HC Deb 24 November 1949 vol 470 cc530-2
66. Mr. Wyatt

asked the Chancellor of the Exchequer if his regulations provide for the taxation of payments in shares and cash made by firms to managing directors in consideration of their undertaking not to accept employment by other firms.

Mr. Glenvil Hall

No, Sir. The courts have held that such payments are not liable to tax. I would, however, remind the hon. Member that in my right hon. and learned Friend's Budget Speech of 1948 he gave warning that the position would be closely watched and that the Government would not hesitate to propose legislation with retrospective effect to deal with any such devices. That quotation expresses my right hon. and learned Friend's continued intention

Mr. Wyatt

Is my right hon. Friend aware that the -ecent tax free payments of over £100,000 each to Sir John Black, and Mr. Lord, of the Austin Motor Company, have acted as a grave disincentive to production among the workers of Birmingham because of their blatant flaunting of riches at this time of economic difficulty? In view of that will he not, in this exceptional case, consider introducing retrospective legislation, and will he also make sure that that legislation is quickly passed in order to prevent such further evasions of Income Tax and the accumulation of income at the rate of over £4 million in a single year?

Mr. Beswick

When considering this device for the evasion of Income Tax, would my right hon. Friend also look into the practice known as the commutation of pensions rights and compensation for loss of office, both of which devices, as with these restrictive covenants, have been used for some time for the evasion of proper tax liability?

Mr. Glenvil Hall

I would remind my hon. Friend that in my answer I indicated that my right hon. and learned Friend the Chancellor was considering not only this type of device but also similar devices.

Mr. Erroll

Will the right hon. Gentleman bear in mind that without the dynamic energy of these two people there would not be any work for the workers concerned to do?

Mr. Blackburn

While in no way accepting the hon. Member for Aston (Mr. Wyatt) as an authority on the workers in my constituency, may I ask my right hon. Friend if he is aware that the payment of very large sums like £137,000, which are not liable to tax, obviously conflicts with the policy of the Government and the extremely loyal way in which the trade union movement is supporting the Government?

Mr. Glenvil Hall

My right hon. and learned Friend accepts the view that what has happened in these cases is contrary to the spirit of the policy outlined in the White Paper on Personal Incomes Costs and Prices.

Mr. Mikardo

Can my right hon. Friend say whether this practice is a manifestation of industrial co-partnership or of a property-owning democracy?