§ Sir WILLIAM DAVISON (by Private Notice)
asked the Chancellor of the Exchequer whether his attention has been called to the recent case in the House of Lords of The Crown v. Henning with regard to a taxpayer's liability for Income Tax on foreign dividends in a year when he received no income there-from; whether he is aware that in giving their decision the Lords drew special attention to the fact that notwithstanding that two Commissioners and four Judges had found in Captain Henning's favour he had been forced by the Inland Revenue to bear the heavy expense of taking the case right up to the House of Lords; whether all the costs incurred by Captain Henning in resisting the illegal claims of the Revenue Authorities will 137 be reimbursed to him by the Crown, and whether the Chancellor can assure the House that if a taxpayer in future wins his case on application to the Commissioners, and the authorities desire to carry such case further in order to decide a question of law, the Crown will bear the costs of both sides?
§ The CHANCELLOR of the EXCHEQUER (Mr. Churchill)
I am aware of the case of Whelan v. Henning to which my hon. Friend refers. The point in issue was, in effect, whether under the provisions of the Income Tax Acts tax in respect of income of the class in question is payable over a period of years by reference to the full amount of the income or to a smaller sum. The decision disapproves the interpretation of the law which had prevailed from the beginnings of our Income Tax code and the consequent position is receiving my attention.
On the question of costs in this case the position is as follows. In the High Court the Respondent appeared in person and was awarded costs by the Court. These have been paid as fixed by the Taxing Master. In the Court of Appeal Counsel was engaged by the Respondent, who was again awarded his costs by the Court. These will be paid when the bill of costs is delivered and taxed. Before the case came on in the House of Lords the Respondent was informed that the Crown would in any event pay all his costs in the House, subject to a reasonable limitation as regards Counsel's fees, and in answer to an observation by one of the learned Lords this arrangement was stated to the House by my right hon. Friend the Attorney-General. I have arranged to hear representations on the general question of costs incurred in these taxation cases, and my hon. Friend may rest assured that this difficult matter will receive my careful consideration in all its aspects.
§ Sir W. DAVISON
While thanking my right hon. and gallant Friend for what he has said, I hope he will hear in mind that a large number of taxpayers are prevented from having the benefit of the decision which they have obtained from the Commissioners by reason of the threat of carrying the matter to a higher Court, and the immense legal expenses thereby entailed.