CLAUSE 17.—(Explanation and amendment of paragraph (6) of Second Schedule to the Finance Act, 1936.) (Hansard, 11 July 1939)

§ Sir Alan Anderson
I beg to move, in page 17, line 43, at the end, to insert: (3) Nothing in this Section shall impose on any bank the obligation to furnish any particulars of any ordinary banking transactions between the bank and a customer carried out in the ordinary course of banking business, unless the bank has acted or is acting on behalf of the customer in connection with the formation or management of any such body corporate as is mentioned in paragraph (b) of Sub-section (2) of this Section or in connection with the creation, or with the execution of the trusts, of any such settlement as is mentioned in paragraph (c) thereof. Following the very intricate Clauses and the learned discussions that we have had, this Clause is simple and the Amendment is, I think, easily intelligible to everyone. In fact, when we get to Clause 17 we have passed from the difficult points of accountancy and from the subjunctive mood, of which my hon. Friend complains, to the indicative. The object of the Clause is an obvious one with which we should all agree. We are gunning for our ingenious fellow citizen who escapes paying his proper share of taxes by foreign avoidance. What is foreign avoidance is laid down clearly in Subsection (2, b) and (2, c) and the last paragraph on page 17. At the beginning of the Clause the information which the Commissioners are empowered to ask for is neither definite nor specifically related to the object of the Clause. It is, in 2152 fact, unlimited in scope and in incidence. In Clause 17 (1, a) the particulars that a person must furnish include particulars as to transactions with respect to which he is or was acting on behalf of others. A person, of course, includes a banker, so that means that a banker must furnish particulars about any transactions with any of his customers, whether the customers had any connection at all with this foreign avoidance or not. We all agree that powers are necessary to enable the Special Commissioners to get the information required to bring down this elusive quarry and I hope the House will feel that the powers in my Amendment meet the case.
It appears to my hon. Friends and me that, by accepting the Amendment, the powers at the beginning of the Clause will precisely agree with the objects at the end of the Clause. My Amendment says: .… unless the bank has acted or is acting on behalf of the customer in connection with the formation or management of any such body corporate.… So I submit that all the possible cases in which this Clause would be in operation are covered by the words in the Amendment as to the information that the banker supplies. If, as I hope, the House accept that view, that finishes what I have to say, except on one point, and that one point concerns, not bankers alone, but all of us. We are all sometimes ill, in mind, body, or estate, and when we are ill we resort to a doctor, solicitor, or banker, and it is of enormous importance, I submit, to all of us that we should have full confidence in the secrecy of those whom we trust with the story of our complaints. It is not possible in the public interest to 2153 allow that secrecy to be absolute. Occasions arise when we must impinge upon it and break it down, but I beg the House to see, when an occasion arises, as under this Clause, to make a breach in the secrecy which the banker observes, and properly observes, towards his customer, that that breach should be limited to the time and the point at which the public requires that information.

§ Mr. Holmes
I beg to record the Amendment.

§ The Solicitor-General (Sir Terence O'Connor)
When I spoke on this Clause on the Committee stage I pointed out to the Committee that it was purely a declaratory Clause and that it was to remove certain misapprehensions that seemed to exist on the part of taxpayers. Taxpayers were asking that they were to be judges in their own cases as to whether there was anything they could be called on to disclose, and so forth. The object of the Clause is, of course, to enable the Treasury to obtain information in the case of transfers of assets to corporations abroad. I agree with the case that has been made by the hon. Member for the City of London (Sir A. Anderson), and I have the authority of my right hon. Friend to accept this Amendment. The House will, I am sure, agree that his complaints are well founded. As the Clause is drawn at present, we should be enacting as a declaration that a person must furnish particulars as to transactions with respect to which he is or was acting on behalf of others. Of course, that is extremely wide, far wider than is necessary to obtain information about transactions which involve the transfer of assets abroad, and it is wide enough to cover all ordinary banking transactions. It was never intended that we should seek such powers. Such powers have never been invoked under the Act which this Clause is intended to clarify, and the words that appear in my hon. Friend's Amendment ensure that it will be limited to the class of cases with which we are really trying to deal. If the House will look at the Amendment, they will see that, whereas the ordinary transactions of a banker with his customer are protected, transactions in the ordinary Section 21 case—that is, the case where a company incorporated outside the United Kingdom would be a Section 21 case if it had been incorporated inside the United Kingdom, 2154 or in the case of a settlement resulting to payment to persons outside the United Kingdom—each of those cases, which are the mischief which we want to get at, is carefully safeguarded, so that that information can be obtained. This Amendment, for which my right hon. Friend is much obliged, will in fact limit the Clause to the scope which it was intended to cover and, at the same time, will completely safeguard the position.

§ Mr. Pritt
The history of this House is littered with special legislation having a very tender regard for the interests of bankers. Bankers control our lives outside this House, bankers control our lives inside this House, and the spectacle of the Solicitor-General immediately surrendering to the banking interests is not new any more than the spectacle of a dog fighting a man is new. It is exactly what we expect, exactly what we have to endure for a few years longer. But this particular instance is really a pretty broad one, and I will not use any stronger phrase than that. The first comment that would naturally occur to anybody who approached this question objectively and without suffering from the delusion, as I do, that bankers get a good deal of their own way, would be that surely this Subsection is unnecessary, because if the rest of the Clause as it stands is properly drawn, there would not be anything to impose on a bank or on anybody else any unreasonably wide obligation of disclosure, and, therefore, why take this extra special precaution to see that bankers do not disclose anything?
It is perfectly true, of course, that bankers and their more important customers are naturally engaged for a very large part of their time in transactions which can hardly see the light of day without the gravest damage to a great' many sacred interests and the enlightenment of the working classes as to what is really going on, but when one comes to look a little further, having first said to oneself, presumably, that the Clause, properly drawn, will not impose any obligation on anybody, bankers or anybody else, that is not really proper and reasonable for the protection of the Revenue and the more honest section of the taxpayers, one is at once met by the most ingenious explanation by the Solicitor-General, who, I was going to say, exposed 2155 his flank to the criticism, only that is not a happy metaphor for one of my physical build to use, but he does expose his flank, because this is the way he puts it. He will forgive me for parodying the argument, but this is really what it is: He says, "Oh, well, you see, the truth is that if you look at Clause 17, Sub-section (1, a), you find the phrase: 'as to transactions with respect to which he is or was acting on behalf of others,' and," he says, "that is so wide that it becomes right and proper to protect the banker by putting in a limitation for the banker." Was there ever a more revealing confession than that? I have no doubt—I have not looked it up—that when the Clause itself was before the House some anxious Tory pointed out that it was wide, and the Chancellor, or one of the Law Officers, probaly pointed out that it was necessary to keep it wide, because to deal with the gentlemen representing the more important constituents of hon. Members opposite, you have to have wide Clauses. Now, when the order has come down from the banking community on the back bench, it is immediately said that Clause 17 (1, a) is so wide that you have to have protection for bankers. Let the House see where that leads. If Clause 17 (1, a) is too wide the logical thing to do is to narrow it, but the Government come along and say "Clause 17 (1, a) is so wide that it really works an injustice upon the principles of everyone who is called upon to give information about what their agents are doing," and so everybody is left suffering from the injustice except the banker.
This is usually the one period of the Session when the Treasury Bench, which really knows that it has to get money in from the rascals who keep the Government in office, and Members on this side of the House, are working together to a certain extent to try to make a Bill a good one, and we have often been told for what it is worth that our efforts have helped and we are glad of it. But here the Government get up and say, "Yes, we have drawn the Clause badly, it works injustice, injustice is intolerable and so we must insert a Sub-section to save from injustice"—whom? The common people? No, the bankers. And so once again the bankers are the only people in 2156 this country to be protected. I ask the House to say either that Clause 17 (1, a) is right, in which case let it stand, and let us say that we will not protect the English equivalent of the 200 families by putting in a special Sub-section at their orders, or to say that Clause 17 (1, a) is wrong, in which case it should be put right.
There are one or two other points which can be made about it. Unless I am very much mistaken the ordinary litigant can compel a banker, under the Bankers' Books Evidence Act—another Act passed for the benefit of bankers but in days when they were less grasping and did not mind some obligations—to disclose the particulars of ordinary banking transactions between a bank and a customer for the purpose of evidence in litigation. What will be the position if this Clause is passed with this addition? It will not only be a declaration that there is a grave injustice in Clause 17 (1, a) and that the whole of the public must put up with it, though the bankers must be protected, but there will be the ingenious anomaly that if all you want is proof in litigation that some transaction of some kind was carried through you may have it from the bank, but that if you want proof from a bank's books that not an ordinary litigant, but a gentleman who ought to be made a litigant by the Crown, has tried to "welsh" his fellow citizens by not bearing what even a Conservative Government calls his fair share of taxation, you cannot ask the bank for the information at all.
The hon. Member for the banking community who introduced this Amendment said that it was very important to retain what I think he called the father-confessor position. I am sorry to have misrepresented his position; he represents the City of London. He said it was in the public interest that the position of the father-confessor should be recognised and that people should be protected from disclosure. I am content that the bankers should be put on exactly the same footing in this respect as father-confessors are—they make a strange company, I agree—but father-confessors have no protection in law from disclosing matters which they have learned, and bankers should not have it either. There is, of course, a well-known branch of privilege—the privilege of lawyer Their clients have already 2157 been reasonably tenderly dealt with in Sub-section (2). But most Members of the House will remember that the privilege always stops at fraud, and if the type of transaction which this Clause and other Clauses here which we support are aimed at is not fraud I do not know what it is. If there were to be any special protection at all it ought to be a special protection, very carefully safeguarded, to show that it was not going to protect from disclosure particulars of banking transactions which were carried on in any manner to assist in an evasion of the provisions of this Finance Bill or any Finance Act.
That brings me back to the point I was dealing with earlier, that if Clause 17 were properly drawn—and I do not see anything wrong with Clause 17 (1,a)— there would not be anything in it except what dealt properly with evasion of tax, and consequently the only information which it would be relevant to obtain from anybody, banker or otherwise, would be information about such evasion, and in