Rule 13 of the general rules applicable to Schedules A, B, C, D, and E shall be amended by the addition, at the end thereof, of the following proviso:
Provided that where a resident person carries on a bona fide agency business in the United Kingdom and receives in respect thereof adequate remuneration, being not less than the customary remuneration in that class of business, the resident person shall not be liable for payment of any tax for which any non-resident person may be chargeable in respect of business done through the agency business of the resident person, notwithstanding that the non-resident person may have been charged in the name of the resident person.—[Sir L. Worthington-Evans.]
§ Brought up, and read the First time.
§ Sir L. WORTHINGTON-EVANS
I beg to move, "That the Clause be read a Second time."
This Amendment is not an endeavour to exempt anybody from paying the full rate of tax upon the profits he makes, but it does endeavour to carry out the intention which the Chancellor of the Exchequer, Mr. McKenna, had in mind at the time the amendment of the Act was originally made, to allow the full tax to be made on any principal, whether resident in this country or abroad. It will, however, exempt an agent carrying on an ordinary agency business from being taxed not merely on the profits made by him as agent but upon the profits made by the principal resident abroad, for whom he acts as agent. There was never any original intention to do more than tax the foreign principal, not by the agent but direct, except in the case of fraud, where the agent was not acting bona-fide but was carrying on a fictitious business in order to screen his principal from taxation. I am not asking that in any fictitious business the principal should be screened by the agent from taxation, but what I am asking for is that an agent carrying on a bona-fide business in this country as an agent should be taxed only upon his profits as agent, and should not be made the instrument of collecting tax which is due from his principal to the Treasury. Let me point out what Mr. McKenna said on the occasion of introducing the original Clause.It an agent is doing a bona fide business and receiving his 1 per cent, the ordinary trade return, there will be no more Income Tax charged, except upon the agent's 1 per cent., but if there is a collusive arrangement whereby the agent gets no profit, he will be charged in respect of the proper profit of the agent. That is what Clause 3 says. Otherwise, we are not extending the existing law.I want the Chancellor of the Exchequer to carry out the original intention of the Act. Let me explain the class of case in which it arises and the damage that is being done to trade in this country by the pressure that is being brought to bear by the Somerset House authorities. The business carried on in the City of London is very largely carried on by agents acting for foreign principals or Dominion principals. Let me take, for example, the timber trade. A great many agents 2094 in this country are instructed by a foreign principal—whether he is an actual foreigner or a Canadian or an Australian matters not from this point of view—to sell a cargo of timber. He sells it, and the commission is 1 per cent. That is the sole profit he makes. He pays Income Tax upon that. What the Somerset House authorities are doing now is to assess him for the profits not made by him but by his principal out of the sale of that cargo of timber. That is unjust. That is what the original Clause was never intended to do.
Mr. McKenna had it pointed out to him by Lord Banbury, who was then Member for the City of London, that this risk was being run, even at the time when the Clause was extended. In answer to that, Mr. McKenna made the statement which I have read, that in the case of a bona fide agency, the only tax would be a tax upon the commission earned by the agent. What is now happening is that the Somerset House authorities, not content with the tax upon the agent's actual profit, are assessing the agent for the principal's profit. That, surely, is wrong. What I ask is that where a resident person carries on a bona fide agency—if it is a fraudulent agency I do not- want to protect him—in the United Kingdom and receives in respect thereof adequate remuneration, being not less than the customary remuneration in that class of business, the resident person shall not be liable to pay any Income Tax, for which a non-resident person—that is the principal—may be chargeable, in respect of business done through the agency notwithstanding that the non-resident person may have been charged in the name of the resident person.
To protect the agent it is necessary that he should be able to show that it is a bona fide agency, and that he is receiving not a sham commission but a proper commission customary in the trade. That is to protect the revenue against a sham agent being appointed and paid some infinitesimal commission in order that the non-resident may gain extra profit. See how unfair it is to assess on the profits of the principal. The agent knows nothing about the profits of the principal. He has no power to compel the principal to disclose what profit he is making on, say, the sale of a cargo of timber. It is true that he could refuse to do his business as an 2095 agent unless the principal did disclose the profit, but the effect would be that he would lose the business and it would very likely be lost to England altogether, and the revenue authtorities would lose the tax upon the profits of the agent, and not only upon the profits of the agent, because that sort of entrepot, for which the City of London is famed gains not only direct commission in direct business, but it also gains large sums per annum in the businesses ancillary to the direct transaction, such as insurance shipping freight, banking transactions, and all those things which make profit for the City of London and pay Income Tax to the Chancellor of the Exchequer.
This is an exceedingly shortsighted method of speeding up by the income Tax authorities. It is going beyond what is legitimate to try to hold the agent in this country as a hostage for the payment of the tax by the principal. To show how ridiculous this may be, and how dangerous to business in this country, may I point out that it is not uncommon for a cargo to sail from, let us say, Canada or the United States without any final destination being determined before it sails. The cargo may be wheat or timber. After it sails the owners of the cargo on the other side telegraph to the agent on this side that the cargo is there, and they instruct them to sell it. The sale may take place not to somebody resident in this country at all. Say it takes place in Holland. The ship then will not even call at one of our ports. It may go direct to Amsterdam to discharge its cargo, and the State benefits by that transaction because the agent earns commission on it and pays Income Tax on that.
What you are asking is not that the agent shall pay the Income Tax only on his profit, but that he shall pay the tax on the profits made by the owner of the cargo. What right have we to say that? What about Holland? In such a case as that they might also say, "We shall charge tax on the profits made on the cargo not only by the Canadian principal, but also by the English agent," and you may get, if you are not careful, retaliation under which the Canadian Government may claim Income Tax on the owner's profits, and also on the broker's profits. What we want to do is to keep the 2096 business in this country for our people here, so that they may not only earn those profits, but also earn the ancillary profits of shipping insurance and banking.
I believe that the Amendment will protect the revenue so far as it is possible against fraudulent transaction. I do not know what the answer of the Chancellor of the Exchequer is going to be. I can imagine that he may say there may be cases of fraudulent agreement between principal and agent, and the revenue would probably be cheated of a legitimate subject of taxation. I do not want to deprive him of any power to tax or to collect tax from anybody whom he is legitimately entitled to tax, but I do say that, while he is entitled to devise any means to catch thieves or tax-dodgers, he is not entitled to hold up any man doing a legitimate business, and to assess him for tax in respect, not of the profit which he makes, but in respect of the profit which someone else makes. It is not a wise course, because it destroys the agency business, which is extremely valuable to the City of London.
This has been an important matter, but it is much more important now than ever, because last year the Government took powers to reassess for six years in arrear, and it may well be—and the brokers and agents in the City are afraid to-day—that in the exercise of this power the Inland Revenue authorities may make an assessment upon them in respect of transactions dating back to last year and the year before, and back even to six years ago. Whatever powers they have got to protect themselves from default by refusing to enter into transactions, they have no power to protect themselves in respect of the past, and you may, therefore, under those powers of assessment, practically be assessing them, or entitled to assess them, for very large sums which they cannot possibly check, because they are the profits of principals of which they have no knowledge at all. What we ask is that the agent of a bona fide business should be liable to pay only on his own profits and not on the profits of other people.
I hope the Chancellor of the Exchequer will be able to accept this Amendment. It certainly has a great deal of support in the City, and it seems to me to be elementary justice. I am surprised at having even to move it because I thought 2097 that it was one of the things which the Government themselves would have put down. They did in the original Rules put down a rule which was intended to protect the agent, but it has proved to be insufficient. The Chancellor, no doubt, is familiar with that. It is insufficient now, and I ask him to carry out the original intention and strengthen the rule, and, as Mr. McKenna said:Do not interfere with the bona fide business even though you may have reason to strengthen in other directions methods for detecting and punishing fraud.
§ Lieut.-Colonel POWNALL
I want, in a few words, to support what has been said by the right hon. Member for Colchester (Sir L. Worthington-Evans), because, generally speaking, I am in favour of the Inland Revenue doing all they can to collect what they legitimately can collect in the national interest. I do think in this instance they are really over-reaching themselves. I quite appreciate that when nine years ago this question was first raised by Mr. McKenna there were agreements of what might be called a quasi collusive nature between American firms and their London houses at a time when taxation in the United States was far lower than it is here, by which they could charge unduly high prices to their London houses without making any profit at all in this country, and throw all the profits into the pockets of the United States firm. These arrangements were obviously not fair to the British taxpayer. I consider the Inland Revenue were doing everything they could to stop it, and making it perfectly clear that the branches or agents of the American firms should pay their reasonable share to us. It seems to me the Inland Revenue are going far further than Mr. McKenna realised in 1915. In a speech, he said he would watch the action taken by the Inland Revenue regarding this particular matter very carefully indeed, and see that importing agents were protected. At present London acts as an intermediary in not only questions of finance but also in a very large number of ways. Insurance and shipping are of very great importance to us. It is all important to us that we should hold the position we won back after the War as the words great financial centre. If we are not going to carry this Clause, our agency business, I will not say will disappear altogether, but will disappear to a very 2098 considerable extent in view of our high taxation. Firms in other countries will not pay taxation even if the agent here could get it out of them. I have been looking very carefully into the sugar trade, and I have here a letter from the principal of a firm of brokers in the sugar trade, dealing with the effects the present arrangement would have unless this Clause be carried. He says:If it is intended to tax a foreign shipper who sells through a broker to a British manufacturer, or wholesale importer, goods which the British importer distributes here, then an enormous trade gets upset to the detriment of the British Exchequer.He goes on to say:But the question goes much further. In sugars we have during a lifetime, by obtaining and giving the most reliable information, succeeded in attracting to London a large business between foreign countries on which the British Exchequer collects substantial taxes. It sounds almost incredible, but we have become the medium of a very large business between Java and India, Java and China, or Australia and Vancouver; between Formosa and those countries; between Peru and Vancouver and France, Cuba and France, etc.; in fact, London has become the universal centre for sugar transactions and of all the banking, chartering, etc., connected therewith. If the Government has the intention of getting at the profits of all foreign shippers or producers on our books, they would simply find that they had destroyed the work of a lifetime and lost also individual taxes as our 'business would have ceased to exist.I have figures from the "Board of Trade Journal" which show that some £30,000,000 in commission is earned in this country through these commission services. I have no hesitation in saying that unless steps are taken on similar lines to this Clause to safeguard the interests of commission agents doing their legitimate business, a very considerable portion of this £13,000,000 will not be earned, and indirect profits the country is now taking for shipping, insurance, etc., will go elsewhere. I will give a simple illustration of what I am now stating. We import large quantities of coffee from Brazil. The agents here have to pay Income Tax on the profits made after handling that coffee. If we are going to try and get Income Tax paid by the Brazilian coffee house, what is to stop the Brazilian end from retaliation. In another place, yesterday afternoon, figures were given with regard to the appalling burden of taxation that is now borne in this country by our own manu- 2099 facturers. What will happen if, in addition to our own taxation, they adopt a measure of retaliation for the action taken by the Inland Revenue, and we find ourselves up against taxes, made in foreign countries, on goods shipped to them? I venture to say it will put us in an impossible position. The City of London, as far as I can make out, is keen not to avoid legitimate taxation. Where efforts have been made to evade taxation, it is quite right that the Inland Revenue should act. I ask the Chancellor to go very carefully, indeed, otherwise, he will find it a very considerable loss to the Exchequer as well as a loss to the mercantile community in London.
§ Mr. KEENS
My experience has been that, so far as evasion is concerned, the evasion has been practiced to a very much larger extent by the branch than by the agency. I was controller, under the Trading with the Enemy Act during the War, of such a foreign firm, and I discovered, after having been in the place a very few days, that for years a system of fraud had been carried on. But these frauds were not carried on with an agent, but with the branch in the city, and by the simple method of the people over there invoicing over here at a price which, if the goods were sold, they would not make a profit for the branch. It is only fair to assume that, if the manager had succeeded in showing a profit, he would have got the sack. But this does not deal with the agency question. It is an enormous question. Let us for a moment consider what is likely to happen if this new Clause is not passed, and if the Inland Revenue propose to continue the policy which they are now pursuing.
First of all, I take it, the foreign firms could dispense with their agents altogether, in which case there would be an enormous loss to the revenue on earnings of that character in this country. There would be a loss of revenue on the agent's earnings and a loss of employment as well, for there is a considerable amount of employment in the City on these lines. The agent could be removed to a neighbouring country. I know a large number of businesses in the City which are profitable and contribute a great deal to the revenue, but from the very nature of their undertaking they could be conducted as well from any Continental port 2100 as from London, in which case we stand to lose not only the revenue on those agencies, but we should also stand to lose an enormous amount of that trade to which the right hon. Gentleman has referred. One has to remember there are many cases in which an agency in this country means that goods are sold, not in this country, but in every part of the world. They could dispense with an agent altogether and the foreign firm could do its business in this country by a traveller or through the post. The consequence would be exactly the same—a loss of revenue to the Exchequer and no gain whatever to this country.
Suppose, for a moment, the agent is retained, and is still liable to account for the profits made on the other side. Then he will have no option but to add to the prices of the goods the amount of profit for which he may be liable. There is also the question of the assessment for back years. He may be liable to assessment on figures which he could not control, and it is safe to say he could never recover the amount of that assessment. It would exceed the amount of his commission by a considerable sum. But if the agent is retained, the cost is added to the price of the goods. I am quite aware it is usually assumed that agents in this country are assessed on the sales of manufactured goods. That has been the way in which this case has been argued for years past. As a matter of fact there are certain essential raw materials which are imported into this country, and we still must have them whatever may be the conditions attached to them. If this proviso is not accepted, the only effect must be to raise the price of the goods if the agent is retained in this country; we must either retain the agent and put up with that increase of price, or the agent must go abroad, or the firm must do its business through the post or by means of travellers.
After all, we are the greatest exporting nation in the world. It is not unreasonable to suppose that action of this description may lead to reprisals. I have a recollection that a little while ago we got into trouble with American shipping on the same lines, and we had to bring it to an end. The arrangement also met with reprisals from Spanish shipping which I am afraid has not yet been satisfactorily settled. Whatever the policy of 2101 the future may be, at any rate we must agree it is perfectly monstrous to attempt to assess an agent on the past four years for money which he has no possibility of recovering in any way whatever. It is most unfair that if trade done through a traveller or through the post or by a broker cannot be subject to taxation, the trade done through an agent should be subjected to this double taxation all the way through. There is no real difficulty in the way of conducting the business. It is merely a matter of organisation. The agency must be a convenience to both buyers and sellers, and it is proper we should lay it down that profits only should be taxed where they are made. They are made where capital and labour are employed in the manufacture. We have no right to tax them here. The tax is in restraint of trade and it upsets established business methods. It is inequitable, and it cannot be collected. It prepares the way for reprisals and international complications. It has been condemned by the British National Committee of the International Chamber of Commerce and by the Economic Section of the League of Nations. It is not in keeping with Mr. McKenna's declaration, and the argument that it is unfair competition with British manufacturers I think can be speedily disposed of. Finally, I would suggest it is absolutely impossible to discriminate between manufacturer's profits and merchant's profits, and for these reasons I hope the Chancellor of the Exchequer will see his way to accept the Clause, which I believe will not only be a good thing for the City of London, but will result in good for the trade of the country and for the revenue generally.
§ Mr. E. C. GRENFELL
We have no objection to the action of Somerset House in this matter, because I understand it is their duty only to interpret the law as they find it, and if they find it to be different to what Mr. McKenna intended it to be, I hope the Chancellor of the Exchequer will see his way to carry out Mr. McKenna's wishes. We are in a very different position from what we were in 1915. We have the good will of the agencies. We have pre-eminence in shipping. During the War and after the War our competitors in America, thinking they saw a way to pick up our business, went into the various trades in which we 2102 had been pre-eminent. They went into the shipping business, and I do not think they can congratulate themselves on the financial results of their operations. They went into the insurance business, and as there were not enough insurance people to do the business, several of the banks established subsidiary branches to help finance the insurance business, and a study of their balance sheets shows that those banks in America which indulged in this subsidiary orgy have had to write off enormous sums and eventually to retire from the business. That is extremely satisfactory at any rate to us. Another thing that excited their attention was our foreign banking business. In the last 80 years several foreign banks, by which I mean English banks working in the East and in foreign countries, have slowly accumulated a goodwill that is the envy of the world. There were one or two, I think three, American banks established in the East and elsewhere, and two or three years ago they went through the painful process of writing off two or three hundred millions of dollars for their experiment. Since the War, we have emerged crippled in many ways. But we still have our great agency business in London; not an imposing business, not a business with great buildings, but a small business, with one or two rooms in Mincing Lane and elsewhere, making no show, but, I believe, contributing largely to the revenue. These still exist. They are run by the men who made them, or by their sons, and they enjoy the goodwill of the world and almost universal confidence as compared with other agencies. Although our shipping is suffering, I do not think anyone to-day is able to teach us much in this business. Even if it is a losing business, I think, perhaps, we are losing less than other people. In the insurance world we are undoubtedly supreme.
We owe £40,000,000 annually to the American Government. We are left to-day to pay our foreign debts, our balance of imports; and exports, and our £40,000,000, out of goods and services. The goods do not suffice, and we are left with the services. It is all important that these agencies should be allowed still to go on, and not to have confidence in them impaired. I would also refer to the centre we occupy as the headquarters of the tea, the rubber and many other industries. Further, the 2103 agency fees charged here by the regular agents are extremely moderate. I think, in the sugar trade, the usual commission is about a half or 1 per cent., and the other commissions generally vary according to the trade, up to about 2½ per cent. That is not exorbitant, and is a fee that the foreigner is ready to pay. But if he is asked not only to pay that, but to pay Income Tax unknown when he sells the goods, he is going to refuse to pay them, refuse to show his accounts, and he will let his agent, if he can, pay these duties, and eventually switch off his business to foreign countries. That is going to be a serious loss. The agent here receives a telegram from Java, offering sugar. That sugar is possibly sold across the street in Hongkong or Singapore. It is because the agent here enjoys the Java merchant's confidence, because the Java merchant knows of his agent's experience, that he puts his affairs in his hands, and, having done so, he asks that agent, probably, to arrange the freight, find the ship, insure the goods, and, eventually, the drawing for those goods is done through one of these very foreign English-owned banks we speak of. It is impossible to give real figures, but it should be possible to get them at Somerset House. I have, however, got the figures regarding the years 1921, 1922 and 1923 with regard to a few merchants trading from Java. These figures show that the amount of finance done through these English-foreign banks is £24,000,000; the amount of brokerage to London, £225,000; insurance premiums paid into British insurance companies, £80,000; and the freight paid to British shipowners, and shipbrokers' commissions, £800,000. Needless to say, these merchants and brokers are not anxious to tell me all their affairs, but I have secured these facts out of courtesy. In addition to that, these agents and brokers in London have buildings, small or great. They pay their clerks and their managers, presumably, fair salaries, and I believe that the Chancellor, if he has figures that are really reliable—and they are difficult to get—will find that by running the risk of switching off these agencies to foreign countries, he will lose more in Income Tax and more in Super-tax than he will gain by running after a few foreigners who are defeating the law here. I maintain that it is possible that Somerset House could 2104 exercise more supervision over the foreigners who have multiple houses. They should devote themselves to that rather than taxing agents in a general way.
§ Mr. S. SAMUEL
I wish to speak on this subject because when Mr. McKenna introduced these taxes I strenuously opposed them. I pointed out at the time that it was very dangerous for people who live in glass houses to throw stones. We have found in foreign countries that advantage has been taken to imitate us in trying to tax the foreigner, and that it is utterly impossible. The original idea in these taxes was to protect our manufacturers, because foreign manufacturers on the Continent, especially in Germany, were doing a considerable trade, or had been before the War, in their wares, but I do not want to enter into the question of Protection. We all know that before the War, the German manufacturers, Austrian manufacturers and Americans, had branches in this country, and many of them were employing British firms in distributing the goods of their industries which were sold in his country. I pointed out to Mr. McKenna at the time, and I wish to point out to the present Chancellor of the Exchequer, that it is just as easy for a manufacturer abroad to send a traveller through the country to take the orders and deliver them direct, without the employment of any agent at all, thus killing the goose that lays the golden egg, because you eliminate the British agent who is paying Income Tax, who is paying rates and taxes, and contributing in many ways to the upkeep of the country.
You have only to visit to-day the great industrial centres of this country, Manchester, Liverpool or Bradford, and you will find there that many of the rooms at the hotels are occupied by travelers representing Continental firms. They come here and probably travel England for three or four months of the year. They collect their orders, eliminating the British agent, which was perhaps not the intention of Mr. McKenna, and they take back their orders and pay absolutely nothing towards the taxation of this country. In that respect the remedy is in the hands of the Continental and American industrials, and they have already taken steps to protect themselves. You never can, and you never will, be able to tax them. Their trade will go 2105 on in this country in future as it has in the past, but it will not be done through British agencies. In these matters it is useless for me to say anything further. But there is one thing that I wish to bring to the notice of the Chancellor of the Exchequer, because it creates an exceedingly serious and dangerous position for this country. As the last speaker said, we have through generations, by the integrity of our commercial classes, established connections in every part of the world. We have brought to this country the produce of all the countries in the world, the produce required for every industry. We have done that simply on our reputation, which has been proved to be better than that of any other nationality.
Before the War we were in great competition with Continental countries, especially in the creating of markets for some of the most stable articles. I will mention one which is enormously important. That is wool. London is the centre of the wool markets of the world. We have in London bi-monthly sales, and wool from Australia, from the Cape, from the Persian Gulf and from the Argentine, comes to London, where we have an army of experts who are able to classify the wools and sort them out. Every two months you have only to visit the neighbourhood of the London Docks to find the representatives of industry from every part of Europe, as well as from England, trooping down to inspect the wool. Every bale of that wool is consigned to this country. Hardly a bale is brought here for the account of a British firm, because it is necessary for the buyers who require specialities to visit and select their own clips of wool. The sales are bi-monthly, and often the purchases made at the sales are very small. But during the time between the sales the buyers who have been here make notes of the various parcels offered, and as they require to buy for their consumption in their industries they send their orders to the brokers here to purchase in the open market the wool which has been inspected.
You run great risk if you attempt to tax the farmers by making them pay Income Tax on some fictitious sum which they may repudiate altogether. Now it is said that the agent to whom that wool is sent is to be liable to pay on a fictitious profit which you say the producer has 2106 made. The consequence will be that Havre, which is making provision for attracting the wool trade, will be immediately in competition with this country, and Hamburg, where there is a magnificent port, will offer all sorts of facilities for the wool trade. Our Yorkshire industrials will then not come to London for their requirements, but will be forced to some Continental port every two months to buy what they require. You will lose not only the revenue which you raise at present on the income of the agents, but you will lose the employment of thousands of men who manipulate this wool, you will lose the dock charges which are paid here, and the dock companies will have less profits on which to pay Income Tax, and you will lose the revenue on the handling of all this material.
I have mentioned only one article, but it is one of the most important articles which you are threatening with destruction in the markets of this country. From 50 years' experience as a merchant, I could name a dozen or more articles which are essential to the industries of this country. If you attempt to tax the agents, the producers in other countries through the agents, you will drive ail these trades out of the country, and you will compel the industrials of this country to go abroad, and you will deprive yourself of an enormous revenue which you have had in the past from this entrepôt trade, established through the hard work and honesty of our merchants for generations.
§ Sir J. PENNEFATHER
I would like to reinforce what has been said by the representatives of trade in various parts of the country by drawing attention to a remarkably unanimous resolution which has been passed on this subject by the United Trade Association of Liverpool. It is an association of associations, and comprises 14 trades, among them being cotton, corn, timber, wool, provisions, sugar, fruit, seed oil and cake, general brokers, shipping forwarding agents, West African merchants, and the Co-operative Wholesale Society, Limited. This important association, consisting of 14 other large associations, is rarely able to come to an agreement on any point, the various interests as a rule being in conflict. But on this point the association has written and have asked me to support this new Clause. I think 2107 that fact, coupled with the speeches which have been delivered, should be sufficient to convince the Chancellor of the Exchequer that this proposal is made in a businesslike spirit, that its acceptance will have the approval of very large masses of the business people of this country, and that its rejection will cause them grave uneasiness.
§ Mr. W. GRAHAM
The Debate to which the Committee has just listened has covered a wide field on what is, from some points of view, a rather difficult Amendment, but which I think in the last resort is a comparatively simple proposition. May I at the outset take the Committee back to the exact proposal of the right hon. Gentleman, who put forward this Clause. In effect it comes to this, that where there is a bona fide agent acting in this country for a non-resident principal, we shall depart from what has been the practice hitherto in matters of Income Tax, and not expose that bona fide agent to liability for the tax for which the principal would have been responsible. I need not detain the Committee by reminding hon. Members of the very clear limitations which the right hon. Gentleman himself laid down. He stipulated for a bona fide agency. He also made it perfectly clear that there was to be no interference with the taxation of the agent in his capacity as an agent. What he wanted to do was to try to get the agent clear of this responsibility for the principal resident elsewhere in order to facilitate this agency business and the very large trade which depends upon it in this country. May I say at once that on the face of it that appears to be a fair proposition until we come to examine certain important facts which I think throw an entirely new light on the proposal. I stop hero to say only a word or two about double taxation. There cannot be any issue of double taxation in this Debate, and, even if there were, I should think the Committee would agree that this is not the proper method of dealing with it. In so far as we in this country have been able to overtake the problem of double taxation, the results of our efforts will be found in the Finance Bills of recent years, and there is, of course, a certain extension in the matter of shipping to the Colonies in the 2108 Finance Bill now under discussion. Therefore, that point need not detain us long.
I come to two points which have been raised, one by the hon. Member for Aylesbury (Mr. Keens), and another by hon. Members in other parts of the House which involve questions first about the brokers and secondly about of trade between non-residents. On these points I cannot do better than repeat two passages from the Schedule of the Income Tax (Consolidation) Act, 1918, because, first of all, in the matter of brokers and in the second place, in the matter of trade between non-residents, there is again the question of an entrepot trade which may not touch our shores at all or which just touches our shores, and these two passages in this Act of Parliament go far to indicate that already there is substantial protection and that what hon. Members have held out to the Committee to-night are feelers rather than realities. Take the case of the brokers. Rule 10 of the general rules applicable to Schedules A to E as contained in the Act of 1918 says:Nothing in these rules shall render a non-resident person chargeable in the name of a broker or general commission agent or in the name of an agent not being an authorised person carrying on the regular agency of the non-resident person or a person chargeable as if he were an agent in pursuance of these rules in respect of profits or gains arising from sales of transactions carried out through such a looker or agent.That, I think, is ample protection on that point, and on the question of trade as between non-residents Rule 11 is perfectly plain:The fact that a non-resident person executes sales or carries out transactions with other non-residents in circumstances which would make him chargeable in pursuance of these rules in the name of a resident person shall not of itself make him chargeable in respect of profits arising from these sales or transactions.That of course would entirely cover certain of the transactions described by hon. Members to-night. I think certain of the criticism at all events on those two points has proceeded without clearly remembering the passages in the Act of 1918 to which I have referred. I now come to the central point which is before the Committee. Everybody who knows anything about economic conditions in this country is aware of the enormous im- 2109 portance of the entrepot trade and we are all aware also of the very valuable part which is played by legitimate agents of all kinds. I am saying nothing for the illegitimate or unworthy agents in whose support I take it no hon. Member enters the lists to-night. But it is perfectly clear while we want to do everything we can to encourage legitimate agency in this country and facilitate the great volume of trade which depends upon it, we must be just at the same time to other traders within this country in competition with that trade who are exposed to the great burden of taxation which, presumably, if this Clause were adopted, these agents or their principals would escape.
That takes us back to the practice of recent years. It has been the practice in Income Tax administration to have recourse against the agent for the profits arising from these transactions. May I ask one simple question. If in fact we have no recourse against an agent in this country then against whom have we any recourse at all for the recovery of tax, it may be on a very large enterprise conducted within the borders of Great Britain? That is the real issue before the Committee. Here is a trade or enterprise carried on undoubtedly to a very large extent within these shores. At the present time we have recourse against the agent for the recovery of tax due by the non-resident principals. We have obviously no jurisdiction whatever so far as the non-resident principal is concerned, and therefore if the Clause were carried it would be entirely nugatory as regards the non-resident person. We should have no power to recover against him and we should be deprived of our power to recover against the agent. Notice at once the state of affairs which would result from a condition of this kind. Here is a trade carried on in this country by large numbers of people who are exposed to the admittedly heavy burden of Income Tax, and it may be Super-tax, within Great Britain. Side by side with that trade you have the other trade conducted through these agents here. It is proposed in this Clause to deprive us of the effective power of remedy as regards a tax which, undoubtedly, should be paid. I am familiar with certain forms of Protection which have been urged by hon. Members in different parts of the House, but I never expected to find this novel form of Protection, which would, in 2110 fact, inure very largely, under this Clause, to the advantage of the non-resident trader, inasmuch as there is no real remedy against anybody in respect of the trade which he is conducting. That would be a perfectly intolerable proposition, from the point of view of traders in this country. In fact, it could not be defended. There is a real protection to legitimate agencies under the Clause that I have quoted, and on all those grounds this Clause should be rejected.
§ Sir L. WORTHINGTON-EVANS
The reply of the Financial Secretary to the Treasury has disappointed me. It is a flat refusal to consider this Amendment in any shape or form, but let me examine his arguments. First of all, he quotes Rule 10 of the Act of 1918, as if that were a protection to the bona fide broker and the bona fide agent carrying on business in this country. It is not a protection, because the Inland Revenue to-day are, notwithstanding Rule 10, endeavouring to assess the agent for the profits made by a foreign principal. If that were a protection, I should not have put this Amendment on the Paper, and the assessments would not have taken place, so that the hon. Gentleman feels that he has to apologise to the Committee for doing what is obviously unjust, namely, assessing the agent for the principal, and he apologises by saying that the agent is already protected by Rule 10. Mark the rest of his arguments. He said we have an effective power and remedy over the agent in order in put the tax on the principal. What does that mean? It means that you can, because the agent is living in this country, distrain upon him for a tax, not payable by him, but by a foreign principal. That is the effective remedy. You have him in a trap. You are not attempting to justify this on the ground of equity. You are justifying it solely from a Treasury point of view. You say, "We have got him there, we can squeeze him, and we will not let him go."
§ Mr. GRAHAM
Surely that is not the point. The real point is that this trade, in competition with trade in this country, must be taxed. I invite the right hon. Gentleman to tell us, if we have not a remedy through the agent, where have we a remedy at all?
§ Sir L. WORTHINGTON-EVANS
I am not going to shirk that point, but let the Committee mark again that the hon. Gentleman says, "If we have not a remedy through the agent, where have we a remedy?" It is not a justification of taxing the agent because the agent ought to be taxed, but a justification for using a machinery, however unjust, because it is the only way in which you can get it. Now, is it the only way? If you really do mean, as your arguments seem to suggest, that you want to protect the British manufacturer against an importation into this country which does not pay taxes, put the tax on in the right place. [HON. MEMBERS: "Oh!"] Let the Committee observe that I did not advance this argument in support of this Amendment, but that the Secretary to the Treasury is driven to this argument in order to justify his position. He says that if you do not tax through the agent—and, mind you, he has never said a word in justification of taxing through the agent—that being the only machinery open to us, you are going to let an unfair competition arise with the manufacturers of this country. We know that, and we have the remedy, and so has the Treasury, if it would only use it. Put the tax on in the right place, at the Customs, and then you can equalise the taxation between the foreign manufacturer and the British manufacturer. I did not want to raise the tariff issue. I am always willing to do so, but at the proper time. I did not raise it, and I did not expect it would be raised, in connection with this Amendment. The Financial Secretary cannot justify his position without raising that. And I say to him—and I am entitled to say to him—put the tax in the right place. He does not pretend that this agent is anything but a useful bit of machinery. He does not pretend that the agent or broker is not carrying on a legitimate business. He is not pretending that the profits he is taxing are the profits of the agent or broker. He admits they are the profits of the foreign principal, but what he says is: I have got an effective method by squeezing the agent. Yes, but he will squeeze him to death! Is it fair to the agent in the great entrepot trade of this country, an entrepot trade which is being seriously endangered by this tax? If the Chancellor of the Exchequer is going to deal with this at all I should 2112 like to know what his justification is? Under the Act of last year you can go back six years. Does he propose to go back six years and put these six years' deductions, which ought to be paid by the foreign principal, upon the British agent who has no power whatever to recover from the foreign principal, and, indeed, may have ceased to do business for that particular foreign principal? Are you going to tax retrospectively that English broker or agent for having carried on a perfectly legitimate business? All I can say is that, if that is the only answer which the Treasury can give it is an admission that the Amendment which I am asking the Committee to accept is a proper Amendment, doing nothing but justice, and only opposed on the ground that there is no other machinery than the very complicated and big machinery they have got.
§ The ATTORNEY-GENERAL (Sir Patrick Hastings)
I only desire to say a very few words on this, because I really believe the matter has been summed up pretty well. Might I ask the Committee just to let me quote the Finance Act as to what the position is of the income-tax law at the moment in regard to the foreigner who is trading in this country, for it is quite simple. He is obliged to pay Income Tax on his earnings in this country just as if he were a resident, and I appeal to the Committee that this is not only natural, but it is right. Whether right or not it is not dealt with by this Amendment. Therefore, one starts on the principle that the foreigner who lives in this country has to pay the same tax on the profits of his industry as does the resident here. Rule 10 of the Act of 1918 has been referred to. It is really quite clear in its interpretation. My right hon. Friend said that the Income Tax authorities are engaged every day in trying to get something to which they are not entitled—
§ Sir L. WORTHINGTON-EVANS
The right hon. and learned Gentleman must either quote, or not quote; and if he does quote to quote me correctly. What I said was that the Financial Secretary to the Treasury had claimed that there was protection already given by Rule 10. I said, notwithstanding Rule 10 the Inland Revenue authorities are now endeavouring to assess agents for the branches of 2113 foreign principals so that the Rule is not the protection that the Financial Secretary claims it is.
§ The ATTORNEY-GENERAL
Really Rule 10 is quite clear. It says that where a man is the agent he is not taxed at all. The only case in which the agent is taxed is where he is a special agent for a foreign principal. I will give as an illustration the case of a man abroad who manufactures champagne. If he sells the champagne here in this country through a mere broker, that broker is not charged. But if he has an established agency here, then he is a special agent and he is charged. In a case where a foreign principal has not an established agency in this country, the agent would not be liable to be assessed for the tax. My right hon. Friend the Member for Colchester (Sir L. Worthington-Evans) is quite right when he speaks of squeezing. Our point is that if the foreign principal cannot be assessed through his agent there is no hardship. The agent here enters into the transaction knowing he is assessable for his principal, and it is quite easy for that agent to see that the requisite amount shall remain in his hands for that purpose.
It would be better if my right hon. Friend really wanted to effect a change not to put in an Amendment to the effect that you shall not be able to charge the agent. If he means the foreign principal I could understand it. The foreign principal is selling in this country, and he should pay the tax, but the right hon. Gentleman is now proposing to remove the only method by which we can make him pay. I thought the Committee would desire this case to be stated, and I want the Committee to know what happened in these cases. What does my right hon. Friend suggest? If the foreign principal is to be taxed, and there is no suggestion in the Amendment that he should not be taxed, how does my right hon Friend suggest that he should be taxed.
§ Mr. S. SAMUEL
Is the Attorney-General aware that the method he proposed would eliminate the agent altogether, and that the manufacturer abroad would sell direct to the consumer? The custom of the trade is that the agent takes the order, but he does not handle the money. The manufacturer or the shipper draws direct upon the people to whom the agent sells.
§ The ATTORNEY-GENERAL
I am sure my hon. Friend does not want to mislead the Committee, but under this Amendment you are proposing nothing, and we are simply saying that the law as it stands should continue to stand.
§ The ATTORNEY-GENERAL
If you desire to alter the law as to the foreign principal paying, why put down an Amendment saying that they need not pay? It is no good putting down an Amendment which says that they ought to pay and which, at the same time, takes away the only method of making them pay. If my right hon. Friend or anyone else can suggest a method by which the tax can be assured without taxing the agent, I am sure the Chancellor of the Exchequer would consider it.
§ The ATTORNEY-GENERAL
The whole principle of Rule 10 is, surely, this, that it would not be fair to say to a general broker, who has not regular business arrangements with his employer, "At any moment we an come down and say to you, "You are liable for the whole of the tax of your principal.'" The right hon. Gentleman says that that is what we are asking, but I have had these cases before me every day, and we are doing nothing of the sort. In a case which was decided within the last two months, the Court said, "The question is, is the person a broker or a special agent? If he is a broker, he is not liable for the tax at all, and cannot be assessed under Rule 10, but if he is a general agent for the purpose of a special business he can be assessed." If my right hon. Friend can suggest any alternative. I am sure the Chancellor of the Exchequer will consider it, but it is really no good asking the Committee to vote without knowing the real facts. If the foreigner is to pay the tax, there is, as far as I know, no means of getting the money except from the agent.
§ Sir VANSITTART BOWATER
I am sure it must be very gratifying to Members on this side of the Committee to find some of those on the Front Government Bench at last coming round to Protection. I am quite sure that every Member on this side is very anxious that the foreigner 2115 should pay something, but if you are going to put a tax on foreign goods that come into this country, then, even if it is called an Income Tax, it is still a tax, and, whatever Members on the other side may say, it must be against their principles, if they have any principles, of Free Trade. If you have a bona fide agent in this country, whether he be the agent of only one firm or not, and he is simply earning his commission in a bona fide way, how can the Government or anyone else come upon him and expect him to pay the Income Tax on the profit that the manufacturer makes? How is that agent to find out? The manufacturer is not so stupid as to let the agent know what profit he is making. Whether he is an English manufacturer employing agents abroad, or a foreign manufacturer employing agents in this country, he does not confide in his agent to the extent of telling him what profit he had made. If we insist on taxing the agent, what does it mean? It means that we either force the agent to become a merchant, in which case not another penny of tax would be obtained, because his profit would be the same, or you force the foreigner to dispense with the agent and do the business direct, saving the agent's commission, which the consumer will not get. Hon. Members opposite profess to be endeavouring to find work for the unemployed, but that would be one of the first things to throw a great many people out of employment. It is all very well for hon. Members opposite to laugh, but it is a fact that if you do away with the agent, and the foreigner does his business direct, you will not get the tax from him, because you cannot get at him, and the agent and all his employés will be thrown out of employment.
In addition to that, will not the foreigner retaliate? Any number of big manufacturers in this country have their agents all over the world, and is it to be thought that the foreigner, in addition to the taxes we already have to pay on our goods that go into foreign countries, will not put on an impost, and make the agents pay Income Tax on the profits that are made by people in this country? I hope the Chancellor will see his way to accept the Clause. It is most reasonable. If Rule 10 protects the agent, how is it that the Income Tax collector is 2116 worrying the agents at present? I will read a few lines from a letter I have received during the last few days:Your news that the matter is to come before the House to-day possibly accounts for our receiving yesterday forms to fill in on behalf of foreign principals. Of our various principals we have only been attacked on account of one. The officials select one presumably to try to establish that we are a branch. I find those are the usual tactics.If Rule 10 protects the agent, why are the Income Tax people bullying people in this way? [An HON. MEMBER: "What firm is that?"] A very responsible firm in the City of London. I am prepared to give the Chancellor of the Exchequer the name, but not all the hon. Members opposite. I was pleased to see an hon. Member opposite strongly supporting the arguments which have been used by several Members on this side, and I think there is a very strong case for the Chancellor of the Exchequer to take into consideration and to accept the Clause.
§ Mr. D. HERBERT
I have had a certain amount of direct personal experience in these matters. It seems to me that there has been a certain confusion running through the whole Debate, created to a great extent by a fear as to the action of the Inland Revenue. The Attorney-General realises that this Clause is directed immediately to relieving from personal liability an agent who is not in receipt of the profits that he wants to tax, and who may quite possibly be absolutely unable to recover from his principal. If the revenue cannot recover from the principal, it is at least possible, and in most cases probable, that the agent also cannot recover from the principal. If that is so, it is, of course, contrary to all the principles of equity that because you cannot get the tax out of the principals, sooner than go without it you should get it out of some poor, harmless individual, who has done nothing to deserve being penalised in that way. There are cases, of course, which are quite different from that, where the agent may be said to be in league with his principals. An hon. Member opposite referred to a case in which he was concerned as a Controller during the War. I was concerned in an absolutely similar case, one, probably, very well known to the Attorney-General, and certainly to many Members of the House, where a German firm established 2117 a factory over here, ran it as an English company and took care that not a penny of profit was made by the English firm, but it was all made by the German firm, who owned the shares and bought the product and resold it to merchants in London. Then, by a piece of book-keeping, they put all the profit into Berlin instead of this country. The Attorney-General asks how we are going to get at these people, if not through the agent? I suggest that it is not beyond the capacity of English law to get at these people, so long as there are assets in this country.
§ The ATTORNEY-GENERAL
Where there are assets in this country the position might be met, but in 99 cases out of 100 they are cases where there are no assets and no business in this country. The only business is the business of sale or exchange, which is conducted agents, and there are no assets.
§ Mr. HERBERT
I am much obliged for that statement, but I think the Attorney-General is a little wrong when he says that in 99 cases out of 100 there are no assets. My point is that in an immense number of cases, I will not say 99 per cent., but 50 per cent., there are assets in this country. Where it is a case of fraud, the arm of the English law is strong enough to get at them. [HON. MEMBERS: "Divide!"] I am trying to meet the points which the Attorney-General and the Financial Secretary have quite properly made. Is it right, in order to try to deal with a comparatively few thoroughly dishonest people, instead of resorting to a process based upon the allegation of fraud, to pass a law under which you penalise and make personally liable for the tax a perfectly innocent agent, who is less able to recover the tax than the revenue authorities are. [HON. MEMBERS: "Divide!"] If hon. Members on the Back Benches opposite would only be as polite and perhaps as intelligent as those who have been good enough to listen to me from their own Front Bench—
§ Mr. E. BROWN
I have tried to listen to the hon. Member for the last 20 minutes and hon. Members on his own Front Bench have prevented my doing so.
§ Mr. HERBERT
I want to put the matter in plain words. In most cases it 2118 will be admited that if recovery can be made against the foreigner no one is better able than the Crown, with all their special resources, to recover. Let me remind the Attorney-General that the Crown has certain machinery, which it has endeavoured to put into operation within the last few years, under the Crown Suits Acts, a process which is not for a private individual in this country. The Crown has a greater power to recover from the foreigner than has a private individual. If the Crown is unable to recover from the foreigner it is grossly unfair that the Crown should pass a law that a private individual, who may be absolutely innocent, should be compelled to pay for the principal when he is utterly unable to recover the money.
There is the other point which has caused so much disturbance in the City of London. The Attorney-General referred to the rule under the Income Tax Act of 1918, which is copied from the Act of 1915. I think that I am right in understanding him to say that the foreigner is considered to be chargeable where there is a special agent carrying on trade or business in this country. That I think is a great part of the disturbance in the City of London. What is the meaning of "special agent," and what is the meaning of "exercising or carrying on trade or business in this country?" The class of case which the revenue have been endeavouring to tax lately, and which has caused this disturbance, is this type of case. Producing companies in the Colonies or abroad, whether they produce tea, sugar, coffee, nitrate, rubber or whatever it is, in some cases sell their produce by going to no end of different general brokers, and I understand that the hon. and learned Gentleman says that they are not taxable. I rather gather from what he says that if instead of doing that they go to one firm of brokers and say, "We wish to arrange for the disposal of the whole of our crop through you, and you will incidentally make advances to us" it means that there is a special agency. I understand that the Attorney-General assents to this.
This does affect the very root of the whole of our entrepot trade on which the great financial business of the City of London is based. The hon. and learned Member shakes his head. I will not for a moment attempt to argue upon the law with him, but I have, perhaps, more 2119 personal experience of this particular kind of business in the City of London than he has, and an immense number of these companies, particularly in these days, find it necessary to go to a special agent as their broker or their produce merchant, because it is through them they get financed, and get all sorts and kinds of advantages which result from having a definite correspondent in the financial world. It has always been considered, until lately, that the rule to which the hon. and learned Gentleman referred relived those companies from taxation. In reference to the company of which I am speaking, and which he says would be chargeable, may I ask with what is it chargeable, and on what profits is it chargeable? Suppose it to be rubber, the rubber is grown, all the labour in connection with it is done, all the expense is paid, and all the goods are collected in a foreign country. [Interruption.] I am endeavouring to be as short as I can. I can assure hon. Members opposite, who do not realized the importance of this question, that as long as I am able to stand up, and that as long as representatives of the Government are good enough to listen to me, I am not going to be stopped by the Back Benches, so the sooner I can get on, the sooner I shall finish.
The point I am making is this. One of these companies producing rubber, tea, sugar or whatever it is, sends it produce all over the world, spends the whole of its money in producing these products abroad, and the only thing that is done in this country is that the broker or agent who earns a profit in the form
§ of the commission he makes on the contract with the buyer and gives the particulars of that contract to the foreign company in order that they may deliver the goods. Is that company, because it has made a special agreement to deal with one general broker only, to be liable to pay tax. The Attorney-General must give us a definite answer to this one way or another. He shakes his head now, but he nodded his head in the affirmative when I asked him whether the making of an agreement with one broker constituted a special agent. [Interruption.] I suggest to the Chancellor of the Exchequer that it is of the utmost importance that these companies should not be thought liable for taxation. It is of the greatest importance that those engaged in merchant businesses in London should—[Interruption.]
§ Mr. HERBERT
I want the Chancellor of the Exchequer—and no one realizes better than himself—[Interruptions.] If I am allowed one more minute I will finish—
§ Question put accordingly, "That the Clause be read a Second time."
§ The Committee divided: Ayes, 156. Noes, 260.2123
|Division No. 136.]||AYES.||[11.1 p.m.|
|Agg-Gardner. Rt. Hon. Sir James T.||Cayzer, Maj. Sir Herbt R.(Prtsinth. S.)||Edmondson, Major A. J.|
|Amery, Rt. Hon. Leopold C. M. S.||Cecil, Rt. Hon. Sir Evelyn (Aston)||Elveden, Viscount|
|Baldwin, Rt. Hon. Stanley||Chadwick, Sir Robert Burton||Erskine, James Malcolm Monteith|
|Balfour, George (Hampstead)||Chamberlain, Rt. Hon. N. (Ladywood)||Falle, Major Sir Bertram Godfray|
|Barnston, Major Sir Harry||Chapman, Sir S.||Ferguson, H.|
|Beckett, Sir Gervase||Chilcott, Sir Warden||FitzRoy, Capt. Rt. Hon. Edward A.|
|Bellairs, Commander Carlyon W.||Clarry, Reginald George||Forestier-Walker, L.|
|Betterton, Henry B.||Clayton, G. C.||Gates, Percy|
|Birchall, Major J. Dearman||Cockerill, Brigadier-General G. K.||Gaunt, Rear-Admiral Sir Guy R.|
|Bird, Sir R. B. (Wolverhampton, W.)||Colfax, Major Wm. Phillips||Greene, W. P. Crawford|
|Blades, Sir George Rowland||Cope, Major William||Greenwood, William (Stockport)|
|Blundell, F. N.||Courthope, Lieut.-Col. George L.||Grenfell, Edward C. (City of London)|
|Bourne, Robert Croft||Crooke, J. Smedley (Deritend)||Gretton, Colonel John|
|Bowater, Sir T. Vansittart||Cunliffe, Joseph Herbert||Guinness, Lieut.-Col. Rt. Hon. W. E.|
|Bowyer, Capt. G. E. W.||Curzon, Captain Viscount||Hacking, Captain Douglas H.|
|Briscoe, Captain Richard George||Dalkeith, Earl of||Hall, Lieut.-Col. Sir F (Dulwich)|
|Bullock, Captain M.||Davies, David (Montgomery)||Hannon, Patrick Joseph Henry|
|Burman, J. B.||Davies, Maj. Geo. F.(Somerset, Yeovil)||Harland, A.|
|Burney, Lieut.-Com. Charles D.||Dawson, Sir Philip||Harmsworth, Hon. E. C. (Kent)|
|Butler, Sir Geoffrey||Deans, Richard Storry||Henn, Sir Sydney H.|
|Butt, Sir Alfred||Dixon, Herbert||Hennessy, Major J. R G|
|Cautley, Sir Henry S.||Eden, Captain Anthony||Herbert, Dennis (Hertford, Watford)|
|Hogg, Rt. Hon. Sir D. (St. Marylebone)||Pease, William Edwin||Stanley, Lord|
|Hope, Rt. Hon. J. F. (Sheffield, C.)||Pennefather, Sir John||Steel Samuel Strang|
|Howard, Hn. D.(Cumberland,Northrn.)||Penny, Frederick George||Sutcliffe, T.|
|Howard-Bury, Lieut.-Col. C. K.||Percy, Lord Eustace (Hastings)||Tattersall, J. L.|
|Huntingfield, Lord||Perkins, Colonel E. K.||Thomas, Sir Robert John (Anglesey)|
|Jackson, Lieut.-Colonel Hon. F. S.||Perring, William George||Thompson, Luke (Sunderland)|
|Jones, Henry Haydn (Merioneth)||Philipson, Mabel||Thomson, F. C. (Aberdeen, South)|
|Keens, T.||Pielou, D. P.||Thomson, Sir W. Mitchell-(Croydon, S.)|
|Kindersley, Major G. M.||Pownall, Lieut.-Colonel Assheton||Titchfield, Major the Marquess of|
|King, Captain Henry Douglas||Raine, W.||Turton, Edmund Russborough|
|Lane-Fox, George R.||Rankin, James S.||Vaughan-Morgan, Col. K. P.|
|Lloyd, Cyril E. (Dudley)||Reid, D. D. (County Down)||Waddington, R.|
|Lord, Walter Greaves-||Remer, J. R.||Ward, Lt.-Col.A. L. (Kingston-on-Hull)|
|Lumley, L. R.||Rhys, Hon. C. A. U.||Warrender, Sir Victor|
|MacDonald, R.||Richardson, Lt.-Col. Sir P. (Chertsey)||Watson Sir F. (Pudsey and Otley)|
|Maitland, Sir Arthur D. Steel-||Roberts, Samuel (Hereford, Hereford)||Wells, S. R.|
|Makins, Brigadier-General E||Ropner, Major L.||Weston, John Wakefield|
|Marriott, Sir J. A. R.||Roundell, Colonel R. F.||Wheler, Lieut.-Col. Granville C. H.|
|Mason, Lieut.-Col. Glyn K.||Russell, Alexander West (Tynemouth)||Wilson, Sir C. H. (Leeds, Central)|
|Meller, R. J.||Samuel, A. M. (Surrey, Farnham)||Wilson, Col. M. J. (Richmond)|
|Milne, J. S. Wardlaw||Samuel, Samuel (W'dsworth, Putney)||Windop-Clive, Lieut.-Colonel George|
|Mitchell, W. F. (Saffron Walden)||Sandeman, A, Stewart||Wintringham, Margaret|
|Mitchell, Sir W. Lane (Streatham)||Savery, S. S.||Wise, Sir Fredric|
|Moore-Brabazon, Lieut.-Col. J. T. C.||Sheffield, Sir Berkeley||Wood, Major Rt. Hon. Edward F. L.|
|Nall, Lieut.-Colonel Sir Joseph||Shepperson, E. W.||Wood, Sir H. K. (Woolwich, West)|
|Newton, Sir D. G. C. (Cambridge)||Simms, Dr. John M. (Co. Down)||Worthington-Evans, Rt. Hon. Sir L.|
|Nicholson, O. (Westminster)||Sinclair, Col. T.(Queen's Univ., Belfst.)||Wragg, Herbert|
|Nicholson, William G. (Petersfield)||Smith-Carington, Neville W.||Yerburgh, Major Robert D. T.|
|Oman, Sir Charles William C.||Somerville, A. A. (Windsor)|
|O'Neill, Rt. Hon. Hugh||Somerville, Daniel (Barrow-in-Furness)||TELLERS FOR THE AYES.—|
|Owen, Major G.||Spender-Clay, Lieut.-Colonel H. H.||Commander B. Eyres-Monsell and|
|Ackroyd, T. R.||Davies Ellis (Denbigh, Denbigh)||Henderson, T. (Glasgow)|
|Adamson, Rt. Hon. William||Davies, Evan (Ebbw Vale)||Henderson, W. W. (Middlesex,Enfield)|
|Adamson, W. M. (Staff., Cannock)||Davies, Rhys John Westhoughton||Hillary, A. E.|
|Alden, Percy||Davison, J. E. (Smethwick)||Hindle, F.|
|Alexander, A. V. (Sheffield, Hillsbro')||Dickie, Captain J. P.||Hirst, G. H.|
|Allen, R. Wilberforce (Leicester, S.)||Dickson, T.||Hobhouse, A. L.|
|Ammon, Charles George||Dodds, S. R.||Hodges, Frank|
|Aske, Sir Robert William||Duckworth, John||Hoffman, P.C.|
|Attlee, Major Clement R.||Dukes, C.||Hore-Belisha, Major Leslie|
|Ayles, W. H.||Duncan, C.|
|Baker, Walter||Dunnico, H.|
|Banton, G.||Edwards, G. (Norfolk, Southern)||Hudson, J. H.|
|Barclay, R. Noton||Egan, W. H.||Isaacs, G. A.|
|Barker, G. (Monmouth, Abertillery)||Emlyn-Jones, J. E. (Dorset, N.)||Jackson, R. F. (Ipswich)|
|Barnes, A.||England. Colonel A.||Jonkins, W. (Glamorgan, Neath)|
|Batey, Joseph||Falconer, J.||Jenkins, W. A. (Brecon and Radnor)|
|Becker, Harry||Foot, Isaac||Jewson, Dorothea|
|Benn, Captain Wedgwood (Leith)||Franklin, L. B.||John, William (Rhondda, West)|
|Berkeley, Captain Reginald||Gardner, B. W. (West Ham, Upton)||Johnston, Thomas (Stirling)|
|Birkett, W. N.||Gardner, J. P. (Hammersmith, North)||Johnstone, Harcourt (Willesden, East)|
|Bondfield, Margaret||Gavan-Duffy, Thomas||Jones, C. Sydney (Liverpool,W.Derby)|
|Bonwick, A.||George, Major G. L. (Pembroke)||Jones, J. J. (West Ham, Silvertown)|
|Bowerman, Rt. Hon. Charles W.||Gibbins, Joseph||Jones, Morgan (Caerphilly)|
|Briant, Frank||Gillett, George M.||Jones, T. I. Mardy (Pontypridd)|
|Broad, F. A.||Gorman, William||Jowett, Rt. Hon. F. W. (Bradford,E.)|
|Bromfield, William||Gosling, Harry||Jowitt, W. A. (The Hartlepools)|
|Brown, A. E. (Warwick, Rugby)||Gould, Frederick (Somerset, Frome)||Kay, Sir R. Newbald|
|Brown, James (Ayr and Bute)||Graham, W. (Edinburgh, Central)||Kedward, R. M.|
|Buchanan, G.||Greenwood, A. (Nelson and Colne)||Kennedy, T.|
|Buckingham, Sir H.||Grenfell, D. R. (Glamorgan)||Kenworthy, Lt.-Com. Hon. Joseph M.|
|Buckle, J.||Griffiths, T. (Monmouth, Pontypool)||Kenyon, Barnet|
|Burnie, Major J. (Bootle)||Groves, T.||Kirkwood, D.|
|Buxton, Rt. Hon. Noel||Grundy, T. W.||Lansbury, George|
|Chapple, Dr. William A.||Guest, J. (York, Hemsworth)||Laverack, F. J.|
|Charleton, H. C.||Guest, Dr. L. Haden (Southwark, N.)||Law, A.|
|Clarke, A.||Hall, F. (York, W.R., Normanton)||Lawrence, Susan (East Ham, North)|
|Climie, R.||Hall, G. H. (Merthyr Tydvil)||Lawson, John James|
|Cluse W. S.||Harbord, Arthur||Leach, W.|
|Clynes, Rt. Hon. John R.||Hardle, George D.||Lee, F.|
|Collins, Sir Godfrey (Greenock)||Harris, Percy A.||Lessing, E.|
|Collins, Patrick (Walsall)||Hartshorn, Rt. Hon. Vernon||Linfield, F. C.|
|Compton, Joseph||Harvey, T. E. (Dewsbury)||Livingstone, A. M.|
|Comyns-Carr, A. S.||Hastings, Sir Patrick||Loverseed, J. F.|
|Costello, L. W. J.||Hastings, Somerville (Reading)||Lowth, T.|
|Cove, W. G.||Haycock, A. W.||Lunn, William|
|Cowan, D. M. (Scottish Universities)||Hayday, Arthur||McCrae, Sir George|
|Crittall, V. G.||Hemmerde, E. G.||McEntee, V. L.|
|Darbishire, C. W.||Henderson, Rt. Hon. A. (Burnley)||Macfadyen, E.|
|Davies, Alfred Thomas (Lincoln)||Henderdson, A. (Cardiff, South)||Mackinder, W.|
|Maclean, Neil (Glasgow, Govan)|
|Macnaghten, Hon. Sir Malcolm|
|Mansel, Sir Courtenay||Rees, Sir Beddoe||Thomson, Trevelyan (Middlesbro, W.)|
|March, S.||Rees, Capt. J. T. (Devon, Barnstaple)||Thorne, G. R. (Wolverhampton, E.)|
|Marks, Sir George Croydon||Richards, R.||Thornton Maxwell R.|
|Marley, James||Richardson, R. (Houghton-le-Spring)||Thurtle, E.|
|Martin, F. (Aberd'n & Kinc'dine, E.)||Ritson, J.||Toole, J.|
|Martin, W. H. (Dumbarton)||Robertson, J, (Lanark, Bothwell)||Tout, W. J.|
|Masterman, Rt. Hon. C. F. G.||Robertson, T. A.||Trevelyan, Rt. Hon. C. P.|
|Maxton, James||Robinson, S. W. (Essex, Cheimsford)||Turner, Ben|
|Middleton, G.||Romeril, H. G.||Viant, S. P.|
|Millar, J. D.||Rose, Frank H.||Vivian, H.|
|Mills, J. E.||Royle, C.||Wallhead, Richard C.|
|Mitchell, R.M. (Perth & Kinross, Perth)||Scrymgeour, E.||Ward, G. (Leicester, Bosworth)|
|Mond, H.||Scurr, John||Watson, W. M. (Dunfermline)|
|Montague, Frederick||Seely, H. M. (Norfolk, Eastern)||Watts-Morgan, Lt.-Col. D. (Rhondda)|
|Morel, E. D.||Sexton, James||Webb, Lieut.-Col. Sir H. (Cardiff, E.)|
|Morris, R. H.||Shaw, Rt. Hon. Thomas (Preston)||Webb, Rt. Hon. Sidney|
|Morrison, Herbert (Hackney, South)||Sherwood, George Henry||Wedgwood, Col. Rt. Hon. Josiah C.|
|Morrison, R. C. (Tottenham, N.)||Short, Alfred (Wednesbury)||Wheatley, Rt. Hon. J.|
|Morse, W. E.||Simon, E. D. (Manchester, Withington)||Whiteley, W.|
|Mosley, Oswald||Sinclair, Major Sir A. (Caithness)||Wignall, James|
|Moulton, Major Fletcher||Smith Ben (Bermondsey, Rotherhithe)||Williams, A. (York, W. R., Sowerby)|
|Murray, Robert||Smith, W. R. (Norwich)||Williams, David (Swansea, E.)|
|Murrell, Frank||Snell, Harry||Williams, Dr. J. H. (Llanelly)|
|Naylor, T. E.||Snowden, Rt. Hon. Philip||Williams, Col. P. (Middlesbrough, E.)|
|Nixon, H.||Spence, R.||Williams, Lt.-Col. T.S.B. (Kennington)|
|O'Grady, Captain James||Spencer, H. H. (Bradford, South)||Williams, Maj. A.S. (Kent, Sevenoaks)|
|Oliver, P. M. (Manchester, Blackley)||Spero, Dr. G. E.||Williams, T. (York, Don Valley)|
|Paling, W.||Spoor, B. G.||Willison, H.|
|Palmer, E. T.||Stamford, T. W.||Wilson, C. H. (Sheffield, Attercliffe)|
|Pattinson, S. (Horncastle)||Starmer, Sir Charles||Wilson, R. J. (Jarrow)|
|Perry, S. F.||Stephen, Campbell||Windsor, Walter|
|Pethick-Lawrence, F. W.||Stewart, J. (St. Rollox)||Wood, Major M. M. (Aberdeen, C.)|
|Phillipps, Vivian||Stranger, Innes Harold||Woodwark, Lieut.-Colonel G. G.|
|Potts, John S.||Sturrock, J. Leng||Wright, W.|
|Purcell, A. A.||Sunlight, J.||Young, Andrew (Glasgow, Patrick)|
|Raffety, F. W.||Sutherland, Rt. Hon. Sir William|
|Rathbone, Hugh H.||Terrington, Lady||TELLERS FOR THE NOES.—|
|Raynes, W. R.||Thomas, Rt. Hon. James H. (Derby)||Mr. Allen Parkinson and Mr.|
|Rea, W. Russell||Thompson, Piers G. (Torquay)||Warne.|
Question, "That the Question be now put," put, agreed to.