HC Deb 17 November 1955 vol 546 cc760-2
21. Mr. H. Wilson

asked the Chancellor of the Exchequer the estimated loss to the revenue of dividend stripping operations for the financial year 1954–55, and for the first six months of the current financial year, respectively.

Mr. H. Brooke

Full statistics are not available. From information which has become available recently, it appears that the loss from such transactions in 1954–55 was rather over £4 million. I have no information yet as to the first six months of the current year.

Mr. Wilson

Since the House has been very puzzled by the right hon. Gentleman's reference to a loss of a little over six figures, which most hon. Gentlemen took to be a reference to some hundreds of thousands of pounds, is it not clear that this racket is on a much bigger scale than the right hon. Gentleman indicated to the House on Second Reading of the Finance Bill?

Mr. Brooke

The phrase I used was "in excess of six figures." I took that to mean seven figures, but I am sorry if I have misled the right hon. Gentleman.

Mr. Wilson

Since this was the point of the Question and the phrase "little more than six" can mean seven, eight, nine or ten, will the right hon. Gentleman now assure the House that his best estimate is that it is running into some millions of pounds, and would he say whether it is growing at the present time?

Mr. Brooke

I never said anything about "little more than six." I have given the right hon. Gentleman the amount as far as we can ascertain it for 1954–55, and I said on Second Reading of the Bill that when this was showing signs of expanding so rapidly it was essential to take action in the autumn Finance Bill.

22. Mr. H. Wilson

asked the Chancellor of the Exchequer to what extent his Department's estimates of the loss to the revenue through dividend stripping include the estimated avoidance of Surtax by the vendors in addition to the tax reclaims by the purchasers of the shares in question.

Mr. H. Brooke

The estimates in question relate only to tax on the technical losses sustained by the dealing concerns that bought the shares for dividend stripping.

Mr. Wilson

Is the right hon. Gentleman aware that the House is becoming more confused about this; that we are now to understand that when he says six he means seven, and that when he makes an estimate of a loss he is referring only to the smaller item in the loss, namely, the reclaim of Income Tax. Is he not aware that if he had included in his calculations the loss on Surtax, the total figures which he has just quoted of £4 million would probably—in very general terms—take him into eight figures, which might be a loss to the Revenue of £10 million, £12 million or £15 million? Would he not agree with that sort of estimate?

Mr. Brooke

I am trying to be as frank with the House as I can. Surtax loss is a hypothetical and not an actual loss. It is quite impossible to tell what rate of Surtax might have been payable by the people concerned.

Mr. Wilson

Could the right hon. Gentleman not at least have made some estimate about Surtax, for example, at 15s. in the £ for Income Tax and Surtax together? Does he not agree that this rather myopic approach to the calculation is typical of the Government's approach in general, in that they are attacking this problem only from the point of view of the buyer of the shares and not from the point of view of the vendor who is probably involved in more money?

Mr. Brooke

I cannot accept the word "myopic." I have been absolutely candid with the House and all these things will be debatable.

23. Mr. H. Wilson

asked the Chancellor of the Exchequer at what figure he estimates the loss to the Revenue of those forms of bond-washing which are not prohibited by Section 17 of the Finance Act, 1937, as consolidated by the Income Tax Act, 1952.

Mr. H. Brooke

I regret that there is no basis on which to make such an estimate.