Harold (Warrington)
Bull, Sir William James Hohler, Gerald Fitzroy Spear, Sir John Ward
Campbell, Captain Duncan F. (Ayr, N.) Hope, James Fitzalan (Sheffield) Stanier, Beville
Campion, W. R. Hope, Major J. A. (Midlothian) Stanley, Hon. G. F. (Preston)
Carlile, Sir Edward Hildred Houston, Robert Paterson Staveley-Hill, Henry
Castlereagh, Viscount Hume-Williams, W. E. Strauss, Arthur (Paddington, North)
Cave, George Hunt, Rowland Sykes, Mark (Hull, Central)
Cecil, Evelyn (Aston Manor) Jardine, Ernest (Somerset, E.) Talbot, Lord E.
Cecil, Lord Hugh (Oxford Univ.) Kebty-Fletcher, J. R. Terrell, G. (Wilts, N.W.)
Cecil, Lard R. (Herts, Hitchin) Kerr-Smiley, Peter Kerr Thomson, W. Mitchell- (Down, North)
Chaloner, Colonel R. G. W. Kerry, Earl of Touche, George Alexander
Chamberlain, Rt. Hon. J. A. (Worc'r.) Knight, Captain Eric Ayshford Valentia, Viscount
Clive, Captain Percy Archer Lewisham, Viscount Weigall, Captain A. G.
Cooper, Richard Ashmole Locker-Lampson, G. (Salisbury) Wills, Sir Gilbert
Courthope, George Loyd Locker-Lampson, O. (Ramsey) Wood, John (Stalybridge)
Croft, H. P. Lowe, Sir F. W. (Birm., Edgbaston) Worthington-Evans, L.
Dalrymple, Viscount Lyttelton, Hon. J. C. (Droitwich) Wright, Henry Fitzherbert
Dickson, Rt. Hon. C. Scott MacCaw, Wm. J. MacGeagh Yate, Colonel C. E.
Du Cros, Arthur Philip M'Calmont, Major Robert C. A.
Eyres-Monsell, Bolton M. M'Neill, Ronald (Kent, St. Augustine's) TELLERS FOR THE NOES.—Mr. Cassel and Col. Burn.
Fell, Arthur Malcolm, Ian
Fisher, Rt. Hon. W. Hayes Meysey-Thompson, E. C.

Question put, and agreed to. Adjourned at Twenty-four minutes before Nine o'clock.