HC Deb 08 June 1931 vol 253 cc731-51
Sir T. INSKIP

I beg to move, in page 3, line 36, to leave out the words "whether before or."

This Amendment, I submit, is one of great importance and is one which I hope in the limited time at our disposal will receive some consideration, if not adequate consideration. May I remind hon. Members, some of whom may be unaware of the fact, that the subject of this Amendment was raised at a late stage one night, or early one morning, when the Attorney-General mentioned the matter upon the Financial "Resolution which is the basis of the Bill, and I am justified in calling the attention of the Committee to the words the Attorney-General used in his appeal to the House to pass the Resolution. He said: The House, of course, will have ample opportunity, when we come to the Clauses of the Bill, to consider the details of this matter, which I will then expound more fully, but I forbear from doing so at the present stage."—[OFFICIAL REPORT, 5th May, 1931; col. 356, Vol. 252.]

I suppose that I am entitled to use unparliamentary language about myself, and I say quite frankly that I was a fool to respond to the appeal that was made to me—[HON. MEMBERS: "Agreed."] I ought to have expected that we should be debating this Bill under some such circumstances as the present, and I shall not be deterred from saying what I like by such interruptions as have occurred. As the Attorney-General has not expounded fully the proposals of the Clause, and as we have not, in his words, "ample opportunity" to consider the details of this matter, it is incumbent on us to make whatever use we can of the short hour allowed to us.

My proposal is to leave out some words which have been inserted with the intention of making Income Tax legislation retrospective, that is to say, I ask the Committee to leave out the words which the Attorney-General is deliberately asking the Committee to put into the Bill in order that the law maybe altered with regard to a litigant who is in the course of exercising his ordinary rights under the law as it is to-day. I do not propose to discuss the proposals of the Clause, but, in the absence of that full exposition which the Attorney-General promised us, I must say a few words which will, I hope, be sufficient to indicate what this Clause purports or attempts to do. As everyone knows, there is a practice in Income Tax law under which a company paying dividends deducts the Income Tax from the gross amount of the dividend. As everyone also knows it is assessed in each year upon a statutory measure of income in respect of its profits, and it pays tax in that particular year according to the amount of the assessment. But in a particular year it may very well happen, and indeed almost invariably does happen, that the sum payable by a company for Income Tax is quite different from the sum which in fact it deducts from the dividends paid by it in that year. The practice has existed for many-years, and, broadly speaking, it has been worked without any dissatisfaction and without objection being taken to it.

Surtax and Super-tax have raised new questions. A certain litigant, a Mr. Hamilton, took objection to being charged, by way of deduction from his gross dividends, any sum in excess of that which truly represented the Income Tax payable by the company in that particular year upon the assessment of its profits. I propose to say no more about the proposals of the Clause except that they are drafted in language which will be very difficult indeed even for a lawyer to understand. I doubt very much whether it will be possible, even after two or three hours discussion, to have any useful exposition of the language of the Clause. When the Financial Resolution was introduced, the Attorney-General described it as the most complex and intricate Clause in connection with Income Tax which it would be possible to discuss. Those two epithets were deliberately used by him. So the Committee can appreciate the possibilities at our command in discussing the proposals of the Clause.

But there is no doubt at all about this: Mr. Hamilton was engaged in the court in putting forward his objection to the assessment made upon him for Surtax, for the reason I have mentioned. His arguments may be good or they may be bad. They were advanced before a learned judge, who dealt with them most seriously, and he gave judgment against Mr. Hamilton. The Attorney-General came down with a Financial Resolution which proposed to alter the law, not with regard to future litigants in this held of Income Tax law, but to alter the law retrospectively so as to make it impossible for Mr. Hamilton to succeed in the appeal which he proposed to make. It so happens that the speed with which appeals in Income Tax matters have been heard has enabled Mr. Hamilton's appeal to be taken. The appeal has failed. Mr. Hamilton's objections to the longstanding practice to which I have referred as affecting his liability to Super-tax, have not prevailed before the Court of Appeal any more than before Mr. Justice Rowlatt in the first court.

Notwithstanding that fact, I understand that the Attorney-General still proposes to make the alteration of the law retrospective so as to prevent Mr. Hamilton from advancing his arguments in the highest tribunal of all, where times without number Noble Lords have found it possible to provide for the protection of the taxpayer even in the case of adverse judgments in both the courts upon the same question. But whether or not Mr. Hamilton's appeal is likely to succeed in the House of Lords is really immaterial to this discussion. I beg leave to say that he has a right of appeal based upon the law which was in existence at the time when the question arose. It is a monstrous invasion of that right, with which no hon. Member opposite will have any sympathy at the bottom of his heart, to alter the law retrospectively so as to make his rights depend, not upon what the law was three or four years ago when the question arose, but upon an altered law which the Attorney-General is asking the Committee to pass to-day.

The Income Tax laws are extraordinarily complex. Year after year we make them more intricate. I say with all respect that the House of Commons is incapable any longer of an intelligent appreciation of the various propositions that are introduced one after another in our Finance Acts. The Committee has depended up to now, and I believe it has been safe in being dependent, upon the undoubted integrity of those who have to administer this branch of the law, and upon the advice which the Law Officers and the Chancellor of the Exchequer give to the Committee. But once this House is asked on trust to allow the Chancellor or the Law Officers to alter the law retrospectively, this House is deliberately delivering the liberties of the subject, hand and foot, over the people over whom the House has no control whatever. It so happens that the right hon. Gentleman the Attorney-General, in his unregenerate days, expressed objection to retrospective legislation, and I take the liberty of reminding him of what he said. When I speak of his unregenerate days, I refer to the days when he sat on the Liberal benches. He said in 1923: Retrospective legislation, as everyone agrees, is not desirable if it, can he avoided. I should like to read to the House one quotation from one of the most eminent judges, perhaps the most eminent judge who ever sat on the English bench. He said this about retrospective legislation: 'It manifestly shocks one's sense of justice that an act legal at the time of doing it, should be made unlawful by some new enactment.'"—[OFFICIAL REPORT, 22nd February, 1923; cols. 1367 and 1368, Vol. 160.]

The Attorney-General used those words in this House. I hear his applause for them at this (moment. In view of the complexity of the Clause, I may be pardoned for quoting further from him. He was appealing to my right hon. Friend, then Sir Douglas Hogg, and myself, and he went on in that speech to express the hope that we would consider very earnestly and anxiously whether they cannot, in Committee, depart from the evil practice which has been established in the past and use the simple English language, which can quite easily be done, and make it intelligible to everyone."—[OFFICIAL REPORT, 22nd February, 1923; col. 1369, Vol. 160.]

My present purpose is to deal, not with the comparative unintelligibility of this Clause, but with the simple, plain issue as to whether retrospective legislation can be avoided. We were told by the Attorney-General on 5th May that if Mr. Hamilton's contention prevailed, confusion would result in the administration of the Income Tax laws. I am not prepared to accept that as sufficient reason for introducing retrospective legislation into the Income Tax laws. The Attorney-General on that occasion made a rather curious statement which I was not altogether able to understand. He said: That being so"—

namely, that the whole system of deduction from the source would break down if the Hamilton judgment were reversed: we have felt it necessary to take a step, which is by no means exceptional, and which should only be resorted to in special circumstances."—[OFFICIAL REPORT, 5th May, 1931; cols. 354–5, Vol. 252.]

I suppose by that he meant that there were cases of retrospective legislation in the past. Subject to correction, I beg to doubt if there has ever been a case of retrospective Income Tax legislation. If there had been such a case, I should accept what the Attorney-General says, but that should make us all the more cautious, as the Income Tax Acts are getting more and more complicated, about allowing any repetition of the unfortunate precedents of the past. I do not believe there is any such precedent in Income Tax administration. You can say what you like about retrospective legislation in fields which are well understood by hon. Members in all parts of the House, but if you introduce retrospective legislation into the Income Tax laws, you are really doing it in a field least suitable of all for its operation.

We are told that the Income Tax laws will be thrown into a state of chaos if we do not make it retrospective. In my humble judgment, it would be far more dreadful that the protection of the law should be withdrawn from the taxpayer than that there should be some inconvenience in the administration of the law. Far better a deficiency in the collection of Income Tax than give the impression to the public at large that they need not trouble about their rights, because if the exercise of them is inconvenient to the Treasury, their rights will be altered by Parliament retrospectively. There was a famous saying by Archbishop Magee, that England had better be free than sober. I venture to repeat that, and say it is better to be free than even to balance our Budgets. This is a sinister attempt upon the liberties of the taxpayer. It is a filching away of the subject's right. I challenge the Attorney-General or any hon. Member to defend this proposal to take away from the taxpayer the right which he has at the present time to insist upon the law being applied to his case without any interference retrospectively by Parliament. I am told that necessity compels this alteration. That is the argument which tyrants have always used when they have interferred with the liberty of the individual, as they have said, for the public convenience. It is one which I should be very much surprised if hon. Members opposite were prepared to countenance.

I know it is very likely that the Attorney-General will be able to secure votes in the Lobby for his proposal, but, if he thinks fit to preess it, I say in the presence of hon. Members opposite that I do not believe there is one of them who does not look with apprehension on the use of this weapon to alter the law retrospectively so as to deprive the taxpayer or the litigant of his rights as they exist. This Committee has been vigilant in protecting the rights of the taxpayer on many occasions famous in history. I hope this evening it will not connive with the Attorney-General in depriving the taxpayer of the right, almost the only right which he has under Income Tax law, of appealing to the Courts to apply that law strictly against the Crown if the words are not far beyond all possible doubt. Over and over again that principle of interpretation has been stated. It would be futile, ridiculous and useless if, when the Court has interpreted the law, Parliament can be asked by the Ministry of the day, with all the power at its command in the use of the votes of this House, to alter the law for the mere convenience of the collection of Income Tax, or any other tax. Therefore, I beg to move to leave out the words which will make this tax retrospective.

Sir DENNIS HERBERT

It is not necessary for me to add many words in support of the Amendment which has been moved by my hon. and learned Friend. I want to try, very briefly, to point out the simplicity of the issue before the Committee. We are not concerned in this Amendment with any question of the complex nature of the Income Tax Acts. The question which we have to decide briefly is this: If in the year 1928 or 1929, if, in a year several years ago, under the law as it stood, the taxpayer was liable to pay Surtax on certain money and not on other money, then, is it right for Parliament to legislate retrospectively in order to say that, although it was not the law in 1928 that the tax should be paid on this money, it shall be deemed to have been payable on that money although the law was to the contrary? For the purpose of this argument, we have to assume—and it is a perfectly justifiable assumption—that the House of Lords may decide the law on this subject in a contrary sense from the decision of the Court of Appeal in the first instance. The case is at the moment open to that decision by the House of Lords, and surely it is too much for any hon. Member of this House to say that, when a case is actually pending before the Courts of this country in regard to the rights and liabilities of the subject, the Legislature shall come down and take this matter out of the hands of the court, and say, "It matters not what their decision may be. In other words, it matters not what the law was in 1928; we think the law ought to have been something else, and we are going to pass legislation to say that the subject shall be treated as if the law three years ago was something quite different from what it really was."

That is the short point and I cannot suppose that any Member of the Committee who understands that simple point, can do otherwise than agree with our contention that it is wrong for Parliament to supersede the powers of the Courts of deciding what is the law. Obviously, it is equally wrong for Parliament to do what it is proposed to do here on the assumption that the House of Lords may decide the case adversely to the Government. It is quite unthinkable that Parliament should say, "Although tax was not payable on certain property three or four years ago, we are now going to enact that tax shall be payable on that property." I only wish to stress this one point. Here is a matter actually pending before the Courts of the country, and the Government propose to say to the Courts, "It matters not what your decision may be, we desire that the interpretation should be so and so, and we are therefore going to decide that it shall be so, by legislation, instead of having it decided by the Courts of the realm." It is quite clear that it is nothing more or less than the proposal of an autocratic despot who proposes to govern the country, not according to any set of laws at all, but according to what may be his mighty will and pleasure, and, who if he makes laws and then finds that they are inconvenient, not merely says, "I will put an end to those laws," but says "I shall treat my subjects as if those laws had never been made." Surely further words are not required to commend to all responsible Members of the House the proposition that this is a proposal in the Bill which cannot be allowed to go through.

Mr. SMITHERS

Will the Attorney-General please tell us when he replies, what are the "profits and gains" of the company, which the Chancellor of the Exchequer is trying to get at under this new rule?

The ATTORNEY-GENERAL (Sir William Jowitt)

For my own part I should be perfectly willing to accept the invitation which the hon. Member for Chislehurst (Mr. Smithers) has just extended to me, but you, Mr. Deputy-Chairman, I am sure, would say that I was out of order in doing so. It may be that I shall have an opportunity of expressing a view upon that point, but I regret that, solely for the reason which I have stated, I cannot do so now, and I am sure that the hon. Member will not think me discourteous for not dealing with the matter. I think that a good many of the observations which have been made are rather out of place. If I may say so without disrespect, it seems rather ridiculous to refer to our conduct in this case as being that of an automatic despot. [HON. MEMBERS: "Autocratic."] Perhaps there is not much difference between the two, but a despot, be he automatic or autocratic, has not to come to the House of Commons to get their consent to the proposal which he is putting forward.

With regard to the speech of the hon. and learned Member for Fareham (Sir T. Inskip), I listened with surprise to his statement that retrospective legislation—a form of legislation which I thoroughly dislike, and with regard to which I should repeat to-day precisely what I said some years ago—had not been resorted to in regard to Income Tax matters. My researches have not gone further back than the last 10 years, but within the last 10 years I have found instances in which all three parties are implicated—in the Finance Act of 1921, in the Finance Act of 1923, and in a very celebrated case, which arose out of the decision in McDonald versus Shand, in the Finance Act of 1924. I take the last case because, I think, it indicates the point, and demonstrates the real reason why we ought to object to restropective legislation. May I tell the Committee first what the position was in the case of McDonald versus Shand? It was the case of a man employed by a company on the basis of a fixed salary and a share of the profits, and the question arose whether in assessing him for Income Tax under Schedule E you were to assess the profits which he happened to get for the particular year, on exactly the same basis as his salary, or whether he was to have the privilege, if he wanted, of averaging out the profits over three years.

The highest tribunal in the land decided that he had the privilege of averaging out his emoluments so far as they were fluctuating, over the three years. It was felt that that same principle might apply to civil servants, who as the Committee know are paid part in salaries and part in a bonus which is dependent on the cost of living, and is to that extent, fluctuating. It was felt that if this concession were extended to the Civil Service not only would it cost a considerable sum of money but it would also unfairly differentiate between those civil servants whose assessments had been fixed and determined, and therefore were no longer able to appeal, and those who, not having had that process gone through with regard to their cases, consequently could still appeal. Doubt was expressed as to whether or not the decision would also apply to the fluctuating bonus of the Civil Service. Some of us thought that the case which the Government of the day put up was not strong enough then to justify the introduction of retrospective legislation. I was one who thought so, but the Committee of that day took a different view, and, since the hon. and learned Member for Fareham has done me the honour of quoting the words which I used on a different occasion, I should like to quote the words which were used then by the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) in explaining why he recorded his vote on that occasion to justify retrospective legislation. The right hon. Gentleman explained in words far better than any which I can hope to select what the true principle was and I entirely agree with the way in which he laid down that principle. He said: Before we consider whether this particular case is one which would justify legislation of that character"— That is retrospective legislation— we might perhaps ask ourselves why do we object so strongly to retrospective legislation. I think it is because if a man has done something which is perfectly legal, which is in accordance with the law of the land, which he would not have done if the law had been different, and if, subsequently to his performing that action, the law is altered retrospectively, then he is made to have done something illegally which he would not have done had he been in possesion of the coming change.… When did civil servants—because it affects civil servants for the most part—first become aware of the possibility of their getting anything back in respect of assessment made in those earlier years? Not till March, 1923, and, therefore, it is quite clear that even if such speculative and hypothetical rights as they may have, on the supposition that the case McDonald v. Shand may also cover the case of war bonus, were taken away from them, it cannot be said that they are in the position of a man who has either done something or omitted to have done something in consequence of his believing the law of the land would remain the law of the land. Nothing has been done or undone by those civil servants which they would not have done or undone if the law had been quite clear and altered in the sense of this Clause before 1923. Therefore, it seems to me, looking at the matter from the point of view of retrospective legislation, that if we consider the real reason why we object to retrospective legislation, that reason does not exist in this particular case, and the only objection, therefore, we have to legislation of that kind does not really, or ought not really, in this case to have any weight with us"—[OFFICIAL REPORT, 2nd July, 1924; cols. 1396–8; Vol. 175.] I entirely agree with those observations. It seems to me to put the real case against retrospective legislation as clearly as it can be put.

Sir T. INSKIP

In that case did the proposed legislation deprive the litigant of his rights in the litigation which he had initiated believing the law to be what it was?

The ATTORNEY - GENERAL

It deprived all potential litigants—

Sir T. INSKIP

Actual litigants?

The ATTORNEY-GENERAL

Permit me to proceed. It deprived all potential litigants of the rights which they would have had. Before I can answer with regard to actual litigants, I must know whether you mean by litigants people who have cases pending or heard before the Commissioners. If there were litigants in that position—

Sir T. INSKIP

What I meant was, Was Mr. McDonald, who had entered upon the litigation believing the law to be what it was, deprived of his rights by the retrospective operation of the new legislation? That is the question.

The ATTORNEY-GENERAL

Not at all. The hon. and learned Gentleman has not followed the case that I have put. McDonald and Shand was decided. The question then arose whether the principle of McDonald and Shand might apply to civil servants. The law was altered retrospectively in the sense to take away from civil servants the right which they would have if the decision of McDonald and Shand had applied to their case. What is the position in the present case which makes the present case far stronger than the case which the House passed in 1924? Ever since 1842 it has been at any rate believed, as part of the principle of deduction at the source that a company in paying dividend to a shareholder might deduct from the dividend paid Income Tax at the rate which in recent years has been called the standard rate. There was some question formerly as to whether it was the rate applicable at the time the profits were earned or at the time the dividend was paid. That difficulty has been cleared away, but the right of deduction was never considered to be a right which in any way depended upon the actual amount of profits which the company had made in the year in which they were paying the dividend; and it is obvious, if the Committee will consider, that extreme difficulty would result from any such view.

It is not merely that no shareholder could possibly tell what ought to be deducted from a dividend paid to him, because he would have but little means of finding out what the accounts of the company were—and very likely the accounts of the company for the year in question would not be finally completed when the dividend was paid—but the position in this case which makes it so serious and why it is that I am not merely considering this case from the point of view of the revenue is the position of a man entitled to exemption or abatement. Take the case of a man to-day who gets, and all that he has in the world, is a dividend of £100. That is all that he has. He is entitled to go to the officials and get back, on production of that dividend warrant, the difference between the amount he actually receives and the gross amount which that dividend would represent if you allowed for deduction of tax at the standard rate, regardless of the fact whether the revenue ever had that or not. That is the practice, and has been for years; and if you are going to make the right of a person entitled to exemption or abatement depend, not upon the distinction between the gross amount and the net amount on the assumption of deduction at the standard rate, but make it depend upon the actual liability of the company in respect of some particular period, you may very gravely injure the small taxpayer who claims to get back the full amount of the tax.

Consequently, the Committee will see that any doubt on this point would not only cause chaos with regard to the principle of deduction in the past, but would let loose the floodgates of litigation between all the shareholders in companies and the companies which for years past have been paying dividend deducted at the standard rate. All shareholders for the last six years would be entitled to make claims against companies, but the poor taxpayer, the man who would be entitled to exemption or abatement, would also be enormously prejudiced. If the Committee think that I am overstating the case, I would quote to the Committee the opening sentence of the Master of the Rolls in giving judgment in the Court of Appeal in favour of the Crown, and affirming the decision of the trial Judge: This appeal fails. It raises a very important point, for it is a point which would alter, if not entirely upset, the system under which deductions of tax are made upon dividends paid to shareholders. It is really idle to represent this case as though it were a mere matter of convenience. It is far more than that. It is a case which would imperil the whole system of the collection of Income Tax, which, as I say, would allow a vast amount of litigation to take place, and which might very seriously prejudice the interests of the very taxpayer whom we all want to protect most of all. How did the point come to arise? Just as in the case that the right hon. Gentleman stated of the civil servants who did not think until 1923 that they had got any such right, so it was in these cases. Not very long ago there was decided a case, which I will call the Gimson case, which was dependent upon his own peculiar and particular circumstances. The fact that the Gimson case was decided led some ingenious taxpayers to consider and to think possibly that this system, which had gone on all these years, under which deductions at the standard rate had been made from dividends, was wrong, and thereupon this Mr. Hamilton and, I think, one other started proceedings. It is not the case that they objected at the time of the deduction of the dividend, because the point had never occurred to them at all, and in the whole-history of the matter from 1842 downwards it had never occurred until the last few months; but having the Gimson case before them, they thought they had this technical point and that they were entitled to say that the amount to be deducted must depend upon the amount earned by the company, on which Income Tax was to be paid, instead of being deducted at the standard rate.

I hope I have given the Committee reason to suppose that the retrospective legislation which we are asking the Committee to grant us in this case comes well within the canon which the right hon. Member for Edgbaston laid down on the last occasion, which I entirely accept. Just as in that case the civil servants he said, discovered quite recently that they had this possible right, so here this point after nearly 100 years was discovered a few months ago. But here lies the difference between the two cases. In the Civil Service case, supposing McDonald and Shand had not been followed by legislation, it would have cost the Treasury round about £3,000,000. That was perhaps not a sufficient reason, but I venture to think that it is a reason if I can show that you will have a vast amount of litigation, and that so far from benefiting the taxpayers, if you benefit the taxpayers at all, you will merely benefit some rich taxpayers to the prejudice of many poor taxpayers. [HON. MEMBERS: "No!"] Certainly, everybody who seeks exemption or abatement will be prejudiced. At the present time, a man who claims abatement automatically gets back the full rate of tax. If the Hamilton contention was right, he would not be entitled to get back automatically the full rate. The amount he got back would be dependent on something it would be difficult to prove; it would depend upon the amount of profit a company had made.

In these circumstances, really it does not seem to me that there is any reason at all to suggest that there can be any objection to legislation which merely makes it plain beyond a peradventure. The principle is so important that we ought to leave nothing to chance. Though I venture to think that the Court of Appeal decision is really one which would commend itself to the highest tribunal, I realise that there is a chance, and this Clause is for the express object of avoiding a chance of that decision being reversed, which would badly, if not entirely, upset the whole system of collection of Income Tax which has been in force for nearly 100 years.

Mr. ERNEST BROWN

Those private Members who have done their best to follow the technicalities of the Income Tax Acts will not have been surprised at the speech of the Attorney-General. Whenever similar questions come up, we get the same type of reply. We get a great statement upon the effect on the revenue, and a special statement about the effect on the small taxpayer. The small taxpayer is always produced for the purpose of playing to the gallery. [Interruption.] I am speaking without any reference to any particular Government, but I have followed this matter under all kinds of Governments, and I find the same type of reply. One thing we never get, and that is a reply to the real point at issue. If the Committee will read the speech of the learned Attorney-General to-morrow, they will find that he has not replied to it. Here is the real issue. A taxpayer is conducting litigation which he is entitled to conduct, and he has not completed his full rights under the law, for he has another court of appeal. Before that right is exhausted, the Attorney-General comes forward with all these specious pleas—and they may be, for all I know, admirable pleas—and he proposes to deprive him of the potential chance of exercising his rights.

That is the issue, and there is no other. When the Attorney-General refers to the fact that it has not come up for over 80 years, has he forgotten last Thursday? Against a speech which I made, he prayed in aid an Act which was put upon the Statute Book precisely because something had been discovered under the very same Acts, the Income Tax Acts, by one Bowles, which had not been discovered for more than 40 years. There is the other point of view now—a different point of view. I ask the Committee not to think about the Treasury—we have too much talk about the Treasury and the Inland Revenue—but to think for once about the ordinary private citizen with no defence except this House. In spite of the specious plea of the Attorney-General, the issue is whether any taxpayer or citizen is to be deprived of his full right under the law.

Mr. ATKINSON

The Committee will appreciate the danger of litigation being increased if the litigant is hamstrung half way through his fight by legislation. Surely the position in the McDonald and Shand case was different, for there there was no attempt to interfere with existing litigation. The Legislature waited until litigation was over, and nothing was done to interfere with the rights of the litigant. Here you are interfering with something which is being done with the plea that the law lies in a certain way. Action has been brought in that belief, and before the House of Lords has finally determined the case the law is changed. If it were not because of a serious fear that the House of Lords might put this right, this would not have been done. The fact that it is done shows real apprehension as to the final result. The Attorney-General says that there is justification for this in the belief, which existed for 80 or 90 years, that the taxpayer has the right to claim at the standard amount on the amount paid.

This Bill is not carrying out that provision. If Clause 5 stopped two lines from the bottom of page 3, it would carry out what the Attorney-General said, but there are some six or seven lines of the most complicated description which certainly make new law as far as I can understand it. It certainly does not carry out what has been the belief and become the practice for the past 70 years. I will say one other thing about the small taxpayer. It seems to me that there is nothing whatever in that case. Supposing it to be determined that a company is only entitled to deduct something less, then, of course, there is something less for the taxpayer to recover. You will not have the full 4s. 6d. deducted on the amount paid, but the company will only be entitled to deduct precisely what had been paid. There would be so much less deducted, and the taxpayer he would have the same right as he has now to get from the Government exactly what had been deducted. There is nothing whatever in that point. It is a red herring that has been drawn across a perfectly simple issue.

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

The Committee divided: Ayes, 262; Noes, 217.

Division No. 280.] AYES. [10.4 p.m.
Adamson, Rt. Hon. W. (Fife, West) Griffith, F. Kingsley (Middlesbro' W.) Mills, J. E.
Adamson, W. M. (Staff., Cannock) Griffiths, T. (Monmouth, Pontypool) Milner, Major J.
Addison, Rt. Hon. Dr. Christopher Groves, Thomas E. Montague, Frederick
Aitchison, Rt. Hon. Craigle M. Grundy, Thomas W. Morgan, Dr. H. B.
Alexander, Rt. Hon. A. V. (Hillsbro') Hall, G. H. (Merthyr Tydvil) Morley, Ralph
Alpass, J. H. Hall, J. H. (Whitechapel) Morrison, Rt. Hon. H. (Hackney, S.)
Ammon, Charles George Hall, Capt. W. G. (Portsmouth, C.) Morrison, Robert C. (Tottenham, N.)
Angell, Sir Norman Hamilton, Mary Agnes (Blackburn) Mort, D. L.
Arnott, John Hamilton, Sir R. (Orkney & Zetland) Muff, G.
Aske, Sir Robert Hardie, G. D. (Springburn) Muggeridge, H. T.
Attlee, Clement Richard Harris, Percy A. Murnin, Hugh
Ayles, Walter Hastings, Dr. Somerville Nathan, Major H. L.
Baldwin, Oliver (Dudley) Haycock, A. W. Naylor, T. E.
Barnes, Alfred John Henderson, Arthur, junr, (Cardiff, S.) Noel Baker, P. J.
Barr, James Henderson, Thomas (Glasgow) Noel-Buxton, Baroness (Norfolk, N.)
Batey, Joseph Henderson, W. W. (Middx., Enfield) Oldfield, J. R.
Beckett, John (Camberwell, Peckham) Herriotts, J. Oliver, George Harold (Ilkeston)
Bennett, Sir E. N. (Cardiff, Central) Hirst, G. H. (York W. R. Wentworth) Oliver, P. M. (Man., Blackley)
Bennett, William (Battersea, South) Hirst, W. (Bradford, South) Owen, Major G. (Carnarvon)
Benson, G. Hoffman, P. C. Palin, John Henry.
Bevan, Aneurin (Ebbw Vale) Hollins, A. Palmer, E. T.
Birkett, W. Norman Hopkin, Daniel Parkinson, John Allen (Wigan)
Bowen, J. W. Hunter, Dr. Joseph Perry, S. F.
Bowerman, Rt. Hon. Charles W. Isaacs, George Pethick- Lawrence, F. W.
Broad, Francis Alfred Jenkins, Sir William Phillips, Dr. Marlon
Brockway, A. Fenner John, William (Rhondda, West) Picton-Turbervill, Edith
Bromfield, William Johnston, Rt. Hon. Thomas Pole, Major D. G.
Bromley, J. Jones, Llewellyn-, F. Potts, John S.
Brooke, W. Jones, Henry Haydn (Merioneth) Price, M. P.
Brothers, M. Jones, Morgan (Caerphilly) Pybus, Percy John
Brown, C. W. E. (Notts, Mansfield) Jowett, Rt. Hon. F. W. Ramsay, T. B. Wilson
Brown, Rt. Hon. J. (South Ayrshire) Jowitt, Rt. Hon. Sir W. A. (Preston) Rathbone, Eleanor
Brown, W. J. (Wolverhampton, West) Kedward, R. M. (Kent, Ashford) Raynes, W. R.
Buchanan, G. Kelly, W. T. Richards, R.
Burgess, F. G. Kennedy, Rt. Hon. Thomas Richardson, R. (Houghton-le-Spring)
Buxton, C. R. (Yorks. W. R. Elland) Kenworthy, Lt.-Com. Hon. Joseph M. Riley, Ben (Dewsbury)
Caine, Hall-, Derwent Kinley, J. Riley, F. F. (Stockton-on-Tees)
Cameron, A. G. Knight, Holford Ritson, J.
Cape, Thomas Lang, Gordon Romeril, H. G.
Carter, W. (St. Pancras, S. W.) Lansbury, Rt. Hon. George Rosbotham, D. S. T.
Charleton, H. C. Law, Albert (Bolton) Rowson, Guy
Chater, Daniel Law, A. (Rossendale) Salter, Dr. Alfred
Cluse, W. S. Lawrence, Susan Samuel, Rt. Hon. Sir H. (Darwen)
Clynes, Rt. Hon. John R. Lawrie, Hugh Hartley (Stalybridge) Sanders, W. S.
Cocks, Frederick Seymour Lawther, W. (Barnard Castle) Sawyer, G. F.
Compton, Joseph Leach, W. Scurr, John
Cove, William G. Lee, Frank (Derby, N. E.) Sexton, Sir James
Cripps, Sir Stafford Lee, Jennie (Lanark, Northern) Shakespeare, Geoffrey H.
Daggar, George Lees, J. Shaw, Rt. Hon. Thomas (Preston)
Dallas, George Lewis, T. (Southampton) Shepherd, Arthur Lewis
Davies, D. L. (Pontypridd) Lindley, Fred W. Sherwood, G. H.
Davies, Rhys John (Westhoughton) Lloyd, C. Ellis Shield, George William
Day, Harry Logan, David Gilbert Shiels, Dr. Drummond
Denman, Hon. R. D. Longbottom, A. W. Shillaker, J. F.
Dukes, C. Longden, F. Simmons, C. J.
Ede, James Chuter Lovat-Fraser, J. A. Simon, E. D. (Manch'ter, Withington)
Edge, Sir William Lunn, William Sinkinson, George
Edmunds, J. E. Macdonald, Gordon (Ince) Sitch, Charles H.
Edwards, C. (Monmouth, Bedwellty) MeElwee, A. Smith, Ben (Bermondsey, Rotherhithe)
Edwards, E. (Morpeth) McEntee, V. L. Smith, Frank (Nuneaton)
Egan, W. H. McGovern, J. (Glasgow, Shettleston) Smith, Lees-, Rt. Hon. H. B. (Keighley)
Elmley, Viscount McKinlay, A. Smith, Rennie (Penistone)
Freeman, Peter MacLaren, Andrew Smith, Tom (Pontefract)
Gardner, B. W. (West Ham, Upton) Maclean, Sir Donald (Cornwall, N.) Smith, W. R. (Norwich)
Gardner, J. P. (Hammersmith, N.) Maclean, Nell (Glasgow, Govan) Snowden, Thomas (Accrington)
George, Major G. Lloyd (Pembroke) MacNeill-Weir, L. Sorensen, R.
Gibbins, Joseph McShane, John James Stamford, Thomas W.
Gibson, H. M. (Lancs, Mossley) Mander, Geoffrey le M. Stephen, Campbell
Gill, T. H. Mansfield, W. Strauss, G. R.
Gillett, George M. March, S. Sullivan, J.
Glassey, A. E. Marcus, M. Sutton, J. E.
Gossling, A. G. Marley, J. Taylor, R. A. (Lincoln)
Gould, F. Marshall, Fred Taylor, W. B. (Norfolk, S. W.)
Graham, D. M. (Lanark, Hamilton) Mathers, George Thomas, Rt. Hon. J. H. (Derby)
Graham, Rt. Hon. Wm. (Edin., Cent.) Matters, L. W. Thorne, W. (West Ham, Plaistow)
Gray, Milner Maxton, James Thurtle, Ernest
Greenwood, Rt. Hon. A. (Colne) Messer, Fred Tillett, Ben
Grenfell, D. R. (Glamorgan) Middleton, G. Tinker, John Joseph
Tout, W. J. Wellock, Wilfred Williams, T. (York, Don Valley)
Townend, A. E. Welsh, James (Paisley) Wilson, C. H. (Sheffield, Attercitffe)
Vaughan, David Welsh, James C. (Coatbridge) Wilson, J. (Oldham)
Viant, S. P. West, F. R. Wilson, R. J. (Jarrow)
Walkden, A. G. Westwood, Joseph Winterton, G. E. (Lelcester, Loughb'gh)
Walker, J. White, H. G. Wise, E. F.
Wallace, H. W. Whiteley, Wilfrid (Birm., Ladywood) Wood, Major McKenzie (Banff)
Watkins, F. C. Whiteley, William (Blaydon) Young, R. S. (Islington, North)
Watson, W. M. (Dunfermline) Williams, E. J. (Ogmore)
Watts-Morgan, Lt.-Col. D. (Rhondda) Williams, Dr. J. H. (Llanelly) TELLERS FOR THE AYES.—
Mr. Hays and Mr. Paling.
NOES.
Acland-Troyte, Lieut.-Colonel Despencer-Robertson, Major J. A. F. Milne, Wardlaw-, J. S.
Ainsworth, Lieut.-Col. Charles Duckworth, G. A. V. Mitchell, Sir W. Lane (Streatham)
Albery, Irving James Eden, Captain Anthony Monsell, Eyres, Com. Rt. Hon. Sir B.
Alexander, Sir Wm. (Glasgow, Cent'l) Elliot, Major Walter E. Moore, Sir Newton J. (Richmond)
Alien, Sir J. Sandeman (Liverp'l., W.) England, Colonel A. Moore, Lieut.-Colonel T. C. R. (Ayr)
Amery, Rt. Hon. Leopold C. M. S. Erskine, Lord (Somerset, Weston-s.-M.) Morrison, W. s. (Glos., Cirencester)
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Evans, Capt. Ernest (Welsh Univer.) Muirhead, A. J.
Astor, Maj. Hn. John J. (Kent, Dover) Everard, W. Lindsay Newton, Sir D. G. C. (Cambridge)
Astor, Viscountess Falle, Sir Bertram G. Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Atholl, Duchess of Ferguson, Sir John O'Connor, T. J.
Atkinson, C. Fermoy, Lord Oman, Sir Charles William C.
Baillie-Hamilton, Hon. Charles W. Fielden, E. B. O'Neill, Sir H.
Balfour, George (Hampstead) Fison, F. G. Clavering Peake, Capt. Osbert
Balfour, Captain H. H. (I. of Thanet) Ford, Sir P. J. Penny, Sir George
Balniel, Lord Fremantie, Lieut.-Colonel Francis E. Percy, Lord Eustace (Hastings)
Beamish, Rear-Admiral T. P. H. Galbraith, J. F. W. Perkins, W. R. D.
Bellairs, Commander Carlyon Ganzonl, Sir John Peto, Sir Basil E. (Devon, Barnstaple)
Betterton, Sir Henry B. Gault, Lieut.-Cot. A. Hamilton Power, Sir John Cecil
Bevan, S. J. (Holborn) Gilmour, Lt.-Col. Rt. Hon. Sir John Pownall, Sir Assheton
Birchall, Major Sir John Dearman Glyn, Major R. G. C. Preston, Sir Walter Rueben
Bird, Ernest Roy Gower, Sir Robert Ramsbotham, H.
Boothby, R. J. G. Graham, Fergus (Cumberland, N.) Rawson, Sir Cooper
Bourne, Captain Robert Croft Grattan-Doyle, Sir N. Reid, David D. (County Down)
Bowater, Col. Sir T. Vansittart Greaves-Lord, Sir Walter Remer, John R.
Bowyer, Captain Sir George E. W. Greene, W. P. Crawford Rentoul, Sir Gervals S.
Boyce, Leslie Grenfell, Edward C. (City of Londen) Reynolds, Col. Sir James
Brass, Captain Sir William Gretton, Colonel Rt. Hon. John Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Briscoe, Richard George Gritten, W. G. Howard Roberts, Sir Samuel (Ecclesall)
Broadbent, Colonel J. Guinness, Rt. Hon. Walter E. Rodd, Rt. Hon. Sir James Rennell
Brown, Ernest (Leith) Gunston, Captain D. W. Ross, Ronald D.
Brown, Brig,-Gen. H. C. Berks, Newb'y) Hacking, Rt. Hon. Douglas H. Russell, Alexander West (Tynemouth)
Buchan-Hepburn, P. G. T. Hell, Lieut.-Col. Sir F. (Dulwich) Salmon, Major I.
Buckingham, Sir H. Hamilton, Sir George (Ilford) Samuel, A. M. (Surrey, Farnham)
Burton, Colonel H. W. Hammersley, S. S. Samuel, Samuel (W'dsworth, Putney)
Butler, R. A. Hanbury, C. Sandeman, Sir N. Stewart
Butt, Sir Alfred Hannon, Patrick Joseph Henry Sasscon, Rt. Hon. Sir Philip A. G. D.
Cadogan, Major Hon. Edward Harvey, Major S. E. (Devon, Totnes) Savery, S. S.
Campbell, E. T. Haslam, Henry C. Shepperson, Sir Ernest Whittome
Carver, Major W. H. Henderson, Capt. R. R. (Oxf'd, Henley) Simms, Major-General J.
Castle Stewart, Earl of Heneage, Lieut.-Colonel Arthur P. Simon, Rt. Hon. Sir John
Cautley, Sir Henry S. Hennessy, Major Sir G. R. J. Sinclair, Col. T. (Queen's U., Belfst)
Cayzer, Sir C. (Chester, City) Herbert, Sir Dennis (Hertford) Smith, Louis W. (Sheffield, Hallam)
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.) Hope, Sir Harry (Forfar) Smith, R. W. (Aberd'n & Kinc'dine, C.)
Cecil, Rt. Hon. Lord H. (Ox. Univ.) Howard-Bury, Colonel C. K. Smith-Carington, Neville W.
Chadwick, Capt. Sir Robert Burton Hudson, Capt. A. U. M. (Hackney. N.) Smithers, Waldron
Chamberlain, Rt. Hon. N. (Edgbaston) Hurd, Percy A. Somerset, Thomas
Chapman, Sir S. Hurst, Sir Gerald B. Somerville, A. A. (Windsor)
Christie, J. A. Inksip, Sir Thomas Somerville, D. G. (Willesden, East)
Clydesdale, Marquess of Jones, Sir G. W. H. (Stoke New'gton) Southby, Commander A. R. J.
Cobb, Sir Cyril Knox, Sir Alfred Spender-Clay, Colonel H.
Cockerill, Brig.-General Sir George Lamb, Sir J. Q. Stanley, Lord (Fylde)
Cohen, Major J. Brunel Lambert, Rt. Hon. George (S. Molton) Stanley, Hon. O. (Westmorland)
Colfox, Major William Philip Latham, H. P. (Scarboro' & Whitby) Steel-Maitland Rt. Hon. Sir Arthur
Colman, N. C. D. Law, Sir Alfred (Derby, High Peak) Stewart, W. J. (Belfast, South)
Colville, Major D. J. Leigh, Sir John (Clapham) Sueter, Rear-Admiral M. F.
Conway, Sir W. Martin Leighton, Major B. E. P. Thompson, Luke
Cooper, A. Duff Lewis, Oswald (Colchester) Thomson, Mitchell-, Rt. Hon. Sir W.
Courtauld, Major J. S. Little, Graham-, Sir Ernest Titchfield, Major the Marquess of
Courthope, Colonel Sir G. L. Llewellin, Major J. J. Tryon, Rt. Hon. George Clement
Cranborne, Viscount Locker-Lampson, Rt. Hon. Godfrey Turton, Robert Hugh
Crichton-Stuart, Lord C. Lockwood, Captain J. H. Vaugban-Morgan, Sir Kenvon
Croft, Brigadier-General Sir H. Lymington, Viscount Ward, Lieut.-Col. Sir A. Lambert
Crookshank, Cpt. H. (Lindsey, Gainsbro) Macdonald, Sir M. (Inverness) Warrender, Sir Victor
Croom-Johnson, R. P. Macdonald, Capt. P. D. (I. of W.) Wayland, Sir William A.
Culverwell, C. T. (Bristol, West) Maitland, A. (Kent, Faversham) Wells, Sydney R.
Cunliffe-Lister, Rt. Hon. Sir Philip Makins, Brigadier-General E. Williams, Charles (Devon, Torquay)
Dalkeith, Earl of Margesson, Captain H. D. Wilson, G. H. A. (Cambridge U.)
Davidson, Rt. Hon. J. (Hertford) Marjoribanks, Edward Windsor-dive, Lieut.-Colonel George
Davies, E. C. (Montgomery) Mason, Colonel Glyn K. Winterton, Rt. Hon. Earl
Davies, Maj.-Geo. F. (Somerset, Yeovil) Meller, R. J. Withers, Sir John James
Davison, Sir W. H. (Kensington, S.) Merriman, Sir F. Boyd Wolmer, Rt. Hon. Viscount
Womersley, W. J. Wright, Brig.-Gen. W. D. (Tavist'k) TELLERS FOR THE NOES.—
Wood, Rt. Hon. Sir Kingsley Young, Rt. Hon. Sir Hilton. Sir Frederick Thomson and Captain Wallace.

Question put, and agreed to.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. CHAMBERLAIN

I rise only for the purpose of saying that we on these benches do not feel that the case put by the Attorney-General has in any way answered the objections that have been raised by hon. and right hon. Members on this side of the Committee. There is a good deal more that we could say and desire to say, but, unfortunately, under the terms of the Guillotine Resolution we can only discuss or even divide upon this Clause at the expense of discussion on the next Clause. In these circumstances, I content myself with entering my protest against the mutiliation of discussion upon this Bill and sitting down.