HC Deb 02 July 1917 vol 95 cc878-80

(1) Where interest on any securities issued in connection with any Government Loan raised for the purposes of the present War is paid without deduction of Income Tax, any person by whom such interest is paid, and any person who receives on behalf of any other person any interest so paid without deduction of Income Tax, and any person who has acted as intermediary in the purchase of any securities on which the interest is payable without deduction of Income Tax, shall, on being so required by the Commissioners of Inland Revenue, furnish to them—

  1. (a) the names and addresses of the persons to whom such interest has been paid or on whose behalf such interest has been received, or on whose behalf such securities have been purchased;
  2. (b) the amount of the interest so paid or received, or the amount of the securities so purchased.

(2) The foregoing provisions of this Section shall apply to profits on discounts r in respect of any Government securities and to the securities in respect of which such profits arise in like manner as they apply to the interest and securities mentioned in those provisions.


I beg to move, at the end of Subsection (1), to add the words "(c) but trustees shall not deduct any tax from the interest received by them on such loans before paying same to their beneficiaries."

I move this Amendment in order to get this matter cleared up. This Clause says that trustees may, on behalf of "any person who receives on behalf of any other person, any interest so paid without deduction of Income Tax," that refers to the registered stock of Five per Cent. Loan. My right hon. Friend knows that in the case of the stock of the Five per Cent. Loan no tax is paid at the source. Then the Clause goes on to provide that " any person who has acted as intermediary in the purchase of any securities on which the interest is payable without deduction of Income Tax shall, on being so required by the Commissioners of Inland Revenue, furnish to them," and here follows particulars in paragraphs (a) and (b), after which I propose to insert my Amendment. Trustees are appointed for a certain number of children. Half of the investments are ordinary investments where the tax is deducted at the source. The other half is invested in this Five per Cent. War Loan, and in this case the Income Tax is not deducted at the source. Now some of these beneficiaries are young people, and some of them would not be subject to any tax, and some would have to pay 2s. and others 2s. 6d., and so on. Are the. trustees, before they send on the beneficiaries, to deduct the tax or leave the Government to apply to the beneficiaries for the tax which they are liable for. I hope I have made myself understood. If I were a trustee, and I had £100 to divide among five people, am I to deduct the 5s. tax from each of the £20, or leave it to the Government in the ordinary way by notice to the beneficiaries?


So far as I understand this Amendment, I do not think there is any necessity for it. The position is that a trustee has the right to hand over the names of the beneficiaries to whom the interest is to be paid, and in that case the trustee has no further liability, and the tax is collected from the beneficiaries direct. There are cases where the beneficiaries may not receive the full amount of the income, and in cases of that kind obviously the trustee ought to deduct before paying over the amount. As far as my advisers are able to judge, they consider that this Amendment is quite unnecessary.


I know that some trustees are deducting the full 5s., which they ought really not to do. I can understand that there may be in some cases complicated accounts, but my reason for moving this Amendment is that the Clause is very indefinite. We are dealing with a particular Loan, and it is quite an unusual thing. Ever since the tax was deducted at the source this is the first case I have known where the Bank of England pays the income without any tax, and this has led to a good deal of confusion. Am I to understand that the trustees are at liberty to pay the full amount, giving them the names of the beneficiaries so that the Income Tax Commissioners may collect the money? If that is so I am content.


As one who has had some experience of the working of the law and practice of trustees, I think the Government's attitude in this matter is quite right, and it would be a pity to put anything into the Clause as to what trustees shall do. No doubt in proper cases where trustees know the beneficiaries are liable to the Income Tax they would advise them to pay, but there might be cases where the person to whom the money is payable would have a right to claim some abatement. Consequently I think it is right not to give a direction to the trustees, but simply to direct that they should furnish the names and other information and leave the Exchequer to follow the usual practice.


I think the point as to whether the trustee deducts this tax or not would depend upon the provisions of the Income Tax Acts. There are certain cases where they would be bound to deduct the Income Tax. such as the case of annuities, to do what has been suggested you would need to alter those Acts.

Amendment negatived.

Clause ordered to stand part of the Bill.

Motion made, and Question. "That the Chairman do report Progress, and ask leave to sit again "—[Mr. Bonar Law]— put, and agreed to.

Committee report Progress; to sit again To-morrow.