§ Mr. Jay
I beg to move, in page 16, line 32, at the end, to insert:and (b) the year specified in a notice under this subsection shall not he a year ending more than three years before the date of the service of the notice.This Amendment in effect meets the substance of the proposal contained in the previous Amendment to line 20 on the Order Paper in the name of the hon. and learned Member for Kensington, South (Sir P. Spens) and the hon. Member for Chichester (Mr. Joynson-Hicks). The Amendment is to provide that no one paying untaxed interest shall have to make a return of the list of recipients of such interest for any year earlier than three years before the date on which he has to make the return. That is the substance of the proposal in the previous Amendment, and the effect is that the return shall not go back for more than three years.
§ Mr. Joynson-Hicks
On behalf of my hon. and learned Friend the Member for Kensington, South (Sir P. Spens) and myself, I wish to express appreciation of the fact that on this point, at any rate, the Government have seen the light, and it is not the red light.
§ Amendment agreed to.
§ Mr. Boyd-Carpenter (Kingston-upon-Thames)
I beg to move, in page 17, line 1, to leave out subsection (3).
This Amendment deals with that part of the Clause which imposes upon those who carry on banking business the duty 2023 to disclose interest payments. The subsection relates to the Post Office Savings Bank, and the Amendment seeks to delete from the Clause the words which impose on the Postmaster-General the duty to disclose to the Inland Revenue particulars relating to the Post Office Savings Banks.
This matter was raised towards the end of a sitting of rather longer than usual duration during the Committee stage and was then dealt with, perhaps inevitably, rather perfunctorily. There are two points of importance which seem to arise on it, one largely of a technical nature and the other going into the merits. I will first deal with the technical issue.
The subsection we seek to delete imposes the duty of furnishing to the Inland Revenue particulars relating to Post Office Savings Bank interest and, as I pointed out in Committee, that raises a question of the inter-action of this subsection with Section 4 of the Post Office Savings Banks Act, 1861. The relevant Section states:The Officers of the Postmaster-General engaged in the Receipt or Payment of Deposits shall not disclose the Name of any Depositor nor the Amount deposited or withdrawn, except to the Postmaster-General, or to such of his Officers as may be appointed to assist in carrying this Act into operation.That imposes a perfectly clear prohibition, which, I do not think the Financial Secretary will contradict, has been observed for 90 years, on the disclosure of Post Office Savings Bank interest. I believe I am right in saying that, in deference to the provisions of that Section, the Postmaster-General has refused to disclose particulars of savings bank interest, either to the Ministry of Pensions or the Assistance Board or any Government Department.
The first issue which arises is whether, assuming that what the Government wish to do by the present subsection is right, they are setting about it in the right way; because no attempt is made in the present Bill to repeal the Section of the 1861 Act which I have just read. I raised the matter in Committee, and as neither of the Law Officers of the Crown is at the moment present, I think it would be only fair if I read to the House the words used on this point by the Attorney-General. He said:Both the hon. and learned Member for Norwich, South, and the hon. Member for 2024 Kingston-upon-Thames referred to Section 4 of the Post Office Savings Banks Act, 1861. If they will look more closely at that Section, they will see that it deals with making disclosure otherwise than to the Postmaster-General. The Clause we are talking about does not place any obligation on the officers of the Postmaster-General. It places an obligation on the Postmaster-General himself. [HON. MEMBERS: "Oh."] Well, that is how the thing stands, dealing with it on a purely legal plane. That is its legal effect, but whether that is the effect the Committee desire is another point. Subsection (4) says that the Act shall apply'in relation to the Post Office Savings Bank as if it were a trade or business carried on by the Postmaster General.'The result of that, read in conjunction with subsection (1), shows that the obligation on the Post Office Savings Bank is an obligation placed upon the Postmaster-General himself. In that sense, when Section 4 of the 1861 Act is looked at more closely, there is no conflict between the two, but I would go further and say that even if there were a conflict it is quite clear that the terms of the latter Bill must be regarded as to that extent superseding the former Act. It was suggested that there should have been a specific repeal of the former Act, but I do not think that is possible, because the former Act remains in force for a great many purposes and it would not be desirable or possible to repeal it; but if to that extent there is a conflict, then the later Act would supersede the original one.Perhaps in fairness I ought to say also that, in reply to a question by me as to whether or not what the Attorney-General had said meant that, on that argument the Postmaster-General personally was the channel of communication to the Inland Revenue, the right hon. and learned Gentleman said:No, the advice that I give is that the Postmaster-General is under an obligation and he can discharge that obligation through any person he authorises, including one of his own Officers."—[OFFICIAL REPORT, 8th June, 1951; Vol. 488, c. 1623–4.]Then, I regret to say, the OFFICIAL REPORT goes on to say:Several Hon. Members rose—and it is indicated that the deputy chief Government Whip then used what I am bound to say is much the best argument that the Government have used throughout these debates, and moved the Closure. Now, in the absence, I am glad to say, of the deputy chief Government Whip—or at any rate until he returns—we are in a position to deal with the merits of the answer given by the Attorney-General, whom, I am sorry to say is not here.
2025 I am bound to say that it is quite an extraordinary argument. At the moment we have the position that there remains on the Statute Book the Post Office Savings Banks Act, 1861, which forbids —although I cannot tell the House what is the penalty—officers of the Postmaster-General from disclosing particulars of, among other things, interest payments to anybody except the Postmaster-General. Then we have the subsection which we are here seeking to delete, imposing, as the Attorney-General has said, on the Postmaster-General the duty of disclosing these facts to the Inland Revenue. I will concede for the moment that there is no express prohibition in the 1861 Act on the Postmaster-General making that disclosure. It may be that on a narrow construction the Postmaster-General can do it.
But the Attorney-General went further and said that the Postmaster-General, being under an obligation to do it, could do it through one of his officers. With very great respect to that argument, if those officers do it, they would seem to me, I am bound to say, to be acting in conflict with the prohibition placed upon them by the Act of 1861. The matter becomes even more serious in view of the fact that the Attorney-General was not content to say that the Postmaster-General could do it personally—and I am bound to say that anything that kept him innocently occupied might be a good thing—but went on to say that his officers would, in fact, have to do it in the normal course of administrative business.
It really is highly unsatisfactory from every point of view to introduce legislation now under which, according to the Attorney-General, the officers of the Postmaster-General have to do something which is expressly forbidden by a statutory protection which is continued in force. That must be unsatisfactory. I do not want to weary the House by going into an argument whether or not a later statute can by implication, though not expressly, repeal an earlier one. I am concerned with the practical question with which we are faced. It is quite wrong to put public officers in that position, and if it is desired to take away from depositors in the Post Office Savings Bank the protection which it has been public policy to give them by Statute for 90 years, then 2026 at least the Government should have the moral courage to come forward and repeal Section 4 of the Act of 1861.
The Attorney-General said that could not be done because the Act generally remained in force. Of course it does. All I am suggesting now, as I suggested on the previous occasion, is that we should repeal those parts of the Act which impose these prohibitions. It goes beyond sloppy draftsmanship—we are accustomed to that in this House—to leave unrepealed a prohibition upon the very act which, according to the principal Law Officer of the Crown, officers of the Post Office are to be called upon under this Bill to undertake.
I hope that when the Financial Secretary replies he will address himself in the first place, to this question. Granted that what he is seeking to do is right—and that is a hypothesis which Isuppose he will accept—is he, in fact, going about it in a workmanlike way, and is he really, now that there has been a chance to reconsider the argument, accepting the view which on the spur of the moment the Attorney-General put forward, that it was all right to do this because the orders of the Postmaster-General to do a thing more than countervailed the more express prohibition in the Statute which prevented them from doing it?
I wish to say one word more on the merits of the matter, and I can sum up that argument in these words. As I said, for 90 years it has been public policy under a variety of Governments to preserve the security, in the technical sense, of deposits in the Post Office Savings Bank. It is now sought—whether in a workmanlike manner or otherwise I will not at this stage attempt to argue—to take away that protection, and to compel the Postmaster-General to disclose to the Inland Revenue details of entries paid in excess of £15. I have no doubt that is highly convenient to the Inland Revenue, but the mere convenience of the Inland Revenue is, surely, no reason for overthrowing what has been administrative practice and political doctrine for a matter of 90 years.
Hon. Members, and especially those who operate large bank accounts, may perhaps appreciate the desire for secrecy about their affairs which I believe affects a large number of small depositors in the Post Office. I wonder very much 2027 whether such gains in administrative ease for the Inland Revenue as may be obtained by this subsection will be really worth while reducing—perhaps only psychologically but still reducing—the feelings of security and of confidence which the small depositors have in the Post Office. The Financial Secretary to the Treasury knows better than any man how difficult it is to stimulate small savings now. Is it wise at this moment of all moments to diminish this feeling of confidence which this class of small savers may have?
I wonder whether it is wise; and I wonder, when it is done in the interest of the prevention of tax evasion, the Financial Secretary will come forward and say that large numbers of black market operators place their ill-gotten gains in the Post Office on interest and defraud the Revenue? If he does, he lives in a world of unreality. I believe that the Government are setting out in the wrong way to do what they are seeking to do; they are risking putting officers of the Post Office in difficult and embarrassing positions with the conflicting duties imposed upon them, and, finally, they are setting out to do the wrong thing.
§ Mr. H. Strauss
I beg to second the Amendment.
I am sorry I missed the opening remarks of my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), but I wish to address the Financial Secretary particularly on the first point my hon. Friend raised. It was during the speech of the Financial Secretary in Committee that I put the point about Section 4 of the 1861 Act and asked whether this Section did not conflict with the duty he was imposing on the officers of the Post Office by this Clause and, if it was so conflicting, why the Section of the 1861 Act was not included among the repeals.
The Financial Secretary quickly took the advice of his right hon. and learned Friend the Attorney-General and was good enough to give that advice to the House. He thought there was nothing in the Section which would prevent the carrying out of the obligations imposed by the Clause. At a later stage, my hon. Friend the Member for Kingston-upon-Thames quoted the actual Section, which I need 2028 not repeat because it has been quoted again now, and the reply of the Attorney-General will be found in the OFFICIAL REPORT of 8th June, 1951. at columns 1623–24.
The prohibition imposed by Section 4 of the 1861 Act is an absolutely unqualified prohibition, prohibiting the officers of the Postmaster-General from even disclosing the name of the depositor except to the Postmaster-General or to such of his officers as may be appointed to assist in carrying that Act into operation.
If the Clause we are now considering becomes an Act of Parliament, the officers of the Postmaster-General may be ordered by the Postmaster-General—for that is the effect of the answer of the AttorneyGeneral—to disclose the name of the depositor to somebody who is neither the Postmaster-General nor one of his officers. That is a direct conflict, on the face of it, with the prohibition contained in the 1861 Statute. Suppose they are brought to account before the courts of this country for their breach of the 1861 Statute. Does the Financial Secretary to the Treasury say it would be any answer to plead that they were given an order by the Postmaster-General? His learned Friends will be familiar with the doctrine, if he is not, that obedience to orders is not an answer to a criminal offence. It is a criminal offence that is here in question. If the hon. Gentleman does not agree with that, perhaps he will give the reasons why he disagrees.
I am assuming that the next Amendment in my name, in page 17, line 3, at the end to insert:save to the extent necessary to comply with this section the obligation of secrecy imposed by section four of the Post Office Savings Bank Act, 1861, remains in full force and effect,is not to be called, and therefore I raise this question, if I may be permitted to do so, on the discussion of my hon. Friend's Amendment. The conflict with the 1861 Act is apparently complete, and I suggest that, in the interests of the servants of the Postmaster-General, who will otherwise be placed in intolerable doubt as to what their duty is and whether they should obey Section 4 of the 1861 Act or obey the instructions of the Postmaster-General, the matter should be cleared up by some Amendment dealing with the extent to which the 1861 Act is repealed.
2029 The Attorney-General on 8th June said that he did not think that to operate this Clause it was necessary to repeal Section 4 of the 1861 Statute, but that if he were wrong on that—and he was good enough to acknowledge the possibility of his being wrong—then he was confident that the 1861 Statute was to that extent repealed. Is that a fair position in which to leave the servants of the Postmaster-General? I suggest it is not. The servants of the Postmaster-General should be quite certain that, if they carry out the instructions that the Postmaster-General gives them in his own attempt to carry out this Clause if it becomes law, they will not be acting contrary to the duty imposed upon them by the 1861 Act.
I sympathise with the Financial Secretary to the Treasury because on this occasion he has not got the legal help of his right hon. and learned Friend, but the fact that my hon. Friend the Member for Kingston-upon-Thames had proposed the deletion of this subsection and that I had my Amendment on the Order Paper must have warned him fully of the point that was going to be made, and I hope he will give a satisfactory reply.
§ Mr. Jay
I can assure hon. Members that anything I may say is the view of my right hon. and learned Friend the Attorney-General as well as myself, and I fully consulted with him and others on this point since the earlier debates.
The hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) raised two points—first on the merits of the inclusion of Post Office savings within the ambit of this Clause, and secondly on the relation of the Finance Bill to the Act of 1861. On the first question of the merits, the simple position seems to us to be this. We are under this Clause requiring institutions such as banks to make returns to the Inland Revenue of interest paid to depositors which is already income subject to tax.
We are not in this Clause making any income taxable which was not taxable before. We are merely saying that where it is taxable it should be returned to the Inland Revenue. If we do that there does not seem to be any good case for imposing that obligation on banks and certain other savings institutions and omitting the Post Office, in that the Post Office interest is, like the other interest, already income subject to tax. That is the simple postion, 2030 and it seems to us conclusive in favour of including the Post Office within the Clause.
The hon. Member for Kingston-upon-Thames quite rightly pointed out the great importance of small savings and the desirability, with which I entirely agree, of encouraging and maintaining small savings at present. But however desirable it may be to encourage savings, I do not think we ought to do it by giving a sort of covert exemption from Income Tax for what is really taxable income.
Secondly, as to the relation of this Bill to Section 4 of the Post Office Savings Act of 1861, the hon. and learned Member for Norwich, South (Mr. H. Strauss), asked me a question at some rather curious hour of the day or night and I gave him what was admittedly rather a perfunctory answer. Because of the circumstances of the case it could be nothing else. I congratulate him upon his research, if it was his, into the 1861 Act, but although my answer was perfunctory we are convinced, after a good deal of further consideration, that it was nevertheless correct.
Up to a point the facts are much as they were stated by the hon. Member for Kingston-upon-Thames. The 1861 Act says that the officers of the Postmaster-General must not disclose details about deposits in the Post Office except to the Postmaster-General. What this Clause does is to lay an obligation upon the Postmaster-General to give certain relevant information to the Inland Revenue. So far, therefore, there is no conflict between the two. In our view, if the Postmaster-General, in discharging his obligation under the present Bill to give information to the Inland Revenue, in practice does so, as no doubt he would, by deputing the job to one of his officers, then he is doing no more constitutionally than to give information as Postmaster-General to the Inland Revenue, as he is required to do under the Clause.
§ Mr. H. Strauss
Will the hon. Gentleman deal with this point? The point is not what the Postmaster-General is doing, but what the servants of the Post Office are doing. However laudable and however much it may be under instructions, the servants of the Postmaster-General will be disclosing the name of a depositor to somebody other than the Postmaster-General or a servant of the Postmaster- 2031 General and, on the face of it, that is a violation of the Statute.
§ Mr. Boyd-Carpenter
Is the hon. Gentleman advancing the proposition that because a public servant is acting on the instructions of his Ministerial superior he is therefore exempted from the criminal penalties imposed by Statute?
§ Mr. Jay
What I am saying is this— that the Postmaster-General is authorised, and indeed is under an obligation, by the Bill to give this information. If he authorises one of his officers, under those powers, to discharge that task, he is doing no more than this Bill requires him to do. That is the position as we see it and for that reason, although perhaps the hon. and learned Gentleman may not agree, there does not seem to us, on the further consideration which we have given to it, to be any real conflict between the two requirements.
§ Mr. Strauss
May I put this point to the hon. Gentleman before he sits down? It is possible for us to have a further reply from the Attorney-General, if necessary. The fact that the Postmaster-General may be protected and may be authorised by this subsection to give the information does not in itself mean that anybody else will be authorised to do it, even on his instructions. It is on that point that I hope we shall get a reply from the right hon. and learned Gentleman.
§ Sir Patrick Spens (Kensington, South)
Despite the interesting information given to the House by the Financial Secretary to the Treasury, I have the very gravest doubts whether the advice which he has been given and which he has passed on to the House is right. May I ask him this question? Has he considered the effect of subsection (2)? The Postmaster-General, under subsection (3), is to be deemed to be a person carrying on business, and 2032 under subsection (2) notice may be served on any branch, and the officer of that branch is liable to give the information.
§ Mr. Douglas Houghton (Sowerby)
These accounts are held centrally, and not in the local post offices at all.
§ Sir P. Spens
That may be the answer of the Financial Secretary to the Treasury, but, as far as I know, accounts are kept at local post offices. [HON. MEMBERS: "No."] Under subsection (2) it appears to me—and this is the point that I am raising—that it would be possible to serve a notice on a local postmaster, who then, under subsection (2), has the duty in that capacity of giving the information that is asked for.
Whatever directions the Postmaster-General passes on to his subordinates, he cannot pass on directions that are contrary to a statute which lays down that if such and such a thing is done it is an offence. He cannot give directions to do that, and the suggestion—I was going to call it a quibble, but I do not think that it would be polite to the Financial Secretary to the Treasury—the suggestion that the Postmaster-General is going to depute the giving of this information for and on his behalf is still going to be no protection in law against what is, so far as I can see, an offence against the provisions of the 1861 Act.
Surely, as the matter had been called to the attention of the Government, it would have been all too easy to put in a small Amendment which would have saved all this trouble. As it is, it is almost certain that this question will go to some court or another. It may be that the court will be able to take the view that has been advanced from the Treasury Bench; but, of course, one cannot too often remind the House that nothing that is said from the Treasury Bench in the course of a debate is any direction to His Majesty's judges, and they will take their own view as to how these two Measures conflict. It may be that the answer that they will give will show that the Treasury is right. I think it is more probable that the answer will be given that will show that my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss), is right. But why should this conflict of the two Measures be left at all? Why do not the Government in a case like this put 2033 in some Amendment that would get rid of the trouble altogether?
§ Mr. Black (Wimbledon)
I think we have all listened with a feeling of very great disappointment to the reply given by the Financial Secretary to the Treasury. There is just one short point on the merits of the case that I want to bring to his notice. The Financial Secretary said that the Government could see no reason in this case for differentiating between interest paid on Post Office Savings Bank accounts and interest paid gross on other bank accounts. I should like to bring to his notice one reason why I think that there are good grounds for suggesting that a line can be drawn.
It is normally the case that an individual is not permitted to invest more than £2,000 in the Post Office Savings Bank. There is that limit ordinarily on the amount of the investment that an individual can make; so that when we are dealing with the Post Office Savings Bank, if we assume a maximum investment of £2,000 by an individual and the current rate of interest of 2½ per cent., the maximum interest that can be paid to an individual is £50 a year. Thus the operation of this Clause really falls within the narrow limits of interest of over £15 payable, which is the downward limit imposed by the Clause, and interest of £50 per annum in the upward direction, that being the maximum amount of interest which can be received by an individual who has his maximum investment in the Post Office Savings Bank.
When the position is compared with that of the joint stock banks, there is no limit on the amount of the deposit that an individual can have in a joint stock bank. There may be vast amounts of annual interest which are not bearing the taxation they ought to bear, and there may be a very great leakage of tax on interest on joint stock bank accounts. That consideration cannot apply to the Post Office Savings Bank because of the limit on the amount of an individual's investment. I suggest that, apart from the other reasons which have been advanced, that is a very good reason why interest on Post Office Savings Bank 2034 deposits can and should be differentiated from interest on deposits in other institutions.
§ Mr. McAdden (Southend, East)
I must apologise for being the first hon. Member on this side of the House not a member of the legal profession to intervene on this point. I do not want to follow the legal arguments which have been put forward with such skill by my hon. and learned Friends, but I do want to say a few words on the general question of this subsection.
As I understand it, it is the view of hon. and right hon. Gentlemen opposite that it is necessary to have these powers in order to prevent widespread tax evasion. I am sure that we all agree that tax evasion is something which should be discouraged. On the other hand, I do not agree that the general trend of the majority of people in this country is to evade their tax.
§ Mr. Speaker
This seems to be an argument on the Clause. We are now discussing subsection (3), dealing with the Post Office Savings Bank.
§ Mr. McAdden
I am proposing to confine my remarks to those members of the public of whom it is suggested that they are evading their tax liabilities by failing to disclose the interest accrued on their savings in the Post Office. I believe that the majority of depositors are honest, and that they do disclose their savings. In respect of the remaining few who do not, the Inland Revenue already have powers, which they use considerably, to try to find out what those savings are.
The hon. Member for Sowerby (Mr. Houghton) knows perfectly well that if the Inland Revenue suspect that anybody has failed to disclose the amount of interest earned on his savings, they do not hesitate for one moment to make an entirely fictitious assessment in order that the person concerned shall assist by proving to the Commissioners whether or not the assessment is fictitious. Those powers exist without this subsection, and could reasonably be used in order to bring to justice those who are evading taxation in future as in the past, without the necessity of this subsection which pries into the private affairs of Post Office Savings Bank depositors who, in the main, are thoroughly honest and reliable people.
§ The Attorney-General
I am sorry that I did not hear most of the arguments upon the question whether Section 4 of the Post Office Savings Banks Act conflicts with subsection (3) of the Clause now under discussion. Possibly I should have been shaken in my view if I had heard them. Perhaps I might make this suggestion, as hon. Members opposite have doubts as to whether there is a conflict. Possibly the difficulty might be resolved if you would allow me, Mr. Speaker, at a later stage to move a manuscript Amendment in the following form: In page 17, line 3, at the end insert:This subsection shall have effect notwithstanding anything in section four of the Post Office Savings Banks Act, 1861, but save as aforesaid that section shall remain in full force and effect.
§ Mr. H. Strauss
Has not this the same effect as would have followed if my Amendment had been called and adopted?
§ Mr. Boyd-Carpenter
I am very glad that the right hon. and learned Gentleman has appreciated that there is a point which, although it does not relate to the merits of the matter, does relate to the common interest of this House in seeing that legislation is properly drafted. I will not dwell on this issue as to whether there was any coincidence between the similarity of the form of the Attorney-General's Amendment and that which we had on the Order Paper in the name of my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss). I am well satisfied that an effort is now being made to tidy up this Statute, and in order to clear the way for the manuscript Amendment—
§ Mr. Boyd-Carpenter
I was proposing to seek the leave of the House to withdraw the Amendment. I do not know whether my hon. Friend has particular reasons for desiring to continue the argument, but I think that the chief purpose which I set out to achieve will be met. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ The Attorney-General
I beg to move, as a manuscript Amendment, in page 17, line 3, at the end, to insert:This subsection shall have effect notwithstanding anything in Section four of the Post Office Savings Banks Act. 1861, but save as 2036 aforesaid that section shall remain in full force and effect.
§ Mr. Pickthorn
I only want to ask one very short question. Will the Attorney-General explain to us what is the difference between the effect of this Amendment and the effect of the Amendment standing in the name of my hon. and learned Friend which was not called, otherwise it becomes a little difficult to see why one Amendment is called and not the other?
§ Amendment agreed to.
§ Mr. Jay
I beg to move, in page 17, line 8, at the end, to insert:and if a person to whom any interest is paid or credited in respect of any money received or retained in the United Kingdom by notice in writing served on the person paying or crediting the interest—This Amendment is intended to give effect to an undertaking my right hon. Friend gave in response to an Amendment proposed in the Committee stage by the right hon. Member for Blackburn, West (Mr. Assheton). My right hon. Friend wanted us to exclude from the obligation to return bank interest for tax purposes residents abroad. His argument was, I think, that we did not wish by the imposition of this obligation to deter overseas traders and persons resident abroad generally from having bank accounts in this country and giving business to the City of London and providing earnings by way of invisible exports and so forth. My right hon. Friend agreed to carry that out, and we have attempted to do so by this Amendment.
the person paying or crediting the interest shall not be required to include that interest in any such return; and section thirty of the Income Tax Act, 1918 (which relates to fraudulent claims for relief), shall, with the necessary adaptations, apply in relation to notices under this subsection as it applies in relation to the claims mentioned in the said section thirty.
- (a) declares that the person who was beneficially entitled to that interest when it was paid or credited was not then ordinarily resident in the United Kingdom; and
- (b) requests that the interest shall not be included in any return under this section,
I should like to explain to the right hon. Gentleman and to the House why we found it rather more difficult to carry out that undertaking than we anticipated at the time. The object was to exclude residents abroad from the scope of the Clause. When, however, we consulted 2037 the banks as to the advisability of excluding residents abroad as such, they pointed out that it was not within the knowledge of a bank in the ordinary course of business whether or not a customer was in the full sense of the word ordinarily a resident abroad. All that they would normally know would be the address of the customer concerned. The suggestion, therefore, was that we should exclude any person with an address outside the United Kingdom.
It seemed to us, however, that if we adopted that solution we should open the door to rather obvious evasion of the whole purpose of the Clause, since it would be only necessary if there were such persons who wished to evade it for them to give the bank an address abroad which was merely an address for the purpose of forwarding documents, thereby avoiding the whole obligation.
We have, therefore provided that there shall be an exemption where the recipient of such interest actually notifies in writing the person paying—that is to say the bank —that the person beneficially entitled to that interest when its was paid was not ordinarily resident in the United Kingdom. I think that carries out the purpose which the right hon. Gentleman had in mind, is practicable from the banks' point of view, and reasonably safeguards the Revenue against loss.
§ Mr. Assheton (Blackburn, West)
I am indebted to the hon. Member and to the Chancellor for what he has done here. I was aware that the words of my original Amendment probably raised certain difficulties of that sort, but I knew it was much better to leave it to the wisdom of the Board of Inland Revenue as to the arrangements to be made with the banks. I am sure that the House will be glad that the Chancellor of the Exchequer has seen his way to do so, and we are all grateful to him.
§ Mr. Frederic Harris (Croydon, North)
In regarding persons resident abroad under this Clause, surely there should be some general stipulation laid down of over six months resident abroad?
§ Amendment agreed to.