HC Deb 11 June 1947 vol 438 cc1182-7
Mr. Eccles

I beg to move, in page 29, line 41, after "corporate," to insert: and to any other proprietor who is not normally resident in the United Kingdom This is quite a simple point, compared with the one with which we have been dealing. Clause 33 proposes that, in the case of companies resident outside the United Kingdom, the Profits Tax shall be charged only at the basic rate of 5 per cent. Where a foreign company has a subsidiary company operating in this country, the dividend provided by the subsidiary to the principal company shall bear Profits Tax only at the five per cent. rate. Subsection (2) is limited only in that it exempts distributions passing from the subsidiary to the principal company overseas and it does not take account of the possibility that the principal company overseas may have individual shareholders interested in the subsidiary as well as shares owned by the principal company itself.

The Solicitor-General

We cannot very well accept the Amendment, and I will endeavour to tell the Committee why. When dividend is paid to the company overseas, it goes into the pool of that company's distributable resources and, together with other resources which that company can devote to paying dividends, goes out in the form of dividends to shareholders. There is a special case for exempting from the 7½ per cent. charge dividends paid to the foreign company. The Amendment seeks that any foreign shareholder shall be put in exactly the same position, but it cannot be said in regard to him that he is paying into the pool for redistribution. He is in exactly the same position as any other shareholder, any other foreign national, if you will, to whom money is paid. One cannot make a case for distinguishing between one foreign shareholder and any other shareholder who receives distributions from the British company. We cannot place the foreign shareholder in exactly the same position as the foreign company.

Mr. Eccles

That is a very bad argument. I do not believe in giving privileges, but if we are giving privileges at all we ought to give them to everybody, or we ought to give no privilege at all. As the Clause stands, the foreign company may hold 51 per cent. of the shares, and then it gets dividends free of Profits Tax. Any company holding 48 or 49 per cent. has to pay the tax. That does not make sense. It only shows that this tax is bad. In order to try not to displease them we tell the foreigners who have a controlling interest of 51 per cent. or more of the shares, "You have a controlling interest in these companies in the United Kingdom; you shall not have to pay the Profits Tax." Another man with only 40 per cent. must pay the Profits Tax. It is really bad business. The Government ought to do one thing or the other. They must either say to foreigners or proprietors of companies who are in residence in the United Kingdom that all shall escape, or that none shall escape. I do not very much mind which, but I should be rather inclined to say, "None of them."

9.45 p.m.

Mr. Stanley

I should like to reinforce what has been said by my hon. Friend. I listened carefully to the explanation given by the hon. and learned Solicitor-General, and I confess that, in this instance—although on many previous occasions on these Clauses I have much admired his lucidity—I could not see any reason in Iris remarks. He failed to explain why this exception was made for the particular foreign company who owns the controlling interest. He never explained why it was necessary to give it a privilege, and why that privilege could not he given to the extended range of this Amendment. All he said was something which was already obvious to us, that the individual to whom the Amendment would extend this privilege was different from the company which enjoyed it now; but he did not explain what there was in that difference which entitled one corporation to get the benefit and the other individual not to get it. I can quite see that there might be a very good argument for not giving this exemption to anyone. Certainly no argument has been set before us for giving it to one particular form of company and refusing it to everyone else. As far as I am concerned, I hope that, unless we can get some better explanation of why this discrimination has been made, we shall take the matter to a Division.

Mr. Hopkin Morris (Carmarthen)

I am a little puzzled by the speech of the hon. Member for Chippenham (Mr. Eccles). There seems to me to be some point in what he says—that the foreign company escapes the tax if it has a 51 per cent, controlling interest, but becomes subject to it if it has only a 40 per cent. interest. But the Amendment, as I understand it, has a very different purpose. It says: after corporate' insert and to any other proprietor who is not normally resident in the United Kingdom'. I fail to understand how the Amendment could meet the point raised by the hon. Member for Chippenham. As I have said, he has raised a very substantial point, but

the Amendment raises a very different one.

Question put "That those words be there inserted."

The Committee divided: Ayes, 105: Noes, 262.

Division No. 247. AYES. [9.48 p.m
Amory, D. Heathcoat Hare, Hon. J. H. (Woodbridge) Poole, O. B. S. (Oswestry)
Assheton, Rt. Hon. R Harvey, Air-Comdre. A V Prescott, Stanley
Astor, Hon. M Haughton, S. G. Price-White, Lt.-Col. D
Baldwin, A E Head, Brig. A. H. Prior-Palmer, Brig. O
Barlow, Sir J Headlam, Lieut.-Col. Rt. Hon. Sir C Raikes, H. V.
Beamish, Maj [...] H Henderson, John (Cathcart) Reid, Rt. Hon. J. S. C (Hillhead)
Bennett, Sir P. Hinchingbrooke, Viscount Renton, D.
Birch, Nigel Hudson, Rt. Hon R. S. (Southport) Ropner, ColL.
Boles. Lt.-Col. D.C (Wells) Hutchison, Lt.-Cm. Clark (E'b'rgh W.) Sanderson, Sir F.
Bower, N. Jarvis, Sir J Scott, Lord W.
Boyd-Carpenter, J. A Joynson-Hicks, Hon L. W Shephard, S. (Newark)
Braithwaite, Lt.-Comdr J G Keeling, E.H Shepherd, W. S. (Bucklow)
Buchan-Hepburn, D G T Lambert, Hon. G. Smiles, Lt.-Col. Sir W
Bullock, Capt. M Lancaster, Col. CG Smith, E. P (Ashford)
Challen, C Langford-Holt, J. Smithers, Sir W.
Clarke, Col. R. S. Lindsay, K. M. (Comb'd Eng Univ.) Spearman, A.C. M
Clifton-Brown, Lt.-Col. G Low, Brig. A. R. W Spence, H.R.
Conant, Maj. R. J. E. Lucas, Major Sir J. Stanley, Rt. Hon. O.
Crookshank, Capt. Rt Hon. H F C Lucas-Tooth, Sir H. Stuart, Rt. Hon. J (Moray)
Crosthwaite-Eyre, Col. O. E McCallum, MaJ. D. Sutcliffe, H.
Cuthbert, W. N Mackeson, Brig. H. R Taylor, Vice-Adm. E. A (P'dd't'n, S.)
Digby, S. W. Maclay, Hon. J. S. Teeling, William
Donner, San.-Ldr. P W. Macmillan, Rt. Hon. Harold (Bromley) Thornton-Kemsley, C. N.
Dower, Lt.-Col. A V G (Penrith) Macpherson, Maj. N. (Dumfries) Thorp, Lt.-Col. R A. F
Drayson, G. B ' Manningham-Bullor, R. E Touche, G. C.
Eccles, D. M. Marples, A. E. Vane, W. M. F
Elliot, Rt. Hon. Waiter Marshall, D. (Bodmin) Walker-Smith, D.
Fraser, H. C. P. (Stone) Mellor, Sir J. Ward, Hon. G. R.
Gage, C Molson, A. H. E. Webbe, Sir H. (Abbey)
Galbraith, Cmdr. TD. Morrison, Maj. J. G. (Salisbury) Wheatley, Colonel M. J,
Gammans, L. D. Mullan, Lt. C. H. White, Sir D. (Fareham)
Gomme-Duncan, Col A Naven-Spence, Sir B White, J. B. (Canterbury)
Grant, Lady Osborne, C. Winterton, Rt. Hon. Earl
Gridley, Sir A. Peake, Rt Hon. O
Grimstan, R. V. Pitman, I. J. TELLERS FOR THE AYES:
Hannon, Sir P. (Moseley) Ponsonby, Col. C. E Mr. Drewe and Mr. Studholme.
Adams, Richard (Balham) Brook, D. (Halifax) Deer, G.
Adams, W. T, (Hammersmith, South) Brooks, T. J. (Rothwoll) Delargy, H J
Alexander, Rt. Hon A V Brown, George (Belper) Diamond, J
Allen, A. C. (Bosworth) Brown, T. J (Ince) Donovan, T
Alpass, J. H. Bruce, Maj. D. W T Driberg, T.E. N.
Anderson, F. (Whitehaven) Buchanan, G. Dugdale, J. (W. Bromwich)
Altewell, H. C Burke, W. A. Dumpleton, C. W.
Ayles, W. H. Butler, H. W. (Hackney. S) Durbin, E. F. M.
Ayrton Gould, Mrs B Byers, Frank Ede, Rt. Hon. J. C.
Bacon, Miss A Callaghan, James Edwards, N. (Caerphilly)
Baird J. Carmichael, James Evans, S.N. (Wednesbury)
Balfour, A Champion, A. J Ewart, R
Barstow, P G Chetwynd, G. R. Fairhurst, F.
Barton, C. Cobb, F.A. Farthing, WJ.
Battley, J R. Cocks, F. S Fernyhough, E.
Beattie, J (Belfast, W) Coldrick, W Foot, M.M.
Bechervaise, A. E. Collindridge, F, Forman, J. C.
Bellenger, Rt Hon. F J Collins, V. J. Freeman, Peter (Newport)
Benson, G. Colman, Miss G. M. Gaitskell, H T. N
Berry, H. Comyns, Dr L. Gallacher, W
Beswick, F Corbet, Mrs F K (Camberwell, N.W.) Ganley, Mrs. C. S
Bing, G. H. C Corlett, Dr. J George, Lady M. Lloyd (Anglesey)
Binns, J. Cove, W. G. Gibbins, J.
Blenkinsop, A. Crawley, A Gibson, C W
Blyton, W. R Daggar, G Gilzean, A.
Boardman, H. Daines, P. Glanville, J. E. (Consett)
Bottomley, A. G. Dalton, Rt. Hon. H. Goodrich, H E.
Bowden, Flg.-Offr. H W. Davies, Edward (Burslem) Gordon-Walker, P. C
Bowles, F. G. (Nuneaton) Davies, Ernest (Enfield) Greenwood, A. W.J. (Heywood)
Braddock, Mrs. E. M L'pt Exch'ge) Davies, Harold(Leek) Grenfell, D. R.
Braddock, T. (Mitcham) Davies, Hadyn(St Panoras, S.W) Grey, C. F.
Bramall, E. A. Davies, RJ. (Westhoughlon) Griffiths, D (Rother Valley,
Griffiths, Rt. Hon. J. (Llanelly) Manning, Mrs. L. (Epping) Shinwell, Rt. Hon. E
Griffiths, W. D. (Moss Side) Marshall, F. (Brightside) Shurmer, P.
Guest, Dr. L. Haden Medland, H. M. Silverman, S. S. (Nelson)
Gunter, R. J Mellish, R. J. Simmons, C. J.
Guy, W. H. Middleton, Mrs. L Skeffington-Lodge, T. C
Hall, W. G. Mikardo, Ian Skinnard, F. W.
Hamilton, Lieut.-Col. R Millington, Wing-Comdr E R Sorensen, R. W
Hannan, W. (Maryhill) Milchison, G. R. Stamford, W.
Harrison, J. Monslow, W. Steele, T.
Hastings, Dr. Somerville Moody, A. S. Stewart, Michael (Futham, E.)
Henderson, A. (Kingswinford) Morley, R. Stokes, R. R.
Henderson, Joseph (Ardwick) Morris, P. (Swansea, W) Stross, Dr. B.
Herbison, Miss M. Morris, Hopkin (Carmarthen) Stubbs, A. E.
Hewitson, Capt. M Mort, D. L. Swingler, S.
Hicks, G Murray, J. D. Sylvester, G. O
Hobson, C. R Nally, W. Symonds, A. L.
Holman, P Naylor, T. E. Taylor, H. B. (Mansfield)
Holmes, H. E. (Hemsworth) Neal, H. (Claycross) Taylor, R. J. (Morpeth)
House, G. Nichol, Mrs. M. E. (Bradford, N.) Taylor, Dr. S. (Barnet)
Hoy, J. Nicholls, H. R. (Stratford) Thomas, D. E. (Aberdare)
Hudson, J. H. (Ealing, W.) Noel-Buxton, Lady Thomas, Ivor (Keighley)
Hughes, H. D. (W'lverh'pton, W.) Oldfield, W. H Thomas, I. O. (Wrekin)
Hutchinson, H, L. (Rusholme) Oliver, G. H. Thomas, George (Cardiff)
Irving, W. J. Paget, R. T. Thurtle, Ernest
Isaacs, Rt, Hon. G. A. Paling, Rt. Hon. Wilfred (Wentworth) Titterington, M, F
Janner, B. Paling, Will T. (Dewsbury) Tolley, L.
Jay, D. P. T. Pargiter, G. A Tomlinson, Rt. Hon. G
Jeger, G. (Winchester) Parkin, B. T. Ungoed-Thomas, L.
John, W. Paton, J. (Norwich) Usborne, Henry
Jones, Rt. Hon. A. C. (Shipley) Pearson, A. Vernon, Maj. W. F
Jones, D. T. (Hartlepools) Peart, Capt. T. F. Viant, S. P.
Jones, Elwyn (Plaistow) Plaits-Mills, J. F. F. Walkden, E.
Jones, P. Asterley (Hitchin) Poole, Major Cecil (Lichfield) Wallace, G. D. (Chislehurst)
Keenan, W. Porter, G. (Leeds) Warbey, W. N.
Kinghorn, Sqn.-Ldr E Pritt, D. N, Watson, W. M
Kinley, J. Pryde, D. J Weitzman, D.
Kirkwood, D Pursey, Cmdr. H Wells, P. L. (Faversham)
Lang, G. Randall, H. E. Wells, W. T. (Walsall)
Lee, F. (Hulme) Ranger, J. West, O. G.
Leslie, J R Rankin, J. White, H. (Derbyshire, N.E.)
Levy, B. W. Rees-Williams, D R Whiteley, Rt. Hon. W.
Lewis, A. W. J. (Upton) Reeves, J. Wigg, Col. G. E.
Lewis, J. (Bolton) Reid, T. (Swindon) Willey, F. T. (Sunderland)
Lipton, LI.-Col M Richards, R Williams, D. J. (Neath)
Logan, D. G. Rabens, A. Williams, J L. (Kelvingrove)
Longden, F. Roberts, Emrys (Merioneth) Williams, W. R. (Heston)
Lyne, A. W. Roberts, Goronwy (Caernarvonshire) Williamson, T.
McAdam, W Roberts, W. (Cumberland, N o Willis, E.
McEntee, V La T Robertson, J. J. (Berwick) Wills, Mrs. E. A
McGhee, H. G. Rogers, G. H. R. Wilson, J. H.
Mack, J. D Ross, William (Kilmarnock) Woods, G. S.
McKay, J. (Wallsend) Royle, C. Yates, V. F
McKinlay, A. S. Sargood, R. Young, Sir R. (Newton)
Maclean, N. (Govan) Scott-Elliot, W.
McLeavy, F Sharp, Granville TELLERS FOR THE NOES:
Manning, C. (Camberwell, N.) Shawcross, C. N. (Widnes) Mr. Snow and Mr. Popplewell.

Question put, and agreed to.

Clause ordered to stand part of the Bill.