HC Deb 12 July 1916 vol 84 cc458-70

(1) In addition to any other Income Tax or Supertax charged under this or any other Act, there shall, subject to the provisions of this Section, be charged, levied, and paid for the year beginning on the sixth day of April, nineteen hundred and sixteen, in respect of any part of the income of any person to which this Section applies an additional duty of Income Tax at the rate of two shillings for every pound of that part of the income.

The income to which this Section applies is the income derived from securities which are for the time being included in the Treasury special list as denned by this Section, while those securities are so included; and the income shall, for the purposes of this Section, be deemed to be derived at the time when the interest or dividends payable in respect of the securities become payable.

(2) The additional duty under this Section shall not be charged on any income derived before the first day of July, nineteen hundred and sixteen.

(3) A person shall be entitled to relief from the additional duty imposed by this Section—

  1. (a) in respect of income derived between the date of the publication of the Treasury special list and a date twenty-eight days thereafter if the securities are during that period offered to the Treasury and ultimately become at the absolute disposal of the Treasury; and
  2. (b) in respect of income derived from any securities included in the Treasury special list after the securities have been placed at the absolute disposal of the Treasury; and
  3. (c) in respect of income derived from any such securities after a person has placed the securities conditionally at the disposal of the Treasury, if the securities ultimately become at the absolute disposal of the Treasury without unreasonable delay on the part of that person; and
  4. (d) in respect of income derived from any such securities which ultimately become at the absolute disposal of the Treasury, if it is shown to the satisfaction of the Treasury that any delay in placing those securities at the disposal of the Treasury has arisen from circumstances beyond the control of the holders of the securities; and
  5. (e) in respect of income derived from any such securities held, in any country outside the United King- 460 dom, by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the terms of their trust from placing the securities at the disposal of the Treasury, and are not entitled to the benefit of any indemnity conferred by Act of Parliament in respect of the contravention of those terms, if the securities were so held before the twenty-ninth day of May, nineteen hundred and sixteen; and
  6. (f) in respect of income derived from any such securities which are deposited with persons outside the United Kingdom as a security for a loan from those persons or have otherwise been made security for a loan from persons outside the United Kingdom, if they were so deposited or made security before the twenty-ninth day of May, nineten hundred and sixteen, or after that date with the approval of the Treasury, and if the Treasury are satisfied that the securities cannot be released without impairing the security for the loan; and
  7. (g) in respect of income derived from any such securities which are proved to the special Commissioners to be held by any company or persons concerned in trade or business in any country outside the United Kingdom as a condition (imposed in that country) of carrying on that trade or business.

The provisions of this Subsection shall apply to an offer of securities for deposit in the same manner as they apply to an offer of securities for sale, and securities when accepted for deposit shall, while so deposited, for the purposes of this Subsection, be deemed to be at the absolute disposal of the Treasury.

(4) The power under the Income Tax Acts to require a person to make returns for the purposes of those Acts shall, include power to require him to make such returns as appear to the Commissioners of Inland Revenue to be necessary for the purpose of ascertaining whether any of the income of that person (whether or not Income Tax thereon is chargeable by deduction) is income to which this Section applies, including such particulars as to that income as the Commissioners may require, and those Acts, including the provisions imposing penalties, shall apply accordingly.

(5) Where any income to which this Section applies is derived from securities which are held on trust by more than one trustee the securities may be placed at the disposal of the Treasury if, where there are two trustees, one trustee and the persons entitled to the income of the securities, and, where there are more than two trustees, one-half or more of the number of the trustees and the persons entitled to the income of the securities, are willing that the securities should be so placed at the disposal of the Treasury; and any action taken by such trustees or beneficiaries for the purpose of placing any such securities at the disposal of the Treasury shall, notwithstanding anything in the terms of the trust or any rule of law to the contrary, be as valid and effectual in all respects as though all the trustees had consented thereto and had joined therein.

(6) A person shall not be entitled to any exemption, abatement, or relief under the Income Tax Acts (other than relief depending solely on residence or domicile) in respect of the additional Income Tax imposed by this Section, but in all other respects the provisions of the Income Tax Acts relating to persons who are to be chargeable with duty, assessments, and appeals against those assessments, and to the collection and recovery of duty, and to cases to be stated for the opinion of the High Court shall, so far as they are applicable, apply to the charge, assessment, collection, and recovery of duty under this Section:

Provided that the Treasury may give directions that the additional duty imposed by this Section shall, instead of being charged by deduction, be charged up to the same amount by direct assessment for the period, and in the cases mentioned in those directions, and where any such directions are given, the Income Tax Acts shall have effect accordingly.

(7) In this Section—

The expression "securities" includes stocks, shares, and other securities; and

The expression " the Treasury special list" means any list published by the Treasury in the " Gazette," and for the time being in force, of securities which the Treasury are willing to purchase in connection with any arrangements for the regulation and maintenance of the foreign exchanges.

Amendments made:

In Sub-section (2) leave out the word "first" ["first day of July"], to insert instead thereof the word "twenty-ninth."

In Subsection (3), paragraph (d), leave out the word "which" ["which ultimately become"] and insert instead thereof the words "whether they"; after the word "Treasury" ["disposal of the Treasury"] insert the words "or not"; after the word "placing" ["any delay in placing"] insert the words "or failure to place."—[Mr. McKenna.]

Mr. BRADY

I beg to move, in Subsection (3), paragraph (e), after the word "trustees" ["or by Trustees"], to insert the words "or guardians."

This Amendment is proposed in order to deal with the case where there is a guardian in this country dealing with property outside the United Kingdom, and who is precluded by the law obtaining in that country from either selling or lending securities to the Treasury. I hope the right hon. Gentleman will not object to this.

Mr. POLLOCK

I beg to second the Amendment.

Mr. McKENNA

In dealing with the three Amendments on the Paper in the name of the hon. Member for St. Stephens' Green (Mr. Brady) I would like to say with regard to the first he has just moved that I think it is quite unnecessary, as any guardians who are in a position to place securities at the disposal of the Treasury must be trustees. With regard to his other Amendments, however, I am prepared to accept them, but I hope he will not press the first as it will only add verbiage to the Clause.

Mr. BRADY

In view of the right hon. Gentleman's statement, I do not propose to press the Amendment, but I shall have a word or two to say on the further Amendment.

Amendment, by leave, withdrawn.

Mr. BRADY

I beg formally to move, in Subsection (3), paragraph (e), after the word "sixteen" ["nineteen hundred and sixteen"], to insert the words "or where such securities are under the jurisdiction of a Court in such other country and it would be contrary to the laws of such other country to place such security at the disposal of the Treasury."

I move this because, in a subsequent Amendment, the right hon. Gentleman leaves out the words which occur in my Amendment—"or where such securities are under the jurisdiction of a Court in such other country."

Mr. McKENNA

That is a later Amendment. The hon. Member has another Amendment—In paragraph (e) after the word "the" ["are prevented by the"] to insert the words " laws of such other country or by the."

Mr. POLLOCK

That is accepted.

Mr. BRADY

If that be so I am quite satisfied, and I Beg to move the Amendment to which the Chancellor of the Exchequer has referred.

Amendment agreed to.

Mr. McKENNA

In view of the Amendment we have just accepted I do not need my next Amendment, but I move, in Subsection (3), paragraph (e), to leave out the words "of those terms'" ["contravention of those terms"], and to insert instead thereof the word "thereof."

Mr. BRADY

On a point of Order. I want to cover my Amendment—at the end of paragraph (e) to insert the words "or where such securities are under the jurisdiction of a Court," etc., which I read previously. I am very anxious that these words should be retained, inasmuch as it is possible that investments may not be contrary to the law of the other country, but still a Court of Jurisdiction in the other country might forbid investment in the United Kingdom, or a loan to this country.

Mr. McKENNA

I do not move my next Amendment, then, and the hon. Gentleman's Amendment will come on

Sir G. YOUNGER

I would like to ask how the matter stands. The laws of the country are talked about—

Mr. DEPUTYSPEAKER

There is no Amendment before the House.

Sir G. YOUNGER

I beg to move the Chancellor of the Exchequer's Amendment, then, in order to ask the question. I move the Amendment: Subsection (3), paragraph (e), to leave out the words, "from placing the securities at the disposal of the Treasury," and to insert instead thereof the words "or by the laws of the country from investing money in securities outside the country."

I wish to ask the right hon. Gentleman whether he has now provided for the case of, say, insurance investments in America which are not met connection with the demand that the law makes, of course, that a certain amount of the securities shall be deposited by any particular company of that kind in the States as a guarantee of financial stability, and of that sort of thing. Has the right hon. Gentleman provided for the case where considerable quantities of these securities are held for the purpose of increasing the credit of the Government securities which are now compelled to be left where they are, and not only that, but where the vast profits made during the War by the insurance companies in this country are prevented from being sent home? An official who, I think, is called a superintendent, has not only laid an embargo on the shares, but also on the profits of the company, and has prevented them being sent home. It is very doubtful whether this particular official is able to do that. I am told he is not, but it is easily seen that any company with a huge trade in the United States cannot afford to overlook the order of this man who could make it pretty hot for them, and as a matter of fact they cannot bring it home.

Mr. POLLOCK

I want to ask the Chancellor of the Exchequer whether he does not think that the effect of only accepting the words of the hon. Member for St. Stephen's Green (Mr. Brady) is important? His draftsman drew the words in line eighteen, "or by the laws of the country from investing money in securities outside the country." As the Clause will now read with the Amendment of the hon. Member from St. Stephen's Green, it will read in this way: "In respect of income derived from any such securities held in any country outside the United Kingdom by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the laws of such other country or by the terms of their trust from placing the securities at the disposal of the Treasury." So that the only laws referred to are laws which prevent the trust from placing the securities at the disposal of the Treasury and no more. If the draftsman thought it was also important that the laws referred to should relate to investing securities outside the country, I am inclined to think that in accepting the shorter Amendment the right hon. Gentleman is confining the laws to laws which prevent the trust from placing securities at the disposal of the Treasury, and if the draftsman thought those other words necessary I suggest the right hon. Gentleman ought to move an Amendment to the Amendment of the hon. Member of St. Stephen's Green, and to put in those words "or investing money in securities outside the country." I do not know, but I think we ought not by incaution to allow those words to slip out, as they have been thought to be necessary, and to make it relate only to laws which relate to the actual terms of the trust.

Mr. McKENNA

I should have said—

Mr. DEPUTY-SPEAKER

I have not put the Question, and I will just point out, on the hon. and learned Member's point, that the Amendment which I am now going to put, standing on the Paper in the name of the Chancellor of the Exchequer, but which has been moved by the hon. Member for Ayr Burghs (Sir G. Younger), is in two parts: to leave out something and to insert something else. It is competent for the House, of course, if it pleases, to insert words without leaving out the earlier words. I mention that because it may meet the point. I now put the Amendment.

Mr. McKENNA

I did not move this Amendment myself because, having already accepted the Amendment of the hon. Member for St. Stephen s Green, it will not be necessary to insert these words as well. For my own part, I think that the draftsman's words, which stood in my name, were more apt for the purpose. I understood that we had endeavoured to explain to the hon. Member for St. Stephen's Green that we thought so, but as his words are also apt for the purpose, although not so apt, we did not wish to waste the time of the House in a long discussion over a matter upon which we were agreed in principle. The draftsman's words, as I read them, state explicitly what we propose to do. The words of the hon. Member state the means by which you come to get at your conclusion. The draftsman's words were "or by the laws of the country from investing money in securities outside the country." The words we have inserted say "by the laws of such other country are prevented from placing the securities at the disposal of the Treasury." They could not place them at the disposal of the Treasury unless they did invest them in securities of the other country.

Sir G. YOUNGER

What becomes of my point, which is that it is not necessarily done by law?

Mr. McKENNA

I do not take the point.

Sir G. YOUNGER

The point I take is that the official in the United States who has entire control of this question has absolutely laid an embargo on insurance companies.

Mr. McKENNA

He does it under law.

Sir G. YOUNGER

That is just the point. We say it is illegal.

Mr. McKENNA

Somebody thinks he makes an illegal order, but he has authority to make the order. He only has it under law. It is not an arbitrary act.

Sir G. YOUNGER

Yes, it is.

Mr. McKENNA

The person injured may think so, but so long as the official's action is not upset by the due authority of law, he is acting under the law.

Sir G. YOUNGER

The point is that we do not want you to double the injury done by the superintendent or whoever he is over there. There is no reason why a man should be injured by his own Chancellor of the Exchequer.

Mr. POLLOCK

May I point out to the Chancellor of the Exchequer why the leaving out of these words has become unnecessary? It is a very confused matter. If he now leaves out the words "from placing the securities at the disposal of the Treasury" the way in which this Clause, so amended, would read is "who are not domiciled in the United Kingdom, or by trustees who are prevented by the laws of such other country or by the terms of their trust" are not entitled to the benefit. The Clause will not read if you leave out these words now.

Mr. McKENNA

That is so. This Amendment cannot be accepted. I did not move it because it would make nonsense of the Clause. I know that the hon. Baronet (Sir G. Younger) only moved it in order to raise a question. I do not think the Amendment in the form moved by the hon. Member for St. Stephen's Green will do any harm. His words will carry out his purpose, but they are not so good as the words we placed on the Paper with the same object.

Mr. CURRIE

I would ask the Chancellor to explain whether the point raised by the hon. Baronet (Sir G. Younger) is really met. There is no doubt that people are placed in such a position that, although they may be full of anxiety to do what the Chancellor of the Exchequer wants them to do, they cannot do it. It is no answer to say that somebody in America has done something which six months later may be found in some American Court to be illegal. It would be inequitable to the last degree that people so placed should not be relieved temporarily by the Chancellor of the Exchequer. I hope he sees that, and will promise to give the relief. It is a most just request.

Sir G. YOUNGER

I ask leave to withdraw the Amendment, although I have not had the least satisfaction from the right hon. Gentleman. It is very unfortunate he does not give me the satisfaction that, wherever people are absolutely estopped he should insert words to relieve them.

Mr. McKENNA

I believe they are relieved by the Bill.

Sir G. YOUNGER

They are not. Amendment, by leave, withdrawn.

Mr. BRADY

I beg to move, in Subsection (3), paragraph (e), after the word "sixteen" [" twenty ninth day of May, nineteen hundred and sixteen"], to insert the words " or where such securities are under the jurisdiction of a Court in such other country and it would be contrary to the laws of such other country to place such securities at the disposal of the Treasury."

I propose this Amendment to meet the case of securities which are under the jurisdiction of a Court in another country. I know of a case where there are children resident in the United Kingdom who are in the enjoyment of an income derived from securities in America. Their guardian or trustee, however anxious he may be to do so, is unable to sell those securities or transfer them to the Treasury by reason of the law of the United States or by reason of the jurisdiction of the Court over the minors' property.

Mr. McKENNA

This is agreed. Amendment agreed to.

Sir F. BANBURY

I beg to move, to leave out Subsection (7).

I am sorry that this Amendment is not on the Paper, but it is such a simple one that everybody can understand it. The Subsection says:

"The expression 'the Treasury's special list' means any list published by the Treasury in the 'Gazette.'" Nobody ever looks at the "Gazette." I do not know how many people in this House have ever seen it. I have never seen the "Gazette," and I never look at it. It will be impossible for people, upon whom this penal Clause may fall, to be continually looking in the "Gazette" to see whether or not their securities are included. I know there are certain lists published in the papers, but they vary almost every day. One day certain securities will be included, and another day they will be omitted. It is expecting too much of the holders of these securities to ask that they shall spend their lives in looking through all the daily papers to search for a "Gazette." I myself do not know where to get the "Gazette." I suppose I can buy one, but I have never seen it in a club or any other place. I would suggest to the right hon. Gentleman that he should—I do not know whether he can do it now—publish the list once a month in a paper which people read—[HON. MEMBERS: "The 'Daily Mail'?"]—in the "Daily News" for all I care—which can be obtained at a bookstall and on a given day, so that people should know on the first of each month that they must look to see whether or not their securities are included in the list. As the Bill stands now, it is quite a chance that a person living in a county town and looking at only one or two papers will see the lists in which his securities are published. It is a very simple request. It is one that ought to be received with consideration by the right hon. Gentleman. I move the Amendment in order to obtain a discussion upon it.

Mr. McKENNA

I am the more astonished that so great a financial authority as my right hon. Friend, or the Member for the City of London, should be unaware of the functions of the "Gazette."

Sir F. BANBURY

I said I had never seen it.

Mr. McKENNA

That is amazing to me that the Member for the City of London and a great financial authority should be unaware of the functions of the "Gazette."

Sir F. BANBURY

I said nothing about its functions. I said I never saw it.

Mr. McKENNA

The right hon. Baronet's speech was entirely inconsistent with knowledge of the functions of the "Gazette." All official publications are made through the "Gazette." If the right hon. Baronet does not see it, newspaper proprietors, editors, and those concerned in informing the public of the events of the day invariably see the "Gazette." Of course, we have to have a statutory record of the official list. In Committee I undertook to publish regularly through the Press not only those future lists which we should issue, but also the lists which we have already issued, so that we should be quite sure of bringing home to the public the whole list of the securities.

Mr. J. SAMUEL

The right hon. Baronet wants to make the "Daily News " the official medium.

Mr. McKENNA

I am not astonished at his moving the Amendment, but at his not knowing anything about the "Gazette."

Mr. WATT

It is extraordinary!

Mr. McKENNA

He seems to argue as if our primary object were to get revenue, while it is really to get the securities, and therefore publicity is our object. His whole argument is quite inconsistent with everything he has said about the tax. I hope the right hon. Baronet, who has no greater desire for publicity in the matter than I have, will not press his Amendment further.

Mr. MACMASTER

It is all very well to make amusing remarks, but I understand the "Gazette" costs 1s. I have only seen two or three copies of it in the whole of my life, and I can quite understand that the right hon. Baronet does not see it. People do not look at the "Gazette" for a list of these securities. I suppose the Government has to have some official medium, and naturally that is the official "Gazette." But they should have something more, so that all holders of these securities may see the list through the ordinary means of communication—not a separate list one day and another list another day, but at the outset when this comes into operation there should be published a complete list up to date through the ordinary means of communicating information to the public, namely, through the ordinary daily Press. Very few people will ever see the "Gazette," but what those who hold the securities wish to know is what they are bound to respond to in consequence of the legislation to which we are giving effect. Surely that publication should be of the clearest possible character, and should be communicated to the public generally, 90 per cent, of whom never see the "Gazette." Sir G. YOUNGER: Whether the right hon. Gentleman ought to publish this list more widely than in the London "Gazette " I am not prepared to say, but I was really surprised to hear what he said about that paper. Does he know that where, under the law, notices are required to be given by a limited company, they expressly take power in their articles of association only to publish them in either the London or the Edinburgh "Gazette," because they know that no shareholder will ever see them? They are buried in impenetrable darkness when published in these papers.

10.0P.M.

Sir J. D. REES

Is it not the case that everyone is presumed to see the "Gazette" and know what is published in it? I believe the rule that ignorance of the law excuses no one applies also to publications in the "Gazette."

Sir F. BANBURY

I should be quite willing to withdraw the Amendment. I only brought it forward in order to endeavour to obtain an assurance that this will be published in some other paper than the "Gazette," and should be published at fixed intervals so that people should not be continually looking for it. I plead guilty to having never seen the "Gazette."

Amendment, by leave, withdrawn.