§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
§ Mr. Oliver Stanley (Bristol, West)
May I ask if the Financial Secretary can give some explanation of this Resolution?
§ Mr. Glenvil Hall
This is to make provision in the forthcoming Finance Bill for the definition of directors' remuneration for the purposes of Excess Profits Tax and the new Profits Tax which we have just been debating. Secondly, it is to close a gap, or loophole, for the avoidance of tax, which has recently shown itself. It was recently held in the courts that the remuneration of a director for service in a secretarial, or managerial, or advisory, or technical capacity, was not remuneration as a director. In other words, a director's remuneration covers only remuneration paid to him purely in his capacity as a director. That, clearly, puts director-controlled companies in a more advantageous position than individuals and firms where the proprietors do not get any such advantage. It is desirable that in matters of this kind all firms should stand on the same footing and bear, as far as possible, their due share of tax. This Resolution provides for that. When we reach the 1162 Finance Bill a Clause will be inserted to put that matter right. Also, as the House is very well aware from the Press, there has recently been a case dealing with the sale of whisky in regard to avoidance of tax. Proposals will be made in the Finance Bill for closing that gap and preventing if we can that kind of thing happening again.
§ Colonel Crosthwaite-Eyre (New Forest and Christchurch)
There is no intention, I assume, on the part of the Government to make this retrospective and thus upset the decision given in the courts.
§ Mr. Glenvil Hall
The hon. and gallant Gentleman is quite correct. This will not be made retrospective. The case I mentioned was decided in January.