CLAUSE 23.—(Sale of copyrights for lump sum.) (Hansard, 14 June 1944)

§ Mr. E. P. Smith (Ashford)
I beg to move, in page is, line 38, after "partially," to insert: or grants any interest in the copyright by licence This Amendment and the two following ones are interlocked. Indeed, the two later ones are consequential upon this one, and I shall be glad to have your guidance, Major Milner, on whether I can speak to all the three Amendments on this, the first one, and then formally move the other two.

§ The Chairman
I think that would be for the convenience of the Committee.

§ Mr. Smith
It is true to say, broadly speaking, that no profession has suffered so much from the abolition of the three years' average in respect of Income Tax as the profession of authorship. It is also true to say that the occasional large lump sums paid to an author only accrue from works of some importance, in one sphere of literature or another; and it is very rare for such works to be produced through the whole gamut of making, from conception to completion, within the compass of one year, or even of two; and, thus, it will be seen how hardly the author is hit in his one year of what I may call fruition. Taxation swallows up his makings, and he has to face the next two or three lean years of production with nothing to tide him over until the next year of fruition. This Bill, if the Committee passes it, will give relief in-this respect, 1997 a relief which, I venture to say, is not only timely, but wise, humane and just.
It may be asked how authors come to make these large occasional sums. They are received either in respect of the outright sale of copyright or the partial sale of copyright, and I think the easiest example to adduce is the sale of the film rights of any particular work. Moreover, since it is highly undesirable that an author should part with his copyright whenever he can possibly preserve it, he does, sometimes—in fact whenever he can—grant a limited interest in his copyright by licence. This first Amendment is intended to cover this form of payment, too; and the second Amendment is devised to bring the rest of the Clause into legal line with the first Amendment. One other way by which authors receive large lump sum payments is in respect of advance royalties. These, of course, lack the capital character of the outright or partial sale of a copyright. They come more within the description of pure income; and I have heard the argument put forward: "Why should authors accept large sums by way of advance royalties? Why should they not be content to receive their royalties as they accrue, which would then spread themselves over a period of time, possibly over several years, and thus annul the disadvantage of the one year income system of taxation?" The answer is a technical one. The publisher, particularly the United States publisher, is a person who thinks in terms of big money. He can afford to. Unless you can make him pay a large sum of money by way of advance royalties, unless you can force him to realise that he has a big financial stake in the success of your work, he will not bother with it. He will not advertise it extensively; he will not print it in large quantities, and he will probably only use it as a makeweight in his catalogue. In other words, it will go into the "bargain basement." Thus, the author is forced to stand out for large advance royalties, which are often the only royalties he will get, because he knows he cannot achieve success unless he does; and the purpose of this third Amendment is to include such non-returnable lump sum payments along with the proceeds of copyright and to bring them all under one common ruling.
If my right hon. Friend will accept this Amendment, it will be a great help to the profession, particularly to the less highly- 1998 paid members of it. Indeed, so just, so logical and so obvious is it that one wonders how the present system can have gone on these many years without any attempt being made to rectify it in this respect. There is the story of a bishop who ardently desired a certain preferment, but was passed over. He was approached by a sincere, though simple, member of his fold who asked him what was the most effective thing that an ordinary man could pray for. The bishop replied, rather tartly: "Light in high places." I have always thought it an excellent piece of advice, and I have at times even added it to my own supplications. I hope my prayer may be, at all events, partially answered to-day.

§ Sir J. Anderson
I propose, with your permission, Major Milner, to follow the course taken by my hon. Friend and deal with the three Amendments which stand in his name together. He has explained the purpose of these Amendments and it might well be that the Clause, as it stands, already covers the cases which he has in mind, but there would undoubtedly be a certain element of doubt. For example—I am taking the first case he cited—where, instead of assigning expressly a copyright, wholly or in part, the owner of the copyright grants a licence, there have been cases, I understand, where the courts have held that the transaction amounted to an assignment. But the matter is not free from doubt and, therefore, I have no hesitation in saying I am perfectly prepared to accept the Amendment dealing with that point. Similarly, in regard to the case where a payment of royalties is attended by the payment of a lump sum by way of advance, the matter might be held to be covered by the Clause as it stands. It is desirable, however, to remove any element of doubt, and the case in question is entirely within the purpose of the Clause as I originally announced it in my Budget speech. Therefore, I also accept, if it is the will of the Committee, the two subsequent Amendments standing in the name of my hon. Friend.