§ 39. Mr. E. Fletcherasked the Chancellor of the Exchequer if he will direct Departments to refuse their consent to transfer of current Government contracts to a reorganised or reconstructed company until the Treasury is satisfied that such reorganisation or reconstruction has not been carried out for the purpose of evading tax.
§ Mr. Boyd-CarpenterWhile my right hon. Friend deprecates the use of the device of company reconstruction to avoid taxation, he does not consider that the issue of a direction such as that suggested would be a satisfactory way of dealing with the matter.
§ Mr. FletcherIs the hon. Gentleman aware that recently the Admiralty gave their consent to all current Admiralty contracts being transferred from John Brown and Company Limited to a reorganised company with the same name, and also is he aware of any reason for that reorganisation other than as a measure of tax avoidance which he has deprecated so severely, and is he going to allow Government Departments to continue to encourage this tax avoidance when he could stop it?
§ Mr. Boyd-CarpenterThe hon. Gentleman asked a Question on that precise point of my hon. Friend the Civil Lord of the Admiralty on 15th July, from whom he received a full reply.
§ Mr. FletcherBut I still have to know whether the Chancellor was consulted about that transfer or not. I was told by the Civil Lord of the Admiralty that he could not reply; that all he was concerned with was that a reorganised company could carry out the contract. Of course they could, because they were the same company. Was the Treasury consulted, or will it be consulted in future, about similar reorganisations?
§ Mr. Boyd-CarpenterThat is a different question from the one which the hon. Gentleman put down on the Order Paper.
§ Mr. JayIs it not the responsibility of one Department or another to ascertain whether this action was taken for the purpose of tax evasion?
§ Mr. Boyd-CarpenterOn that I can only remind the right hon. Gentleman of the characteristically clear comments of my hon. Friend the Economic Secretary during the Report stage of the Finance Bill.