HC Deb 04 July 1927 vol 208 cc1041-57
Sir H. BUCKINGHAM

I beg to move, in page 19, to leave out from the beginning of line 14, to the word "requiring" in line 15, and to insert instead thereof the words With a view to preventing the avoidance of the payment of super-tax, and where the Special Commissioners have reasonable grounds for believing that any individual has systematically engaged in transactions as defined in this Section with a view to such avoidance, the Special Commissioners may serve upon him a notice. May I ask whether it is intended to have a general discussion on this Amendment?

The DEPUTY-CHAIRMAN

I think it would be better if we took each Amendment separately as it comes.

Sir H. BUCKINGHAM

This Clause is similar to Clause 29 in some respects. It prevents evasion and it has also caused a good deal of unrest in the public mind. Under the Clause as it stands very extensive powers are given to the Special Commissioners to call upon any individual at any time and at any period to render an account of his transactions, and if it is found that he has exceeded by 5 per cent. The amount of Super-tax he should have paid he is likely to be assessed on the difference. It will be admitted that these are sweeping powers, and the whole object of the Amendment is to reduce them somewhat, and that the object of the Clause should be stated at the very beginning. My Amendment proposes that the Clause should start: With a view to preventing the avoidance of the payment of super-tax, and where the Special Commissioners have reasonable grounds for believing that any individual has systematicaly engaged in transactions as defined in this Section with a view to such avoidance, the Special Commissioners may serve upon him a notice. If the Chancellor of the Exchequer accepts the Amendment it will limit the number of people who will be subject to this inquisitorial process and it will be an advantage if the reason for this inquisitorial process is defined at the beginning.

The ATTORNEY-GENERAL

The Government is unable to accept this Amendment, but I think I can do something to relieve the apprehensions of the hon. Member. He is anxious that anyone who is called upon to give the required particulars and by any chance it is found that the result of his transactions has been to exceed the 5 per cent. he would become liable to pay Super-tax under the provisions of this Clause. Without transgressing your ruling that we are not to have a general discussion I can relieve the hon. Member's anxiety to some extent.

12.0 m.

The Committee will see that, first of all we are proposing that the percentage of Super-tax avoided to attract liability under the Clause instead of being 5 per cent. shall be 10 per cent. We are introducing a provision that there must have been a systematic avoidance. Where it is merely an isolated case, that shall be a ground for exemption from liability. We are proposing also to introduce words not exactly in the terms of the two following Amendments—in page 19, line 16, after the word "any" to insert the words "income bearing"; and in page 19, line 16, to leave out the word "assets," and to insert instead thereof the words "fixed income bearing assets (not being shares or stocks dependent on the yearly earnings of companies)"—but words which I think will cover those Amendments. We are proposing on Report to limit the class of transaction in fixed income-bearing securities to transactions in shares not carried out through the Stock Exchange or paying the ordinary transfer duty. We keep out of the Clause the ordinary dealings in shares on the Stock Exchange. I hope the Committee will realise that that is a substantial concession.

Mr. SMITHERS

Is that the Amendment in page 19, line 16, to leave out the word "assets," and to insert instead thereof the words "fixed income-bearing assets (not being shares or stocks dependent on the yearly earnings of companies)?"

The ATTORNEY-GENERAL

We cannot accept that Amendment, nor the preceding Amendment—in page 19, line 16, after the word "any," to insert the words "income bearing," as they stand, because they are limited entirely to fixed income-bearing assets. We want to get at such transactions as are done outside the Stock Exchange with the object of dodging the tax. We propose to accept the Amendment, in page 19, line 37, to leave out the word "options." We cannot accept, in the words in which it stands on the Paper, the Amendment, in page 20, line 28, at the end, to insert the words: (7) Where any individual proves that his income for any year has been increased by reason of his having acquired beneficially any asset which at the time of its acquisition by him included the right to any income in respect of any period prior to the date of such acquisition any income from such asset shall, whether the same accrued from day to day or not, be deemed to have been apportionable from day to day, and only the proportion of such income which shall be attributable to the period subsequent to the date of such acquisition shall be included in the total income of such individual for such year. We are, however, prepared to bring forward an Amendment on Report to deal with the case where a man regularly and substantially should have enhanced his Super-tax liability by buying fixed income-bearing securities cum dividend. I think the Committee will see that by these Amendments we have gone a long way to meet the position.

Mr. S. SAMUEL

With respect to the Amendment to which the Attorney-General referred, the new Sub-section (7), the object is that if a man sells securities, say, war stock, with—

Mr. GILLETT

On a point of Order. Are we not on the first Amendment?

The CHAIRMAN

The Attorney-General has made a statement really on the whole Clause, following the practice which has been pursued. I am not quite sure whether the hon. Member for Putney (Mr. S. Samuel) is referring to the Amendment 181 on the Order Paper—new Sub-section (7). That should come as a new Clause.

The ATTORNEY-GENERAL

I apologise if I have transgressed; but I thought it would be for the convenience of the Committee to know what course the Government intended to adopt in regard to the Clause, generally. With regard to the actual Amendment, one of the reasons why we cannot accept it is because at the stage when the Commissioners ask for the particulars they could not be in a position to prove, with any legal evidence, that there has been systematic engaging in transactions such as are defined in the Clause, and if the person who was asked to make a return merely defies the Commissioners then there is to be a trial as to whether the Commissioners' grounds were reasonable, and it will put the Commissioners in a position of complete difficulty when ex hypothesi they have not got the information. On the other hand, there certainly is no intention of demanding wholesale particulars. At present the Commissioners have the widest powers of demanding detailed particulars from everybody who is liable to Super-tax.

The CHAIRMAN

Is the right hon. and learned Member commenting on the Amendment which will come on as a new Clause?

The ATTORNEY-GENERAL

No. I was dealing with the Amendment which is under discussion. The Amendment now before the Committee limits the power to cases where the special Commissioners have reasonable grounds for believing that an individual has systematically engaged in transactions as defined in this Clause, with a view to avoidance of the tax. I was pointing out to the Committee that that is an Amendment which we cannot accept, because it would mean that anybody who was served with a notice could, if he chose, say: "I do not believe there are any reasonable grounds that you can show for believing that I have systematically done this. Accordingly, I shall not make a return." It would be almost impossible for the Commissioners at that stage to give evidence which would satisfy the tribunal of the reasonableness of their grounds. There is no danger of the Commissioners using these powers in the way which seems to be anticipated by my hon. Friend in moving the Amendment. What the Clause is intended to touch are the flagrant cases, which certainly exist, where there is a perpetual and deliberate avoidance of Super-tax by the sale to a company just before a dividend is declared. The reason why I say that there is no real ground for suspecting the Commissioners of using this power arbitrarily, is that with regard to any Super-tax payer the Commissioners have power to demand full particulars of such details as they require, under Section 66 of the Finance Act, 1910. As we know, these powers exist at present, but they are not used except to such an extent as may be reasonably necessary to check the accuracy of the returns. The object of the Clause is one with which everybody sympathises and the Amendments which I have indicated will, I hope, satisfy the Committee that it will be limited within reasonable bounds. I trust, therefore, that my hon. Friends will see their way not to press the Amendment which is under discussion.

Sir R. HORNE

I wish to be sure that I understand thoroughly what the Attorney-General proposes to do. In the first place, as I understand from the answer he has given to my hon. Friend, the proposal is to limit the operation of this Clause to fixed interest-bearing securities.

The ATTORNEY-GENERAL

It is limited to fixed interest-bearing securities and transactions on which the ordinary Stamp Duty is not paid.

Sir R. HORNE

It is also the intention of the Government that if the person selling one of these fixed interest-bearing securities, has to pay the amount of Super-tax to which he would be liable upon what is estimated to be his income on the capital price at which he gets the stock, the person who buys the stock will, on the other hand, be relieved of Super-tax to the extent that the first person—the seller—has paid it? That I understand to be the meaning that the right hon. and learned Attorney-General has derived from the last Amendment on the Paper in the name of my hon. Friend the Member for Wandsworth (Mr. Samuel Samuel). I should like to be sure of that, because it is important in regard to the discussion on the Amendment which is before the Committee now.

Mr. CHURCHILL

The intention of the Government is that the same sum of money shall not be taxed twice. We agree that the Clause as it now stands in no way alters the general practice which is in vogue, and if it be considered that further words are wanted to make it quite clear that the tax will not be collected twice on any sum of money, we will undertake to do so before the Report stage is reached.

Mr. SMITHERS

On the point of Super-tax being payable twice over on the same income, I want to thank the Chancellor of the Exchequer for the promise to look into that, but I want to call the attention of the Chancellor of the Exchequer to another important matter. I can best explain it by a simple illustration. Supposing a Super-tax-paying individual buys £100,000 War Loan and holds it for five months, and at the end of five months sells it to another Super-tax-paying individual. Supposing the first man is attacked by this Clause and he has to return in his assessment to Super-tax the accrued amount he would have received on that five months. I presume that, if the Revenue is successful, he would have to pay Super-tax on that five months to the Inland Revenue. Presuming that the second man keeps it over the dividend date and he is in possession of the six months' coupon or in possession of the stock when the dividend was declared, would that second man be liable for the whole six months' dividend? If he is, then the Government has eleven months' dividend on the same income for six months. Then there is also the case of the man who had held some shares for about two years. A dividend was declared on those shares and he sells them, cum-dividend, before they were declared on the Stock Exchange to be ex-dividend. When the directors of a company recommend a dividend, there is a certain space of time, very often several weeks, between the time the dividend was recommended by the directors, and before it was authorised by the general meeting. During that period, the holder of those shares which are transferred sells those shares, cum-dividend, to a second party who will have them until the general meeting. The point is that before they are declared ex-dividend, there is no time to get them out of the first man's name. The dividend was sent to him. He, in a accordance with Stock Exchange practice, passes that dividend on to the man to whom he sold it. He has received a notice from the Revenue authorities that he is liable for tax on that dividend to which he was not entitled, but which he in fact never received and which he was bound, according to the universal practice, to pass on to the man to whom he sold them. I understand that the law of the land is that the man who receives the dividend is responsible for the tax on that dividend, whether he sells the stock or not. If that be the case—taking the first instance which I have given—how is the man who bought this stock, only to hold it for one month, to escape paying the whole of the Super-tax? I am afraid this is a rather complicated point, but I hope I have made it clear. I am one whose business is to enter into these details, and, even if the Chancellor of the Exchequer had the best will in the world, I do not see how, as the law now stands, that second man, who only holds the stock for one month. can possibly get out of paying Super-tax for the whole six months, should he be asked to do so. I hope the Chancellor or his advisers will look into the point and see if they cannot deal with it in the Bill. Pious expressions of opinion on the Floor of the House are no good in the City. We want it stated definitely in the Bill that Super-tax shall not be charged twice over on the same income.

Mr. CHURCHILL

My hon. Friend wrote to me and furnished me with particulars of a case in which, he says, the tax was being collected twice over, and he indicated that a good many people in the City who saw the letter from the Inland Revenue officials in that case thought we were already putting into operation some of the provisions of Clause 31. That was an entire delusion. The particular case is one which does not happen frequently, and it happened under the existing law and has nothing to do with the new legislation which we are introducing in this Bill. It is true that in the case of a sale after the dividend has been declared or before the stock goes ex-dividend, the dividend is adjudged to belong to the vendor, although the sale is cum-dividend. It has happened, and is happening at the present time, in a number of cases that the tax which ought to have been collected from the vendor in those circumstances, has been paid by the purchaser who, coming into possession of the dividend, includes it in his income for Super-tax purposes. What, in fact, has happened is that a certain number of people have failed to pay as vendors when they ought to have paid, and a certain number have paid as purchasers what they need not have paid. That is how it has worked over the Stock Exchange in practice for a considerable number of years and that is not affected at all by what we have done.

As a matter of fact, what the revenue has been losing on the one hand it has gained on the other, and it has not made any particular outcry about it. Now that we are dealing with this matter in Clause 31, these problems arise in a more precise and difficult form, but not in an aggravated form. All I can say upon the subject is that in our view, now that the matter has been raised, tax ought not to be collected twice on the same dividends, whether that dividend is represented in the capital value before sale, or in the dividend received after the purchase by the purchaser. It may be that the tax should be divided between the two parties and that the accrued value up to the date of sale should be attributed to the vendor, and the remainder, after purchase, to the purchaser. That may appear complicated and difficult but that is the principle to which we should like to give effect. None of this is going to affect the ordinary run of Stock Exchange transactions or the daily experience of those dealing in these matters because questions will not arise unless a particular individual has been found to have reduced his Super-tax in the current year—the year in question—by more than 10 per cent. through the practice of selling cum dividend. That individual, when so charged—I use the word not in any criminal sense—when so approached, on the subject, has the right to say that he did not do it systematically. At his option, not at the option of the Inland Revenue, he may refer to three previous years to show that there has been no similar practice of sales cum dividend. Consequently, it is only in these very rare cases where it is established that there is evasion going on to the extent of more than 10 per cent. that the new question connected with this matter will arise at all. They are wholly exceptional cases. I was asked in how many cases the Board of Inland Revenue contemplated calling for a return from individuals under this Clause 31, and the figure I mentioned was far too high. Perhaps a few hundred cases will be sufficient to check the abuse. Subject to confirmation by Parliament of our proposals, inquiries into this number of cases will be sufficient to check abuse. That being so, we must regard this as a matter which, once passed into law, will not affect the ordinary transactions.

Mr. E. GRENFELL

With regard to the question of the shares, shares do not enter into this matter at all, because they are expressly excluded. The real difficulty the Chancellor will have to arrange is where an offending person "A" has held stock for four or five months. He will be charged interest on that as if he received the coupons. It will be sold to an unknown person "B" who, when he receives his coupon in the ordinary course, will be charged the full six months. In that case the Government will receive from "A" five months and from "B" six months, but I do not see that it damages anyone particularly. "A" has been caught out and "B'' has paid the interest he would have paid.

Sir B. PETO

I do not want to deal with special cases, but I do want to say in regard to this Amendment that the answer of the Attorney-General entirely dealt with the intention of the Government regarding this Clause. The Chancellor of the Exchequer has told us that the Government do not contemplate what some of us feared to be the purpose of the Clause, but we have to deal with the Clause as it stands, and even with the Amendments which the Attorney-General and the Chancellor have indicated the substance of the Clause will remain. It will always be possible to expand the Clause; the Amendments may be whittled away by some future Government. The fact remains that the Clause does give the Income Tax Commissioners power to serve a notice on any individual calling on him to make a return of all his stock and share transactions during the year. The Attorney-General says the Income Tax Commissioners have the power to make the fullest inquiries as to the income of any Super-tax payer. That is perfectly true as regards income, but apart from this Clause there is no power to call for a return of every stock and share transaction showing when you bought and when you sold and asking you to account for the exact number of months' interest accrued in each case. It is quite true that the Amendments put down by the hon. Member for the City of London, which the Government are going to accept in a modified form, will limit the scope of the Clause, but the principle is an absolutely new one. In order to catch some few people who seek to avoid Super-tax by transferring stocks just before the dividend is due, the Government are setting up new machinery, and no one knows how it will be used at some future time. It will be no use to say then "In 1927 the Chancellor of the Exchequer said it was never contemplated to do this or that"; or "The Attorney-General said that was not the intention or the Government's intentions and what was contemplated will not matter." The Clause does give the Income Tax Commissioners fresh powers to make inquisitions which can in future be used to any extent, and even universally.

Mr. SMITHERS

I apologise for intervening again, but I want to ask your guidance about two more points I have to raise. I cannot for the life of me see on which Amendment I can raise them.

The CHAIRMAN

If the hon. Member thinks it necessary to raise them he had better do so at once.

Mr. SMITHERS

Clause 31 distinctly says it applies only to Super-tax. The question may be put to me, and I wish to ask the Chancellor: Under Clause 31 will there be any income assessable for Super-tax only? How can there be income assessable for Super-tax if there is no Income Tax? Super-tax returns are based on Income Tax returns; you must have some Income Tax basis before you can have a Super-tax basis. Is there income from a Super-tax point of view which is not income from an Income Tax point of view?

My other point concerns a change of investment. I take the simple case of two stocks which pay their dividends on the same date and are of the same class of security. Supposing an individual holds some India 3 per cent. but at the end of five months decides to change it for India 3½ per cent., because on a yield basis it pays him to make that exchange. Suppose he is approached by the Inland Revenue authorities for Super-tax on his accrued dividend on the India 3 per cent., will he be allowed to set off against that the extra price he has paid for his India 3½ per cent. because he has bought it with five months' accrued dividend on it? These are two questions which I would like the Chancellor of the Exchequer to answer, or, if he cannot do so now, to consider.

Mr. PETHICK-LAWRENCE

As this discussion has become general, I think it would save time and be to the convenience of the Committee if I expressed the attitude of this side of the House to the whole of these Amendments. We shall naturally support the Government in opposing this Amendment under immediate discussion. As far as the Amendments which the Chancellor of the Exchequer has put down are concerned, we shall not be opposed to the Amendment—in page 19, line 34, to leave out the word "any" and to insert instead thereof the word "the"—as we regard it as a favourable alteration. With regard to the Amendment—in page 19, line 39, to leave out the word "five" and to insert the word "ten," we are opposed to it, because we think it unnecessarily broadens the possibility of escape. We consider the original five large enough and we shall oppose the proposed extension to ten. With regard to the Amendments—in page 20, line 10, to leave out the words "by him," and in page 20, to leave out from the word "assets" in line 10, to the end of line 14, and to insert instead thereof the words by or to him shall be deemed to have been received as and when it is deemed to have accrued. Provided that an individual shall not be liable to be assessed to super-tax under this Section in respect of any such income if he proves to the satisfaction of the Special Commissioners that the avoidance of super-tax was exceptional and not systematic, and that there was not in his case in any of the three next preceding years any such avoidance of super-tax as is described in the provisions of the last preceding Sub-section"— we are agreed that there should not be double Super-tax, and therefore, as far as the first is concerned, we are in favour of it; on the substitution of the words in the earlier part of the second we are agreed, but as far as the proviso is concerned we consider that it gives an unnecessary expansion of the means of escape, and we shall oppose it.

Mr. GILLETT

There is just one point I would like to put. There is not very much really in this question of double taxation, because the person who is suffering, that is the buyer, as we have already been told, is at the present time making himself liable and can always guard himself against any taxation of this kind. I want to ask the Chancellor of the Exchequer this point. He has not told us his reasons far taking out Stock Exchange transactions. Is he quite convinced that these individuals he is really searching after, when they find it can be done by the Stock Exchange, will not find that they have been given a loophole?

Mr. CHURCHILL

I am advised that that will not occur. The principal method of avoiding, Super-tax by a cum-dividend sale is operative on fixed income bearing securities and particularly on War Loan and Government stock. The method we particularly object to is where it takes place by means of a mere book-keeping transaction, and where in consequence there is no Stamp Duty collected, and there are none of the checks which operate in the case of a sale in the open market. When a sale takes place in the open market, there may be some check. There is payable the Stamp Duty and brokerage commission on the sale and another on the purchase. We consider these deterrents will be sufficient to protect this group of dealings from tax evasion.

Sir R. HORNE

May I ask if it is not really the fact that the only securities on which it has been proved worth while to carry out this device are Government securities, for which there is no Stamp Duty, and also ordinary bearer bonds? In practically no other forms of transfer is it worth while trying to dodge the tax, and I think it would be a good plan to confine the Clause to the class which are the real means of trying to escape tax. Thus, the Chancellor of the Exchequer will save the Inland Revenue trouble and also the taxpayer.

Amendment negatived.

Amendment made: In page 19, line 34, leave out the word "any," and insert instead thereof the word "the".—[Mr. Churchill.]

Mr. E. GRENFELL

I beg to move, in page 19, line 37, to leave out the word "options."

Mr. CHURCHILL

The Government accept this Amendment.

Amendment agreed to.

Mr. CHURCHILL

I beg to move, in page 19, line 39, to leave out the word "five," and to insert instead thereof the word "ten."

Question put, "That the word 'five' stand part of the Clause."

The Committee divided: Ayes, 23; Noes, 153.

Division No. 237.] AYES. [12.40 a.m.
Alexander, A. V. (Sheffield, Hillsbro') Hayday, Arthur Sinclair, Major Sir A. (Caithness)
Beckett, John (Gateshead) Hayes, John Henry Smith, Ben (Bermondsey, Rotherhithe)
Brown, Ernest (Leith) Hudson, J. H. (Huddersfleld) Strauss, E. A.
Cowan, D. M. (Scottish Universities) Jones, T. I. Mardy (Pontypridd) Wellock, Wilfred
Crawfurd, H. E. Kelly, W. T. Windsor, Walter
Dalton, Hugh Lawrence, Susan
Davies, Rhys John (Westhoughton) Lindley, F. W, TELLERS FOR THE AYES.—
Garro-Jones, Captain G. M. Pethick-Lawrence, F. W. Mr. Parkinson and Mr. Charles
Gillett, George M. Potts, John S. Edwards.
NOES.
Acland-Troyte, Lieut.-Colonel Dixey, A. C. Iliffe, Sir Edward M.
Agg-Gardner, Rt. Hon. Sir James T. Drewe, C. Inskip, Sir Thomas Walker H.
Ainsworth, Major Charles Eden, Captain Anthony Jacob, A. E.
Applin, Colonel R. V. K. Elliot, Major Walter E. James, Lieut.-Colonel Hon. Cuthbert
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. England, Colonel A. Jephcott, A. R.
Balfour, George (Hampstead) Fairfax, Captain J. G. Jones, G. W. H. (Stoke Newington)
Banks, Reginald Mitchell Fanshawe, Captain G. D. Kennedy, A. R. (Preston)
Beamish, Rear-Admiral T. P. H. Fielden, E. B. King, Commodore Henry Douglas
Bennett, A. J. Forrest, W. Lamb, J. Q.
Betterton, Henry B. Foxcroft, Captain C. T. Long, Major Eric
Bird, E. R. (Yorks, W. R., Skipton) Fraser, Captain Ian Lougher, Lewis
Boothby, R. J. G. Gadie, Lieut.-Colonel Anthony Lucas-Tooth, Sir Hugh Vere
Bourne, Captain Robert Croft Gibbs, Col. Rt. Hon. George Abraham Luce, Major-Gen. Sir Richard Harman
Briscoe, Richard George Glyn, Major R. G. C. Lumley, L. R.
Brittain, Sir Harry Goff sir Park Macintyre, Ian
Brown, Brig.-Gen.H. C. (Berks, Newb'y) Greene, W. P. Crawford McLean, Major A.
Buchan, John Grenfell, Edward C. (City of London) Macmillan, Captain H.
Buckingham, Sir H. Gretton, Colonel Rt. Hon. John McNeill, Rt. Hon. Ronald John
Burman, J. B. Grotrian, H. Brent Macquisten, F. A.
Calne Gordon Hall Gunston, Captain D. W. Margesson, Captain D.
Carver, Major W. H. Hall Cap. W. D'A. (Brecon & Rad.) Monsell, Eyres, Com. Rt. Hon. B. M.
Chadwick, Sir Robert Burton Hanbury, C. Moore, Sir Newton J.
Churchill, Rt. Hon. Winston Spencer Hannon, Patrick Joseph Henry Nall, Colonel Sir Joseph
Clayton, G. C. Harland, A. Nelson, Sir Frank
Cobb, Sir Cyril Harrison, G. J. C. Neville, Sir Reginald J.
Cochrane, Commander Hon. A. D. Hartington, Marquess of Newman, Sir R. H. S. D. L. (Exeter)
Cope, Major William Harvey, G. (Lambeth, Kennington) Nicholson, O. (Westminster)
Couper, J. B. Harvey, Major S. E. (Devon, Totnes) O'Connor, T. J. (Bedford, Luton)
Courtauld, Major J. S. Henderson, Capt. R. R. (Oxf'd, Henley) Oakley, T.
Cowan, Sir Wm. Henry (Islingtn., N. ) Heneage, Lieut.-Col. Arthur P. Peto, Sir Basil E. (Devon, Barnstaple)
Craig, Sir Ernest (Chester, Crewe) Henn, Sir Sydney H. Peto, G. (Somerset, Frome)
Crookshank, Col. C. de W. (Berwick) Hennessy, Major Sir G. R. J. Radford, E. A.
Crookshank, Cpt. H. (Lindsey, Gainsbro) Herbert, Dennis (Hertford, Watford) Raine, Sir Walter
Curzon, Captain Viscount Hills, Major John Walter Ramsden, E.
Davidson, J. (Hertf'd, Hemel Hempst'd) Hilton, Cecil Rawson, Sir Cooper
Davies, Maj. Geo. F. (Somerset, Yeovli) Hogg, Rt. Hon. Sir D. (St. Marylebone) Renter, J. R.
Dawson, Sir Philip Hopkins, J. W. W. Remnant, Sir James
Dean, Arthur Wellesley Horne, Rt. Hon. Sir Robert S. Rhys, Hon. C. A. U.
Roberts, E. H. G. (Flint) Sprot, Sir Alexander Watts, Dr. T.
Roberts, Sir Samuel (Hereford) Stanley, Lord (Fylde) Wells, S. R.
Ropner, Major L. Stanley, Lieut.-Colonel Rt. Hon. G. F. Williams, Com. C. (Devon, Torquay)
Salmon, Major I. Stanley, Hon. O. F. G. (Westm'eland) Williams, Herbert G. (Reading)
Samuel, Samuel (W'dsworth, Putney) Steel, Major Samuel Strang Wilson, R. R. (Stafford, Lichfield)
Sandeman, N. Stewart Storry-Deans, R. Windsor-Clive, Lieut.-Colonel George
Sanderson, Sir Frank Stuart, Crichton- Lord C. Wise, Sir Fredric
Sandon, Lord Styles, Captain H. Walter Womersley, W. J.
Savery, S. S. Thomson, F. C. (Aberdeen, South) Wood, B. C. (Somerset, Bridgwater)
Shaw, R. G. (Yorks, W. R., Sowerby) Tinne, J. A. Wragg, Herbert
Shepperson, E. W. Titchfield, Major the Marquess of Young, Rt. Hon. Sir Hilton (Norwich)
Skelton, A. N. Vaughan-Morgan, Col. K. P.
Slaney, Major P. Kenyon Warner, Brigadier-General W. W. TELLERS FOR THE NOES.—
Smithers, Waldron Waterhcuse, Captain Charles Captain Bowyer and Mr. Penny.

Motion made, and Question, "That the word 'ten' be there inserted," put., and agreed to.

Further Amendment made: In page 20, line 10, leave out the words "by him."—[Mr. Churchill.]

Mr. CHURCHILL

I beg to move, in page 20, to leave out from the word "assets," in line 10, to the end of line 14, and to insert instead thereof the words: by or to him shall be deemed to have been received as and when it is deemed to have accrued. Provided that an individual shall not be liable to be assessed to super-tax under this Section in respect of any such income if he proves to the satisfaction of the Special Commissioners that the avoidance of super-tax was exceptional and not systematic, and that there was not in his case in any of the three next preceding years any such avoidance of super-tax as is described in the provisions of the last preceding Sub-section.

Captain GARRO-JONES

I think in simple language this appears to be a mandate to any financier to have one evasive transaction every three years. What occasion is there for that? If it be necessary to prevent these transactions as a general rule, why should we give them this licence to evade Super-tax once every three years? It may prove to be that a very substantial amount is involved or it may prove to be that these financiers will carry out hundreds of transactions for minor amounts and will not be permitted to evade small sums, but once every three years they may sell half a million pounds of stock and evade the Super-tax. I should like to ask the Chancellor of the Exchequer what conceivable reason there can be for this licence for large transactions every three years. If there be no satisfactory reply forthcoming, I feel sure that it is a proposal that we on this side of the House will like to vote against.

Mr. BECKETT

On this Amendment, I hope that we are going to get a reply from the Chancellor of the Exchequer.

Mr. CHURCHILL

I will reply to the hon. Members below the Gangway who are distressed about this Amendment. What we wish to do is to check the abuse. We also desire not to interfere with the rapid flow of business. Therefore, we have been prepared to give the greatest possible measure of reassurance which we can give without destroying the efficiency of the proposal. I am advised that no appreciable loss of revenue will result from this. What we have in mind is systematic and habitual evasion of taxation by people who, as a rule, make it a regular policy on which they conduct their affairs. We do not wish, for the sake of striking at that, to prevent people from dealing in the ordinary way, sometimes selling cum dividend and incidentally avoiding tax when they are not doing it as a part of a settled and habitual policy. For that purpose we have introduced the, proviso. The proviso will have the effect of setting a great mass of people, who deal in stocks and shares, entirely at their ease so far as this Clause 31 is concerned. They can carry on without worrying about it at all. At the same time, I am advised that the proviso enables us to stop those who are making a speciality of tax evasion, and who, having been checked on Clause 29, will endeavour to save themselves through the device of resorting to sales cum dividend.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 21; Noes, 148.

Division No. 238.] YES. [12.53 a.m.
Alexander, A. V. (Sheffield, Hillsbro') Cowan, D. M. (Scottish Universities) Davies, Rhys John (Westhoughton)
Beckett, John (Gateshead) Crawford, H. E. Edwards, C. (Monmouth, Bedwellty)
Brown, Ernest (Leith) Dalton, Hugh Garro-Jones, Captain G. M.
Gillett, George M. Lawrence, Susan Wellock, Wilfred
Hayday, Arthur Lindley, F. W. Windsor, Walter
Hudson, J. H. (Huddersfield) Parkinson, John Allen (Wigan)
Jones, T. I. Mardy (Pontypridd) Pethick-Lawrence, F. w. TELLERS FOR THE AYES.—
Kelly, W. T. Potts, John S. Mr. Hayes and Mr. Benjamin Smith.
NOES.
Acland-Troyte, Lieut.-Colonel Goft, Sir Park Peto, G. (Somerset, Frome)
Ainsworth, Major Charles Greene, W. P. Crawford Radford, E. A.
Applin, Colonel R. V. K. Grenfell, Edward C. (City of London) Raine, Sir Walter
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Gretton, Colonel Rt. Hon. John Ramsden, E.
Balfour, George (Hampstead) Grotrian, H. Brent Rawson, Sir Cooper
Banks, Reginald Mitchell Gunston, Captain D. W. Remer, J. R.
Beamish, Bear-Admiral T. P. H. Hall, Capt. W. D'A. (Brecon & Rad.) Remnant, Sir James
Bennett, A. J. Hanbury, C. Rhys, Hon. C. A. U.
Betterton, Henry B. Hannon, Patrick Joseph Henry Roberts, E. H. G. (Flint)
Bird, E. R. (Yorks, W. R., Skipton) Harrison, G. J. C. Roberts, Sir Samuel (Hereford)
Boothby, R. J. G. Hartington, Marquess of Ropner, Major L.
Bourne, Captain Robert Croft Harvey, G. (Lambeth, Kennington) Salmon, Major I.
Briscoe, Richard George Harvey, Major S. E. (Devon, Totnes) Samuel, Samuel (W'dsworth, Putney)
Brittain, Sir Harry Henderson, Capt. R. R. (Oxf'd, Henley) Sandeman, N. Stewart
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Heneage, Lieut.-Col. Arthur P. Sanderson, Sir Frank
Buchan, John Henn, Sir Sydney H. Sandon, Lord
Buckingham, Sir H. Hennessy, Major Sir G. R. J. Savery, S. S.
Burman, J. B. Herbert, Dennis (Hertford, Watford) Shaw, R. G. (Yorks, W. R., Sowerby)
Calne, Gordon Hall Hills, Major John Waller Shepperson, E. W.
Carver, Major W. H. Hilton, Cecil Skelton, A. N.
Chadwick, Sir Robert Burton Hogg, Rt. Hon. Sir D. (St. Marylebone) Slaney, Major P. Kenyon
Churchill, Rt. Hon. Winston Spencer Hopkins, J. W. W. Smithers, Waldron
Clayton, G. C. Iliffe, Sir Edward M. Sprot, Sir Alexander
Cobb, Sir Cyril Inskip, Sir Thomas Walker H. Stanley, Lord (Fylde)
Cochrane, Commander Hon. A. D. Jacob, A. E. Stanley, Lieut.-Colonel Rt. Hon. G. F.
Cope, Major William James, Lieut.-Colonel Hon. Cuthbert Stanley, Hon. O. F. G. (Westm'eland)
Couper, J. B. Jones, G. W. H. (Stoke Newington) Steel, Major Samuel Strang
Courtauid, Major J. S. Kennedy, A. R. (Preston) Storry-Deans, R.
Cowan, Sir Wm. Henry (Islingtn., N.) King, Commodore Henry Douglas Stuart, Crichton-, Lord C.
Craig, Sir Ernert (Chester, Crewe) Lamb, J. Q. Styles, Captain H. W.
Crockshank, Col. C. de W. (Berwick) Long, Major Eric Tinne, J. A.
Crookshank, Cpt.H.(Lindsey,Galnsbro) Lougther, Lewis Titchfield, Major the Marquess or
Curzon, Captain Viscount Lucas-Tooth, Sir Hugh Vere Vaughan-Morgan, Col. K. P.
Davidson, J. (Hertf'd, Hemel Hempst'd) Luce, Maj.-Gen. Sir Richard Harman Warner, Brigadier-General W. W.
Davies, Maj. Geo. F. (Somerset, Yeovli) Lumley, L. R. Waterhouse, Captain Charles
Dawson, Sir Philip Maclntyre, Ian Watts, Dr. T.
Dean, Arthur Wellesley McLean, Major A. Wells, S. R.
Dixey, A. C. Macmillan, Captain H. Williams, Com. C. (Devon, Torquay)
Drewe, C. McNeill, Rt. Hon. Ronald John Williams, Herbert G. (Reading)
Eden, Captain Anthony Margesson, Capt. D. Wilson, R. R. (Stafford, Lichfield)
Elliot, Major Walter E. Monsell, Eyres, Com. Rt. Hon. B. M. Windsor-Clive, Lieut.-Colonel George
England, Colonel A. Moore, Sir Newton J. Wise, Sir Fredric
Fairfax, Captain J. G. Nail, Colonel Sir Joseph Womersley, W. J.
Fanshawe, Captain G. D. Nelson, sir Frank Wood, B. C. (Somerset, Bridgwater)
Fielden, E. B. Neville, Sir Reginald J. Wragg, Herbert
Forrest, W. Newman, Sir R. H. S. D. L. (Exeter) Young, Rt. Hon. Sir Hilton (Norwich)
Foxcroft, Captain C. T. Nicholson, O. (Westminster)
Fraser, Captain Ian O'Connor, T. J. (Bedford, Luton) TELLERS FOR THE NOES.—
Gadie, Lieut.-Col. Anthony Oakley, T. Mr. Frederick Thomson and Captain
Gibbs, Col. Rt. Hon. George Abraham Penny, Frederick George Bowyer.
Glyn, Major R. G. C. Peto, Sir Basil E. (Devon, Barnstaple)

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause, as amended, ordered to stand part of the Bill.