COAL BILL [Lords] (Hansard, 27 July 1943)

§ The Attorney-General (Sir Donald Somervell)
I beg to move, in page 4, to leave out lines 8 and 9, and to insert: (3) Where a freeholder's lease is granted, the amount payable as consideration therefor under paragraph (a) of Sub-section (1) of this Section shall be deemed to have been payable at the date of the commencement of the term granted by the lease, and shall carry interest from that date to the date of payment at the same rate as compensation under Section six of the principal Act. This Amendment corrects a small slip in the original Bill which arose in these circumstances. When compensation or payment on account of compensation was made as from the vesting date, it carried interest at £3 per cent. If, therefore, one assumes that a payment on account is being made to a freeholder of £206, £200 goes to him as capital and £6 goes to him as interest. At present rates he will get only £3 because Income Tax will be deducted. If he decides to take a pepper- 1509 corn lease under this Clause, he has to repay what he has received, but it is right and proper that when he has to repay the £206, he should repay £200 as capital and the balance as interest. On that basis he will deduct the Income Tax from the £6 and pay back the £3, which is all he has had, and the transaction will be as if it had never happened. At the moment there is no provision entitling him, when he repays, to treat as interest for purposes of repayment what he has received as interest. That is obviously unfair and this Amendment puts it right.

§ Mr. Tinker (Leigh)
The Attorney-General has tried to explain what it means, but I must confess that I am not clear about it.

§ The Attorney-General
Can I try again? Clause 3 provides that a freeholder may give a notice and get a peppercorn lease on the basis that he repays, in compensation, which he may already have received and gives up his right to any compensation which he has not so far received. The compensation is payable as from the vesting date and carried interest from that date. Suppose I am a freeholder and I receive, two years after the vesting date, a payment on account. That will be made to me as to say £200 for capital and as to £6 for interest. In paying that sum the Commission would, according to ordinary principles, deduct the Income Tax from that part of the payment which was interest. Therefore, all I should get would be £203. This Clause provides that I have to repay what I have received. If we did not make this Amendment the Clause might be construed as meaning that I had to pay £206, which was the gross amount due to me. Six pounds of this sum is interest and I should be entitled to do what the Commission did when paying me, namely, deduct Income Tax. This Amendment puts that right by saying that when a man who has received a sum in part capital and in part interest, is called upon to repay, he will repay the sum in part capital and in part interest on the same basis as he received it.