HC Deb 24 October 1944 vol 404 cc28-9
54. Professor Savory

asked the Chancellor of the Exchequer under what authority a worker from a neutral country earning high wages in Great Britain, from which Income Tax has been deducted under the pay as you earn system, can demand a refund of all these deductions provided he returns to the neutral country within the period of six months; and whether this process of avoiding Income Tax can be indefinitely repeated.

Sir J. Anderson

I assume that my hon. Friend has in mind individuals coming to this country from Eire. I must remind my hon. Friend that the Double Taxation Agreement, made between this country and Eire in 1926 and confirmed by Section 23 of the Finance Act, 1926, covers all income and provides that individuals resident in one country and not resident in the other country are liable to tax only in the country of residence, and that companies trading in both countries are liable to tax only in the country in which they are controlled. Accordingly, a labourer from Eire who proves that he was not resident in the United Kingdom for a particular Income Tax year can obtain repayment of United Kingdom Income Tax deducted for that year from his earnings under the P.A.Y.E. system.

My hon. Friend appears to be under the impression that residence in the United Kingdom can be avoided if the labourer is not in this country for a continuous period of six months. This is not correct —the test is whether the total time spent by him in the United Kingdom in a particular Income Tax year amounts to six months, and no repayment of any tax deducted under Pay-as-you-earn would be made until it is established that the labourer was not resident for the year to which the tax relates.

Professor Savory

Cutting out all circumlocution, will the right hon. Gentleman not agree with this—that Patrick from Ulster pays everything, and Patrick from Eire pays nothing to the British Government?

Sir J. Anderson

No, Sir. I could not possibly agree with that statement.

Colonel Sir Arthur Evans

May I ask whether the Government will consider extending the excellent principle outlined in the right hon. Gentleman's reply to our Allies, particularly the United States?

Sir J. Anderson

That is quite another question, but, as my hon. and gallant Friend knows, we have quite recently entered upon discussions with the United States, from which I hope a satisfactory agreement will result.