§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Sir F. SoskiceThis Clause looks innocent in character. It is another 1026 Clause which grants a relief. I suppose that its purpose is to achieve a recommendation in paragraphs 306 and 307 of the Millard Tucker Report, but I really think that we ought to know a little more about it. It is a little hard to ask Ministers to give exact estimates of the cost of a Clause of this sort but, on the other hand, we are apparently being very generous in this Bill in the matter of double taxation relief.
I cannot discuss the next Clause beyond indicating that in very general terms it greatly extends the scope of unilateral relief in relation to double taxation. Clause 23 is designed apparently to deal with the situation envisaged in paragraph 307 of the Millard Tucker Report. That paragraph gives an example of the situation in India where initial allowances are granted, and granted apparently at a time or in a year which is different from the year in which the corresponding initial allowance would be granted in this country.
That brings about the result, which one can well imagine, that a company which pays tax in India and here may come off very badly in that it may have its tax liability reduced by its initial allowance in two different years with the result that a set-off of tax provided for in a double taxation agreement would be very small indeed. I can well see the case made in the Millard Tucker Report for granting relief in that particular example.
But paragraph 307 of the Report simply gives that as an example. The Clause, on the other hand, is a Clause which may or may not be limited to that type of example. It is very general in its terms and relates to relief under Part XIII of the Income Tax Act, 1952. I ask the Economic Secretary if he can give the Committee any idea of the scope of relief which is granted here. In other words, can he tell the Committee in what other cases this Clause will be operative? Will it be operative simply in the case of initial allowances under Indian taxation laws, or are there other countries in respect of which this relief will be operative?
No doubt those who have advised the hon. Gentleman will have taken steps to obtain a provisional estimate. Can he give an idea of the cost to the public purse of this relief? I do not want the 1027 Minister to embark upon a long, discursive account of all the examples in which this Clause might operate, but I think that the Committee, before passing the Clause, ought in duty to ask for information roughly and broadly in outline about the scope of the relief granted here. Is it operable only in India? Are there other territories, or are there other kinds of cases than those described in paragraph 307 of the Millard Tucker Report?
Keeping within the rules of order and without moving the two Amendments to page 24, line 20, which are on the Order Paper in my name and have not been selected, I hope the Government will look again at the drafting of subsection (3). I know that those who draft these Clauses are highly skilled, but if they are listening to what I say they may agree that there is a certain amount of room for improvement in the drafting—with a view to making the Clause clearer—on the lines of the Amendment which has not been selected and to which I shall certainly make no more reference in your presence, Sir Charles, than the questions I am now asking. I simply express the hope that they will look at the Order Paper and be able to devise something on the lines of the Amendment about which I am certainly not speaking at the moment. The Minister cannot be asked to do that here and now, but I hope that he will be able to answer the question of substance.
§ Mr. MaudlingPerhaps I may first make some reference to the Amendments which the right hon. and learned Gentleman did not move—not by way of argument but by way of illustration of the Government's tolerant consideration of these matters. I thank the right hon. and learned Gentleman for having called our attention to these Amendments which, had they been moved. I would have said we would have considered to be an improvement and would have been glad to accept.
They are intended as a clarification of the drafting and of the intention of the Clause. The right hon. and learned Gentleman is perfectly right when he says that this Clause is intended to carry out the Millard Tucker Committee's recom- 1028 mendation—which is contained in paragraph 308 and not paragraph 307—the point being, as he explained, that where an initial allowance is granted in one year in this country and in the next year in the other country to which a double taxation agreement applies, the taxpayer may not get the benefit to which he would normally be entitled under the protection of the double taxation agreement.
India is the example which is quoted in the Millard Tucker Report, but there are some other countries. I could not give a list of them and I do not think the right hon. and learned Gentleman asked for one. There are not many of them. This provision also applies to the ordinary annual allowances and the balancing charges allowances. Its scope is not restricted to the initial allowance, or to the country of India, though that is the example which is normally quoted. The cost cannot be accurately estimated but it is officially described as small, and from his experience the right hon. and learned Gentleman will know that that means it is a matter of hundreds of thousands of pounds rather than millions of pounds.
I hope that what I have said will meet the main points which the right hon. and learned Gentleman had in mind. This Clause intends to carry out the recommendations of the Millard Tucker Committee, but its scope is general and is not confined to initial allowances or to India. It also covers the annual allowance and the balancing charges allowance. We think this is a concession to which the taxpayer is rightly entitled and we are satisfied that the cost of meeting it would not be more than small.
§ Mr. Douglas Jay (Battersea, North)Do I understand the hon. Gentleman to say that if we were to put down on the Report stage certain Amendments which have been mentioned, if those Amendments were there selected the Government would be prepared to accept them?
§ Mr. MaudlingThat strikes me as a hypothetical question. I said that if they had been called this afternoon they would have been accepted then.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.