Clause 21.—(PAYMENTS FOR WAYLEAVES, ETC., FOR ELECTRIC LINES.) (Hansard, 19 June 1950)

§ Mr. Selwyn Lloyd
I beg to move, in page 15, line 8, to leave out subsection (2).
There may be different views about the relative importance of Clause 20 and Clause 21 but they have in common this retrospective element. I move the Amendment in an interrogatory manner in order to find out the exact reason for this Clause being made retrospective.
926 So far as I understand it, it deals with the method of collecting taxes on rents paid in respect of easements and way-leaves with regard to things like electric cables, and the Clause prescribes that the payer shall pay these rents tax-free and be accountable for the tax. That is so far as I understand the meaning of subsection (1). Then there is the proviso abouts rents not exceeding £2 10s. which is the de minimis proviso. Subsection (2) then states: This section shall be deemed always to have had effect … 927 I should like the Solicitor-General to tell the Committee why it is necessary for this Clause to be retrospective. It does not appear to me to come within the other canons which he laid down. I am not certain that the Chancellor of the Exchequer issued a warning on the question of rents in respect of wayleaves.

§ The Solicitor-General
The reason this Clause is made retrospective is to legalise the practice which has been followed for a great many years past. For many years it was thought that rents paid in respect of these easements and wayleaves should be taxable at source. That was thought to be the case because it was considered that Section 21 of the 1934 Act was applicable to such payment of rent. It was decided recently, as the result of advice, that that practice which had been followed for so many years was of doubtful legality so far as payments to landlords are concerned, and therefore the purpose of Clause 21 is to make it perfectly clear that for the future it shall be lawful to deduct tax at source on payment of these rents and also, inasmuch as this practice has existed for so many years in the past, to legalise that practice in the past.
That was one of the cases of retrospective action which the hon. and learned Member for Hove (Mr. Marlowe) said he thought was permissible; that is to say, to legalise something long thought to be lawful. It does not mean that anyone has to pay any additional tax. It means that tax paid without protest for many years past and the payment of which is now shown to be of doubtful legality is ex post facto lawfully valid. The Committee will agree that this procedure cannot be said to offend against any principles with regard to retrospective legislation.

§ Mr. Selwyn Lloyd
Am I right in thinking that under this Clause it will be compulsory to deduct tax?

§ The Solicitor-General
Except in the case of payments under £2 10s., in which case there is an election against tax being deductible at source.

§ Mr. Selwyn Lloyd
There will be a compulsion in other cases to deduct tax?

§ The Solicitor-General
Yes, Sir.

§ Mr. Selwyn Lloyd
In that ease, suppose that someone has not conformed to this practice in the past?

§ The Solicitor-General
They always have. This refers to payments made by large electric light companies to landowners, and the tax has always been deducted at source. If the tax were not deducted at source, it could be taxed in the hands of the recipient. The answer to the question is that it always has been the practice, and it has been followed for many years past, during which time no question has been raised until quite recently. What we are doing is to assuage doubts that have arisen.

§ Mr. Selwyn Lloyd
In view of the fact that this tax will not be paid twice, I beg to ask leave to withdraw the Amendment.