§ Mr. Powell
I beg to move in page 48, line 14, after "company", to insert:and as if references in that subsection to the person owning shares in the Overseas Trade Corporation were references to the person to whom the grant or loan is made".This is a drafting Amendment. Since we are here dealing not actually with dividends but with grants and loans, we should therefore make the appropriate modification.
§ Amendment agreed to.
§ Mr. Stevens
I beg to move, in page 48, line 22, at the end to insert:and the said subsection (2) as so applied in relation to a grant or loan made to an Overseas Trade Corporation shall have effect as if the proviso were omitted".I moved an Amendment in connection with Clause 23, and in doing so I tried to conjure up the picture of a string of overseas trade corporations, each of which was a subsidiary of a parent overseas trade corporation, which, in turn, was the subsidiary of a company registered in this country which was not itself an overseas trade corporation. If I recollect aright, my hon. Friend the Financial Secretary accepted that Amendment.
That Amendment dealt with the income received from the subsidiary companies, but the same kind of position will arise in connection with loans or grants made in a similar fashion. As the Bill is drafted there would be an anomalous position in that, according to Clause 23, income would be treated in the proper fashion, so by this Schedule grants or loans between associated overseas trade corporations would not be so treated. This Amendment is designed to put right that anomaly.
§ Mr. Powell
This Amendment is consequential on that which the Committee has already decided to make to Clause 23 (2) and I therefore suggest that it should be made.
§ Amendment agreed to.703
§ 3.45 p. m.
§ Mr. Powell
I beg to move, in page 48, line 22, at the end to insert:and (d) where the payment which the person to whom the grant or loan is made is under paragraph (b) of this sub-paragraph to be deemed to have received is for the purposes of the profits tax to be included in computing the profits from a trade or business carried on by that person, subsection (3) of section twenty-six of this Act shall apply with the necessary modifications for the allowance of credit against the profits tax attributable to that payment ".This Amendment is consequential upon an Amendment already made to Clause 26 (3), and makes the appropriate modification where the payment in question is not a dividend but is a grant or loan.
§ Amendment agreed to.
§ Mr. Stevens
I beg to move, in page 48, line 22, at the end to insert:(d) where a grant or loan in respect of which income tax has been charged under sub-paragraph (1) of this paragraph is repaid in whole or in part, the amount of the repayment, increased by income tax at the standard rate in force when the repayment is made, shall be carried forward and set off against the next subsequent relevant distribution and if the payment exceeds that relevant distribution the excess shall be carried forward and deducted from the next following relevant distribution and so on, and to that extent the company shall not be charged in respect of those subsequent relevant distributions.
This Amendment can be taken together with the next Amendment in the name of the hon. Gentleman the Member for Langstone (Mr. Stevens), namely, in page 48, line 49, at the end to insert:and when the grant or loan is repaid paragraph (d) of sub-paragraph (1) of the foregoing paragraph shall apply as in the case of a grant or loan repaid as mentioned in that paragraph".
§ Mr. Stevens
One of the main objects of the formation of the tax provision for overseas trade corporations is to enable switching of funds from one O. T. C. to another. The thought behind it is that one overseas trade corporation may be successful, may accumulate profits beyond its own immediate requirements, and may switch to another O. T. C. operating in a country where perhaps the activities of the company are not so far developed.
One has to consider the definite possibility that at a particular point in time, when one corporation has been successful, 704 it may not be the case that an O. T. C. in another country is immediately in need of funds for development. It seems to me a pity that the surplus funds of the first corporation should be kept sterile in that corporation instead of being available for investment. I see no reason why those funds should not be invested with the parent company, if there is one. It is true that tax may be paid then, but there should be provision for repayment of tax if the subsidiary O. T. C. calls back the surplus funds and invests them in the O. T. C. operating in another country.
I have put the point as simply and plainly as I can, and I hope that my hon. Friend will be able to accept the Amendment.
§ Mr. Powell
As my hon. Friend has explained to the Committee, this provision would go beyond anything which is required to enable the switching of funds to take place between overseas trade corporations with a group—if I may use that loose expression. As the Bill stands it is possible for the switch to take place between the subsidiary O. T. C. and the parent, and back again, from time to time without a real liability to United Kingdom tax being attracted in the process.
What this Amendment would do would be to make it possible for the exempt trading income of an overseas trade corporation to be applied as a grant or loan by a United Kingdom company which might not be an O. T. C., and which should be liable to normal United Kingdom tax. The effect of that might be that the exempt trading income of overseas trade corporations would go to the building of businesses within the United Kingdom itself, a result which would certainly be felt to be unfair by competing firms in the United Kingdom which had no such link with an O. T. C.
I therefore suggest to my hon. Friend that for the purposes which he mentioned this Amendment is not necessary, and that its effects would certainly be open to grave criticism and would go beyond anything that he would desire.
§ Mr. Mitchison
I, too, thought the Amendment went much too far, but I carefully refrained from saying so for fear of inducing the Financial Secretary to accept it if I did. If I had risen earlier, 705 I should have said, no doubt less eloquently and with less knowledge, more or less what the Financial Secretary has said.
§ Amendment negatived.
§ Mr. Powell
I beg to move, in page 48, line 24, at the end to insert:(3) Where a company makes a grant or loan to a person who is not an associated person under reciprocal arrangements involving the making by another party to the arrangements of a grant or loan to a person who is, in relation to that company, an associated person, this paragraph shall apply to the grant or loan made by that company as if the person to whom it is made were such an associated person.Perhaps, Sir Gordon, we might, at the same time, consider a later Amendment, in page 48, line 49, at the end to insert:(2) Where a company makes a grant or loan to or for the benefit of a person who is not a director or member of the company under reciprocal arrangements which involve the making by some other party to the arrangements of a grant or loan to or for the benefit of a director or member of that company, this paragraph shall apply to the grant or loan made by that company as if the person to whom it is made were a director or member of that company.During the Second Reading debate, attention was drawn to the possibility of an avoidance device, whereby grants or loans might not be between associated overseas trade corporations but might be cross loans whereby one principal would make grants to the subsidiary of another principal and vice versa. The two Amendments are designed to close that loophole.
§ Mr. Mitchison
It seems to us that the Government have stopped one hole in the sieve. There are many others.
§ Amendment agreed to.
§ Mr. Powell
I beg to move, in page 48, line 47, to leave out from the beginning to "sub-paragraph".
This Amendment is consequential upon the addition of a new paragraph (d) to paragraph 1 (1).
§ Amendment agreed to.
Further Amendment made: In page 48, line 49, at end insert:
(2) Where a company makes a grant or loan to or for the benefit of a person who is not a director or member of the company under reciprocal arrangements which involve the making by some other party to the arrangements of a grant or loan to or for the benefit of a director or member of that company, this paragraph shall apply to the grant or loan
made by that company as if the person to whom it is made were a director or member of that company.—[Mr. Powell.]
§ Mr. Mitchison
I beg to move, in page 50, line 34, to leave out "liquidator" and to insert "members".
It will probably be for the convenience of the Committee to consider, at the same time, the next two Amendments, in page 50, line 35, to leave out from "paragraph" to the end of line 40, and, in line 40, at the end to insert:(3) Notwithstanding anything in the last foregoing sub-paragraph, the amount received by a member of the company in the distribution, grossed up by reference to income tax at the standard rate for the year of assessment in which the distribution is made, shall, for the purposes of sur-tax, be deemed to have been received by the member as income.
§ Mr. Mitchison
The Amendment that I have moved has broadly the same object and intention as the two following Amendments. The machinery suggested is a little tidier in the next two Amendments, but the substantial point is the same. The Financial Secretary was good enough to make clear what I thought we had all concluded from a perusal of the previous Schedule, that at the time of distribution the liquidator will be distributing money which is not to be treated as capital but is to be treated as income, and he will distribute as part of that money a part of the exempt trading income. If I have not got that quite right, I hope that the Financial Secretary will correct me at once. That is what I understand to be the position.
As between the Revenue and the company, there is no doubt that that distribution is income and liable to Income Tax. The Bill accordingly provides, in the passage which we now seek to amend, that the liquidator shall be assessed and charged to Income Tax on that distribution. When the money is distributed to the shareholders, the question arises whether it is income in their hands, and we understand it to be so, but not for the purposes of Surtax. That is to say, we understand that they will get a distribution, such as would be obtained anyhow on the liquidation of a company, of money which was the company's accumulated income which included some exempt trading income. Perhaps I was inaccurate in saying that it is, strictly speaking, income in their hands. It is a distribution 707 in liquidation. As the Bill stands at present, they will not be paying Surtax on that distribution.
Let us see what the money actually is. This is trading income which at any time could have been distributed by way of dividends to shareholders. It is a question for the overseas trade corporation whether or not it accumulates it and to what extent it accumulates it, and if it accumulates something beyond what is regarded for these purposes as strictly capital, when it comes to distribute it in winding up it is handing back to the shareholders money which but for the choice or convenience of the overseas trade corporation was at any time available to be handed over to shareholders by way of dividend.
That is, generally speaking, the position on any distribution, but the matter is complicated here because that money was exempted from tax as between the Revenue and the company under the provisions of this part of the Bill. It was exempted because it represented trading income, and, accordingly, it had that special advantage.
The question is whether the shareholders ought to be liable to Surtax on it. The first point that I want to make is that there is no provision in the Bill that liquidation should not take place with comparative frequency. Indeed, one of the cases that have been made on behalf of the general provisions of this part of the Bill is that there should be freedom to shift money and resources from one overseas trade corporation operating in a country to another, that there should be freedom to hive off.
I think it follows that there will be a great deal of manipulation—I do not use the word in an offensive sense—of these overseas trade corporations. It is quite possible that if no Surtax is to be paid on the distribution in winding up, a well-to-do person may put aside a considerable sum of money, invest it in an overseas trade corporation, and allow it to pile up in that corporation. He may then have it distributed to him, and he will thereby have avoided the Surtax which he would have paid if the money had been more regularly distributed as dividend. I agree that to some extent there is always that possibility at present, apart from the question of overseas trade corporations, and 708 there are, of course, provisions to deal with it, but it seems to me that, logically, at any rate in this case, there is no real reason why the money should not be made liable to Surtax on distribution.
The first suggestion about the machinery is that, instead of the liquidator of the company being assessed and charged Income Tax on the distribution, the money should actually be taxed in the hands of the members of the company. That is one way of doing it, but what is rather simpler and better is that the liquidator of the company shall be assessed and charged in respect of tax due under this paragraph, and to stop there, and then that the money so handed on to members of the company in the distribution should be treated as their income and should be "grossed up" and subject to Surtax in their hands.
4.0 p. m.
This is a rather complicated matter. I hope that I have made clear the substance and the intention of what is proposed. I can only repeat that these provisions are entirely novel, as the Government and their supporters have made perfectly clear. They have indicated their intentions in bringing them forward. They have said, at the same time, that they are extremely complicated, that they are a new venture, that they are difficult to frame correctly. Today, and last week, we have dealt with one Amendment after another, sometimes introduced by the Government, sometimes from this side of the Committee, and sometimes from the benches opposite, trying to stop up holes, perhaps, in some cases, to enlarge holes in the framework of the Bill.
This is altogether an exceedingly difficult piece of legislation for us to follow, for others to administer and for those who are concerned to understand and to operate. No one, I am sure, will disagree with that. One of the points which has struck people who have made an examination of this part of the Bill, and made it, on the whole, in no unfriendly spirit, is that in the form of distributions out of exempt trading income in the liquidation of a company it opens the door to the possibility of people avoiding Surtax which they ought to pay, that it is much better that those distributions should be taxed in the hands of members, both as to Income Tax and as to Surtax, and that the machinery proposed by the 709 Bill, which, of course, avoids Surtax altogether and makes the liquidator and the liquidator only liable to Income Tax in these matters, is notionally wrong and leading, in practice, to avoidance on a considerable scale.
For those reasons, we on this side of the Committee regard this matter as one of real importance. We believe that those who wish this part of the Bill to have a good effect and to have as little bad effect as can be coupled with that good should support us on a matter of this sort. We see no theoretical ground whatever for exempting these distributions, which are, of course, not capital but income distributions, from Surtax which falls generally on what is income. The short distinction is that capital distribution is another matter, but this is distributed income which should be liable to Surtax in the hands of those who are liable to pay Surtax. The form of the Bill should not provide a means of avoiding Surtax in these cases.
§ Mr. Donald Chapman (Birmingham, Northfield)
The Financial Secretary will recall that I mentioned this topic last week, when we were discussing Clause 24. I said that one of the reasons why I was anxious that we should vote against Clause 24 was that it was a paving Clause, so to speak, for this Schedule and that this was one of the matters in the Schedule to which we took objection. Those of us on this side of the Committee who have stated our general objection to the way in which Part IV of the Bill is intended to work have been doing our best, given the Government's case for doing the job in this way, to approach their method in a reasonable spirit and to be reasonable in our Amendments.
The whole justification for the Government's case so far has been that help is needed and assistance is justified for people who are investing in overseas trade corporations, because of the good which that is doing for this country in trading overseas and in eventually increasing our outlet for exports and so on.
What strikes us as odd is, if the justification for giving the tax concession is that the money is left in, that there should suddenly be a provision which encourages people to take it out and which gives them a tax bonus on taking it out. The whole purpose of Part IV 710 is to encourage people to leave their money in overseas trade corporations and to let it be doing good abroad. This provision encourages them to take it out, particularly, as the financial newspapers have pointed out, when Part IV as drafted will make overseas trade corporations attractive to Surtax payers.
That point has been made time and time again in the Financial Times and the Economist. It is a legitimate point which is presented in no carping spirit. We should not encourage Surtax payers to take out their money. If they are to be helped by these provisions, we want them to be encouraged to leave their money in.
When the Financial Secretary tries to see our point of view, as I am sure he will, I hope that he will distinguish, as many of us are trying to do, between the very legitimate companies of high repute who will not be going in and out of liquidation to suit the tax purposes of their shareholders, the sort of company in which the right hon. and learned Member for Kensington, South (Sir P. Spens) is interested, and the other companies, perhaps smaller and, in some cases larger, which use that device simply for the purpose of finding the best loopholes for tax avoidance. It is to that latter kind of company that we are directing these arguments. We know that there are people doing that and they should be not only discouraged, but made to feel the pinch by this sort of Amendment.
§ Mr. Powell
I hope that the hon. and learned Member for Kettering (Mr. Mitchison) will forgive me if I do not discuss the machinery of these provisions. Clearly, if the Committee decides that, in principle, this change is desirable, we can then discuss the machinery. However, I suggest to the Committee that it is not right to make the distinction now proposed between an overseas trade corporation and an ordinary resident company. When an ordinary resident company goes into liquidation, its assets, so far as they are not as it were original capital, are the accumulation of profits which have already borne United Kingdom tax.
Upon liquidation, the distribution which is made, as the hon. and learned Member said, is not liable to Surtax in 711 the hands of the recipient. It is true that the device of piling up reserves after tax and then receiving them in a Surtax free form upon liquidation is an avoidance device with which this Committee has had to contend in the years gone by. The provisions regarding one-man companies, with which the Committee will be familiar, are designed to meet that method of avoidance.
The Committee will recollect that these provisions are applied in their full force to overseas trade corporations by Clause 30, but I suggest that it would be quite wrong to put the shareholder in an overseas trade corporation in a worse position than a shareholder in an ordinary United Kingdom company, upon liquidation. When the provisions of the Schedule have been applied United Kingdom tax will have been paid upon the exempt trading income of the overseas trade corporation.
In the case of an overseas trade corporation the distribution should surely then be treated exactly as it is in the case of a resident company. If it is felt that there are still loopholes whereby Surtax can be avoided by means of liquidation we should make them universal and not apply them specifically to overseas trade corporations.
§ Mr. Mitchison
Will the Financial Secretary deal with two points? First, he says that the trading income of the company will have been liable to Income Tax. That is not right. What we are dealing with here is the part of the distribution that is to be taken as made out of exempt trading income. That may be made liable by what we are discussing now, but it has not been made liable otherwise. Will the hon. Gentleman make it quite clear that we are, in fact, dealing with trade income which will not pay tax until the distribution?
Secondly—it may have been my fault that the hon. Gentleman did not quite follow what I said—this is a distribution of the assets of the company which is not a distribution of capital. It is a distribution of income, and the hon. Gentleman himself told me so when we were discussing the previous Schedule. That is the difference between this distribution and 712 any other distribution on liquidation. So far as I know, any other distribution on liquidation is a distribution of capital.
§ Mr. Powell
On any other distribution on liquidation the assets to be distributed may well include the accumulated trading profits which have borne Income Tax. So, here, the assets may include the accumulated trading profits which have been exempt until brought under taxation by the provisions of this Schedule.
§ Mr. Roy Jenkins (Birmingham, Stechford)
The Financial Secretary applied himself fairly closely to the points which have been raised, but I do not think that he has answered either of the last two points raised by my hon. and learned Friend. I also think that he was basing his argument upon a slightly false hypothesis when, throughout his speech, he continually talked about the danger of the shareholder in the overseas trade corporation being put in a worse position than the shareholder in the ordinary company operating at home.
There is no doubt that one of the facts that we are dealing with in these provisions is that—perhaps accidentally from the point of view of the Government—the shareholder in the overseas trade corporation is, in a variety of ways, put in a much more favourable position than the shareholder in a home company, and there is a great incentive under the Bill to invest money abroad rather than at home.
I do not think that the Financial Secretary answered my hon. and learned Friend's last two points. I should have thought that it was highly undesirable to encourage companies enjoying overseas trade corporation status to indulge in what is virtually tax avoidance. I should have thought that there was a substantial case for considering the Amendments with a view to seeing whether, on Report, one of them could not be adapted to deal with the difficulty.
In those circumstances, I hope that my hon. Friends, as a symbol of their feelings, will press the matter to a Division.
§ Question put, That "liquidator" stand part of the Schedule:—
§ The Committee divided: Ayes 223, Noes 171.713
|Division No. 154.]||AYES||[4.15 p. m.|
|Agnew, Sir peter||Grimston, Hon. John (St. Albans)||Nicholls, Harmar|
|Aitken, W. T.||Grimston, Sir Robert (Westbury)||Nicholson, Godfrey (Farnham)|
|Alport, C. J. M.||Gurden, Harold||Nicolson, N. (B'n'm'th, E. & Chr'ch)|
|Amery, Julian (Preston, N.)||Hall, John (Wycombe)||Nugent, G. R. H.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Harris, Frederic (Croydon, N. W.)||Oakshott, H. D.|
|Arbuthnot, John||Harris, Reader (Heston)||Orr, Capt. L. P. S.|
|Armstrong, C. W.||Harrison, Col. J. H. (Eye)||Osborne, C.|
|Ashton, H.||Harvey, Sir Arthur Vere (Macclesfd)||Page, R. G.|
|Baldwin, A. E.||Harvey, Ian (Harrow, E.)||Pannell, N. A. (Kirkdale)|
|Barber, Anthony||Harvey, John (Walthamstow, E.)||Peyton, J. W. W.|
|Barlow, Sir John||Hay, John||Pickthorn, K. W. M.|
|Barter, John||Heath, Rt. Hon. E. R. G.||Pike, Miss Mervyn|
|Baxter, Sir Beverley||Henderson, John (Cathcart)||Pilkington, Capt. R. A.|
|Beamish, Maj. Tufton||Henderson-Stewart, Sir James||Pitt, Miss E. M.|
|Bevins, J. R. (Toxteth)||Hicks-Beach, Maj. W. W.||Pott, H. P.|
|Biggs-Davison, J. A.||Hinchingbrooke, Viscount||Powell, J. Enoch|
|Birch, Rt. Hon. Nigel||Holland-Martin, C. J.||Price, David (Eastleigh)|
|Bishop, F. P.||Hornby, R. P.||Price, Henry (Lewisham, W.)|
|Black, C. W.||Horobin, Sir Ian||Prior-Palmer, Brig. O. L.|
|Bossom, Sir Alfred||Howard, Hon. Greville (St. Ives)||Profumo, J. D.|
|Bowen, E. R. (Cardigan)||Howard, John (Test)||Raikes, Sir Victor|
|Boyd-Carpenter, Rt. Hon. J. A.||Hughes Hallett, Vice-Admiral J.||Redmayne, M.|
|Braine, B. R.||Hughes-Young, M. H. C.||Remnant, Hon. P.|
|Braithwaite, Sir Albert (Harrow, W.)||Hutchison, Michael Clark (E'b'gh, S.)||Renton, D. L. M.|
|Bromley-Davenport, Lt.-Col. W. H.||Hylton-Foster, Rt. Hon. Sir Harry||Ridsdale, J. E.|
|Brooke, Rt. Hon. Henry||Iremonger, T. L.||Rippon, A. G. F.|
|Brooman-White, R. C.||Irvine, Bryant Godman (Rye)||Robertson, Sir David|
|Browne, J. Nixon (Craigton)||Jenkins, Robert (Dulwich)||Robinson, Sir Roland (Blackpool, S.)|
|Bullus, Wing Commander E. E.||Jennings, J. C. (Burton)||Rodgers, John (Sevenoaks)|
|Burden, F. F. A.||Johnson, Dr. Donald (Carlisle)||Roper, Sir Harold|
|Butcher, Sir Herbert||Johnson, Eric (Blackley)||Ropner, Col. Sir Leonard|
|Butler, Rt. Hn. R. A.(Saffron Walden)||Jones, Rt. Hon. Aubrey (Hall Green)||Russell, R. S.|
|Campbell, Sir David||Joseph, Sir Keith||Schofield, Lt.-Col. W.|
|Cary, Sir Robert||Joynson-Hicks, Hon. Sir Lancelot||Scott-Miller, Cmdr. R.|
|Channon, Sir Henry||Kerby, Capt. H. B.||Sharples, R. C.|
|Chichester-Clark, R.||Kerr, Sir Hamilton||Shepherd, William|
|Cole, Norman||Kershaw, J. A.||Smithers, Peter (Winchester)|
|Conant, Maj. Sir Roger||Kimball, M.||Soames, Christopher|
|Cooke, Robert||Kirk, P. M.||Spearman, Sir Alexander|
|Cordeaux, Lt.-Col. J. K.||Lagden, G. W.||Speir, R. M.|
|Craddock, Beresford (Spelthorne)||Langford-Holt, J. A.||Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)|
|Crosthwaite-Eyre, Col. O. E.||Leavey, J. A.||Stevens, Geoffrey|
|Crowder, Sir John (Finchley)||Legge-Bourke, Maj. E. A. H.||Steward, Harold (Stockport, S.)|
|Cunningham, Knox||Lindsay, Hon. James (Devon, N.)||Steward, Sir William (Woolwich, W.)|
|Currie, G. B. H.||Lindsay, Martin (Solihull)||Storey, S.|
|Danoe, J. C. G.||Linstead, Sir H. N.||Stuart, Rt. Hon. James (Moray)|
|Davidson, Viscountess||Lloyd, Maj. Sir Guy (Renfrew, E.)||Studholme, Sir Henry|
|D'Avigdor-Goldsmid, Sir Henry||Low, Rt. Hon. A. R. W.||Sumner, W. D. M. (Orpington)|
|Digby, Simon Wingfield||Low, Rt. Hon. A. R. W.||Taylor, Sir Charles (Eastbourne)|
|Drayson, G. B.||Lucas, Sir Jocelyn (Portsmouth, S.)||Taylor, William (Bradford, N.)|
|du Cann, E. D. L.||Lucas-Tooth, Sir Hugh||Teeling, W.|
|Dugdale, Rt. Hn. Sir T. (Richmond)||McAdden, S. J.||Temple, John M.|
|Elliot, Rt. Hon. W. E. (Kelvingrove)||Macdonald, Sir Peter||Thomas, Leslie (Canterbury)|
|Elliott, R. W.(N'castle upon Tyne, N.)||Mackeson, Brig. Sir Harry||Thompson, Lt.-Cdr. R.(Croydon, S.)|
|Errington, Sir Eric||McKibbin, A. J.||Thorneycroft, Rt. Hon. P.|
|Farey-Jones, F. W.||Mackie, J. H. (Galloway)||Thornton-Kemsley, C. N.|
|Fell, A.||Maclay, Rt. Hon. John||Tiley, A. (Bradford, W.)|
|Finlay, Graeme||Maclean, Sir Fitzroy (Lancaster)||Turton, Rt. Hon. R. H.|
|Fisher, Nigel||Macleod, Rt. Hn. Iain (Enfield, W.)||Vane, W. M. F.|
|Fort, R.||Macmillan, Maurice (Halifax)||Vaughan-Morgan, J. K.|
|Foster, John||Macpherson, Niall (Dumfries)||Vickers, Miss Joan|
|Fraser, Hon. Hugh (Stone)||Maitland, Cdr. J. F. W. (Horncastle)||Wakefield, Edward (Derbyshire, W.)|
|Galbraith, Hon. T. G. D.||Maitland, Hon. Patrick (Lanark)||Wall, Major Patrick|
|Gammans, Lady||Marlowe, A. A. H.||Ward, Rt. Hon, G. R. (Worcester)|
|George, J. C. (Pollok)||Marples, Rt. Hon. A. E.||Ward, Dame Irene (Tynemouth)|
|Gibson-Watt, D.||Marshall, Douglas||Watkinson, Rt. Hon. Harold|
|Godber, J. B.||Mathew, R.||Webbe, Sir H.|
|Gomme-Duncan, Col. Sir Alan||Maudling, Rt. Hon. R.||Whitelaw, W. S. I.|
|Goodhart, Philip||Mawby, R. L.||Williams, Paul (Sunderland, S.)|
|Gough, C. F. H.||Maydon, Lt.-Comdr. S. L. c.||Williams, R. Dudley (Exeter)|
|Gower, H. R.||Milligan, Rt. Hon. W. R.||Wills, G. (Bridgwater)|
|Graham, Sir Fergus||Molson, Rt. Hon. Hugh||Wood, Hon. R.|
|Grant, W. (Woodside)||Moore, Sir Thomas|
|Green, A.||Morrison, John (Salisbury)||TELLERS FOR THE AYES:|
|Gresham Cooke, R.||Nabarro, G. D. N.||Mr. Legh and Mr. Bryan.|
|Grimond, J.||Neave, Airey|
|Ainsley, J. W.||Harrison, J. (Nottingham, N.)||Pannell, Charles (Leeds, W.)|
|Allaun, Frank (Salford, E.)||Hastings, S.||Parker, J.|
|Allen, Arthur (Bosworth)||Hayman, F. H.||Pearson, A.|
|Allen, Scholefield (Crewe)||Healey, Denis||Peart, T. F.|
|Bacon, Miss Alice||Henderson, Rt. Hn. A. (Rwly Regis)||Pentland, N.|
|Bellenger, Rt. Hon. F. J.||Holman, P.||Popplewell, E.|
|Bence, C. R. (Dunbartonshire, E.)||Holmes, Horace||Prentice, R. E.|
|Benn, Hn. Wedgwood (Bristol, S. E.)||Houghton, Douglas||Price, J. T. (Westhoughton)|
|Beswick, Frank||Howell, Charles (Perry Barr)||Probert, A. R.|
|Blackburn, F.||Hoy, J. H.||Randall, H. E.|
|Blenkinsop, A.||Hughes, Cledwyn (Anglesey)||Rankin, John|
|Blyton, W. R.||Hughes, Emrys (S. Ayrshire)||Redhead, E. C.|
|Boardman, H.||Hughes, Hector (Aberdeen, N.)||Reeves, J.|
|Bottomley, Rt. Hon. A. G.||Hynd, H. (Acorington)||Reid, William|
|Bowden, H. W. (Leicester, S. W.)||Hynd, J. B. (Atteroliffe)||Rhodes, H.|
|Bowles, F. G.||Irving, Sydney (Dartford)||Robinson, Kenneth (St. Pancras, N.)|
|Boyd, T. C.||Isaacs, Rt. Hon. G. A.||Ross, William|
|Braddock, Mrs. Elizabeth||Janner, B.||Royle, C.|
|Brockway, A. F.||Jay, Rt. Hon. D. P. T.||Shinwell, Rt. Hon. E.|
|Brown, Thomas (Ince)||Jeger, George (Goole)||Short, E. W.|
|Burke, W. A.||Jeger, Mrs. Lena (Holbn & St. Pncs, S.)||Shurmer, P. L. E.|
|Butler, Herbert (Hackney, C.)||Jenkins, Roy (Stechford)||Silverman, Julius (Aston)|
|Callaghan, L. J.||Johnson, James (Rugby)||Silverman, Sydney (Nelson)|
|Champion, A. J.||Jones, David (The Hartlepools)||Skeffington, A. M.|
|Chapman, W. D.||Jones, Elwyn (W. Ham, S.)||Slater, J. (Sedgefield)|
|Chetwynd, G. R.||Kenyon, C.||Smith, Ellis (Stoke, S.)|
|Clunie, J.||Key, Rt. Hon. C. W.||Snow, J. W.|
|Collick, P. H. (Birkenhead)||Lawson, G. M.||Sorensen, R. W.|
|Collins, V. J.(Shoreditch & Finsbury)||Ledger, R. J.||Soskice, Rt. Hon. Sir Frank|
|Craddock, George (Bradford, S.)||Lee, Frederick (Newton)||Steele, T.|
|Cronin, J. D.||Lee, Miss Jennie (Cannock)||Stewart, Michael (Fulham)|
|Crossman, R. H. S.||Lindgren, G. S.||Stones, W. (Consett)|
|Dalton, Rt. Hon. H.||Lipton, Marcus||Strachey, Rt. Hon. J.|
|Darling, George (Hillsborough)||Logan, D. G.||Strauss, Rt. Hon. George (Vauxhall)|
|Davies, Ernest (Enfield, E.)||Mabon, Dr. J. Dickson||Summerskill, Rt. Hon. E.|
|Davies, Harold (Leek)||MacColl, J. E.||Swingler, S. T.|
|Deer, G.||McInnes, J.||Sylvester, G. O.|
|Dodds, N. N.||Taylor, Bernard (Mansfield)|
|Donnelly, D. L.||McKay, John (Wallsend)||Thomas, Iorwerth (Rhondda, W.)|
|Dugdale, Rt. Hn. John (W. Brmwch)||Macpherson, Malcolm (Stirling)||Tomney, F.|
|Ede, Rt. Hon. J. C.||Mallalieu, E. L. (Brigg)||Ungoed-Thomas, Sir Lynn|
|Edelman, M.||Mallalieu, J. P. W.(Huddersfd, E.)||Viant, S. P.|
|Edwards, Rt. Hon. Ness (Caerphilly)||Marquand, Rt. Hon. H. A.||Watkins, T. E.|
|Edwards, Robert (Bilston)||Mason, Roy||Wells, Percy (Faversham)|
|Edwards, W. J. (Stepney)||Mayhew, C. P.||Wells, William (Walsall, N.)|
|Evans, Albert (Islington, S. W.)||Mellish, R. J.||West, D. G.|
|Fletcher, Eric||Mikardo, Ian||White, Henry (Derbyshire, N. E.)|
|Forman, J. C.||Mitchison, G. R.||Wilkins, W. A.|
|Fraser, Thomas (Hamilton)||Monslow, W.||Willey, Frederick|
|Gibson, C. W.||Moody, A. S.||Williams, Rev. Llywelyn (Ab'tillery)|
|Greenwood, Anthony||Morrison, Rt. Hn. Herbert (Lewis'm, S.)||Williams, Ronald (Wigan)|
|Grenfell, Rt. Hon. D. R.||Mulley, F. W.||Williams, Rt. Hon. T. (Don Valley)|
|Grey, C. F.||Noel-Baker, Rt. Hon. P. (Derby, S.)||Williams, W. R. (Openshaw)|
|Griffiths, Rt. Hon. James (Llanelly)||O'Neill, Hn. Phelim (Co. Antrim, N.)||Willis, Eustace (Edinburgh, E.)|
|Griffiths, William (Exchange)||Oram, A. E.||Woodburn, Rt. Hon. A.|
|Hall, Rt. Hn. Glenvil (Colne Valley)||Oswald, T.||Woof, R. E.|
|Hamilton, W. W.||Owen, W. J.|
|Hannan, W.||Paget, R. T.||TELLERS FOR THE NOES:|
|Mr. John Taylor and Mr. Rogers.|
§ Motion made, and Question proposed, That this Schedule, as amended, be the Seventh Schedule to the Bill.
§ Mr. Douglas Houghton (Sowerby)
Before we agree to add the Sixth Schedule to the Bill, there are a few comments which might usefully be made about the increasing complexity of the taxation of companies and those engaged in overseas activities, and the safeguards necessary to prevent abuse of the tax concessions which are given.
This Schedule deals with the charge to taxation in respect of distributions made 716 out of exempt trading income. Under these comprehensive arrangements for the exemption of profits on overseas trading activities, we have, of course, a considerable new code of safeguards necessary to prevent abuse. Hitherto, it has not been of any great concern to companies or corporations to inflate their overseas profits; now it is. Nor has it been their aim that they should extract distributions from overseas trading profits because of the substantial difference in the level of taxation.
In a speech I made during the Second Reading debate on the Finance Bill, I 717 suggested that industries engaged in overseas activities might be prepared to accept an omnibus anti-avoidance Clause in the Bill. I know that in this Committee and in the country that kind of comprehensive safeguard against avoidance is not regarded with approval. It places very substantial discretion and powers in the hands of the Commissioners of Inland Revenue, or an appeal tribunal.
One of the cardinal features of our taxation system is that, so far as possible, we should know what is inside and what is outside the scope of our taxation provisions. We like to know for certain where we stand, though there are many uncertainties about all attempts to define conditions of concessions and safeguards against avoidance. But, so far as possible, certainty is our aim.
In times past it has been necessary to make this sort of provision against avoidance. It was done in connection with the Excess Profits Duty in the First World War and later in connection with the Excess Profits Levy. Here, over a comparatively restricted field, are very substantial tax concessions. The measure of tax relief has already been freely discussed in our debates and in all it amounts perhaps to £30 million a year.
That is a very substantial tax relief for the limited number of companies and corporations engaged in overseas activities or at least, engaged in overseas trading activities in a form which will enable them to take advantage of these concessions. So I think it should have been possible for the Chancellor to come to terms with the representatives of those mainly concerned to avoid all this complicated legislation which has been found necessary to give effect to a perfectly simple idea.
Basically, the idea is almost simplicity itself. Yet, as we come to give effect to it, we find ourselves confronted with complicated Clauses in the Bill, a very lengthy Part IV and with Schedules of equal complexity and length. There is no doubt that this new concession will open a new business of tax avoidance and that will be regrettable.
I know that it is often argued that attempts at tax avoidance are in strict ratio with the level of taxation, but I do not think that that is confirmed by experience. In fact, I recall that there was a Select Committee of this House which, 718 in 1906, dealt with tax avoidance and evasion and had some strong things to say about taxpayers who employed every device they could think of to get round the terms and provisions of the law. The level of taxation in 1906 was rather low by present standards. The Royal Commission of 1919–20 also took a high moral line on tax avoidance and at that time the level of taxation was lower than it is today.
The truth is that Income Tax and railways fares have an evil fascination for some people. They must dodge them if they can. Certainly, in the matter of Income Tax on companies and corporations there is no doubt that today far too many professional and business brains in this country are employed in considering ways and means of lowering the tax burden within the law. The law is stretched and ways are found round it. The smallest loopholes are discovered and, if possible, enlarged.
What is the reason? Is it a reduction of social morality on the part of the taxpaying public? Is it something inherent in all systems of taxation which we just have to live with and legislate against so far as possible? Is there any hope of bringing about a higher standard of morality in this connection?
I use the word "morality" because, although I know that learned judges and others have from time to time pronounced on the subject, I still doubt whether the citizen is entitled to arrange his affairs in an artificial way for the express purpose of reducing the tax burden below that which I think any reasonable person would say was the intention of the legislature.
§ Viscount Hinchingbrooke (Dorset, South)
The hon. Gentleman uses the word "artificial". Why not say it is a convenient way, otherwise people would not do it?
§ 4.30 p. m.
§ Mr. Houghton
Call it convenient or artificial, I put it this way: that arrangements are made which are not necessarily in the interests of the company or corporation for any other purpose except that of taxation.
It is highly artificial. There is no trading involved. There is nothing whatever which increases the prosperity of the 719 company or facilitates its trading operations. Many of the artificial arrangements made have as their sole purpose the lowering of the taxation burden on a company or a corporation, or the lowering of the taxation burden on those individuals who will profit from it.
This evasion arrangement took these two forms. It is not only the company and the corporation itself seeking to reduce its tax burden. That, perhaps, can be condoned to a further point than the desire of individuals to profit from these transactions. A company may argue that all this is grist to the trade mill; that it will increase the prosperity of the company and facilitate its trading operations, and, in the long run, add to the national income and improve our balance of payments.
That may be an argument. But this Sixth Schedule deals with conditions under which distribution shall be made, mostly to individuals, from trading profits which have been exempted under the main Clauses of Part IV of the Bill. There is no doubt that a great many people will want to get money out of overseas trade corporations, just as they want to get money out of any other business enterprise. If they can get any advantages individually from the concessions given on the taxation of the profits of overseas trade corporations, they will want to get more, if they can, rather than less.
So, I think that the Sixth Schedule raises again this general issue, which is constantly troubling the administration, the Chancellor and this Committee, of how to introduce adequate safeguards against avoidance and evasion in order to sustain the repute and equity of our fiscal system.
There never will be any end to this until the Committee decide, as a matter of policy, that it will write into our fiscal code omnibus provisions against avoidance activities. That is the conclusion to which I have come with great reluctance because I know the difficulties that will create and that many people will say that they will never know for certain where they stand under the law.
Yet what is the alternative? Each year there is one worthy claimant taken out of the queue of cases waiting the attention of this Committee and the House in the 720 loopholes which are discovered. When we come to Clause 35 we shall be discussing similar ones relating to Estate Duty. There is a limited time available in the House and in the Committee to deal with these complex matters, and each attempt to close a loophole gives rise to fresh difficulties of interpretation and further complexities in the safeguards which have to be introduced.
What is the answer? Does anyone in the Committee know the answer, if it is not to have some overriding power to stop these activities? Otherwise, I am afraid that we shall continue to deal with avoidance devices slowly, belatedly and only when they become a matter of free gossip among those in business circles and in the financial columns of the Press, and tax avoidance devices are spoken of as if they were something respectable in the City of London. I therefore again give my opinion to the Committee that this is a serious social question. It is one which will now be aggravated by the concessions which are being given in Part IV of the Bill and which the Sixth Schedule is designed to cope with so far as possible.
There is no doubt that Part IV, the agreed Schedules and the Sixth Schedule will be a nightmare from the administration point of view, and that they will occupy the time of many business executives, managements and professional people seeking to get the best out of them and to see whether there are any weaknesses in the provisions against avoidance and abuse of the concession. The Inland Revenue has freely acknowledged that in this field it has little experience of this kind of concession for overseas trading activities. It is something new. It is something which is bound to bring, in the course of experience, new opportunities for studying the behaviour of the taxpayers concerned and of their professional advisers.
I think that we are bound to acknowledge that in giving effect to Part IV, to the provisions of Clause 23 and the Sixth Schedule, which enlarge the conditions upon which a charge to tax can be made upon distribution from exempted profits for overseas trading activities, we are merely enlarging the scope of avoidance activities and adding other difficulties to the already complex problems of administration.
§ Mr. Chapman
May I put this case to the Financial Secretary? He will recall that I put a specific example to him the other day and that he was able to satisfy me to some extent by referring to some tax avoidance legislation. I will come back to that in a minute.
Under the first part of the Bill and the Sixth Schedule, a grant or loan made to associated persons out of exempted trading income is regarded as taxable, to put it briefly. Suppose we take an example of this sort of grant or loan especially in one-man or small, director-controlled companies—I do not mean small in size, but small in the number of people in control over them.
Take the sort of grant or loan on which the company might want to avoid paying tax. It might want to supply one of its directors with a house abroad out of its tax-exempt income, to enjoy the house at leisure for holiday purposes, for example. If a loan were made to that director out of exempt trading income to purchase the house, tax would have to be paid on the money involved, but let us suppose that the company decides to buy the house out of its tax-free reserves as a legitimate form of storing its capital overseas, and that it grants a lease of the house to director A, B, or C at a peppercorn rent.
This will be the sort of thing which the director wanted in the first place, a house bought out of exempt trading income. Whether he gets it from the company on a 99-year lease at a nominal rent or as a freehold in his own name will not matter if he is substantially in control of the company.
There may be a roundabout way of dealing with this case and I hope there is. It will be to the good if the Financial Secretary can assure me on the point. As a corollary of what I have been saying, I put it to him that this is the sort of exercise that will be going on in the minds not of people like myself, not versed in the control of personal overseas companies, but of people who are versed in these things and who have very powerful legal advice to help them to discover every possible loophole.
I beg of the Financial Secretary to realise that many of us feel that this is not just one case that the Financial Secretary can write off by saying, "There you 722 are. Everything will be quite satisfactory." There will be many such cases that wide people can pull out of the bag.
§ Mr. Chapman
The noble Lord asks what is wrong with it. It happens to be the sort of case to which my hon. Friend the Member for Sowerby (Mr. Houghton) was referring.
It is not avoidance of the law, but avoidance of the whole spirit and principle of the law by finding out loopholes after others have been stopped up, to reach the desired end. Parliament could go on legislating like this, and we should continually find other loopholes giving the tax avoider the desired end that he had in mind in the first place.
When I gave the Financial Secretary an example of avoidance the other day he mentioned Section 412 of the 1952 Income Tax Act, and he assured me that the case I then had in mind could be prevented. I looked up that Section. Suppose I transfer my shares in a company to Bermuda and this company receives there for me my tax-exempt income, which piles up there. It is all very well to say that Section 412 effectively stops that, but perhaps that is not what happens. I have a feeling that the Board of Inland Revenue is not capable of checking up on transactions when they are nicely done in a roundabout fashion.
I would not be so foolish, if that transaction were going to be caught, as to try to transfer my assets and shares directly to my private company in Bermuda. I would do it in a roundabout way. First, I would transfer them to another company in this country and it would transfer them to trustees. I can give an example from inside this country where that goes on.
These trustees then have some less illegitimate means of transferring the assets abroad. The Income Tax inspector is busy, at one remove and almost by hearsay, trying to track what is going on. He is trying to check on the last transaction and to link it with the first one. That is the roundabout way of getting around the law that is going on. It prevents the Income Tax inspector from linking 723 up ultimate transactions with initial transactions.
That is what worries me. When I read complicated legislation like this Schedule I feel that the more we complicate the law here the more, at each point, further complications will be developed in order to get round it. It is a matter of great concern to us and we feel that it will be developed further if the Sixth Schedule is put into operation.
We beg all Government supporters to realise that we are not attacking the substantial, respectable company which is doing the job of Britain abroad but people who deliberately use these provisions to get tax-free income. We believe that the Schedule will increase to a substantial degree the number of people doing that.
§ 4.45 p. m.
§ Mr. Mitchison
On this side of the Committee, we are not satisfied with the Schedule. Some of its complexity and difficulty may be due to a fault in the principle of the Bill rather than in the terms of the Schedule. We are not at all happy about it, particularly in relation to the exempt trading income when winding up a company and in relation to people who pay Income Tax and Surtax. We shall, therefore, divide against it.
§ Mr. Powell
Before the Committee divides, perhaps I might answer specific points which were put to me by the hon. Member for Northfield (Mr. Chapman). He and I have had an instructive time
§ dodging one another through the corridors of the 1952 Income Tax Act. On the case he has put to me I think he will find that Section 162 of that Act, which deals with benefits in kind to directors, is probably satisfactory for this purpose. He will recognise that, where the transfer was detected, Section 412 would deal with the case which he put to me the other day.
§ The hon. Member says, generally, "Here is a piece of legislation which, since it exempts certain trading income in certain circumstances must, by its nature, multiply the possibilities of evasion." We are trying to remove the disadvantage under which a resident company suffers merely because it is resident in this country. An otherwise identical company trading in an identical way, but which is not resident, has all the advantages which we are seeking to confer by the Bill.
§ We are trying to remove a discrimination against the resident company. It seems to me to weigh very little in the scale if a few extra avoidance possibilities are in some way created in the process, as the hon. Gentleman suggests.
§ Mr. Mitchison
If the Financial Secretary has some confidence that he is, in fact, doing that, why does he continue to let companies migrate?
§ Question put, That this Schedule, as amended, be the Sixth Schedule to the Bill:—
§ The Committee divided: Ayes 231, Noes 184.727
|Division No. 155.]||AYES||[4.49 p. m.|
|Agnew, Sir Peter||Braithwaite, Sir Albert (Harrow, W.)||Dance, J. C. G.|
|Aitken, W. T.||Bromley-Davenport, Lt.-Col. W. H.||Davidson, Viscountess|
|Alport, C. J. M.||Brooke, Rt. Hon. Henry||D'Avigdor-Goldsmid, Sir Henry|
|Amery, Julian (Preston, N.)||Brooman-White, R. C.||Deedes, W. F.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Browne, J. Nixon (Craigton)||Digby, Simon Wingfield|
|Arbuthnot, John||Bryan, P.||Drayson, G. B.|
|Armstrong, C. W.||Bullus, Wing Commander E. E.||du Cann, E. D. L.|
|Ashton, H.||Burden, F. F. A.||Dugdale, Rt. Hon. Sir T. (Richmond)|
|Astor, Hon. J. J.||Butcher, Sir Herbert||Elliot, Rt. Hon. W. E. (Kelvingrove)|
|Atkins, H. E.||Butler, Rt. Hn. R. A.(Saffron Walden)||Elliott, R. W.(N'castle upon Tyne, N.)|
|Baldwin, A. E.||Campbell, Sir David||Errington, Sir Eric|
|Barber, Anthony||Cary, Sir Robert||Farey-Jones, F. W.|
|Barlow, Sir John||Channon, Sir Henry||Fell, A.|
|Barter, John||Chichester-Clark, R.||Finlay, Graeme|
|Baxter, Sir Beverley||Clarke, Brig. Terence (Portsmth, W.)||Fisher, Nigel|
|Beamish, Maj. Tufton||Cole, Norman||Fletcher-Cooke, C.|
|Bevins, J. R. (Toxteth)||Conant, Maj. Sir Roger||Fort, R.|
|Biggs-Davison, J. A.||Cooke, Robert||Foster, John|
|Birch, Rt. Hon. Nigel||Cordeaux, Lt.-Col. J. K.||Fraser, Hon. Hugh (Stone)|
|Bishop, F. P.||Corfield, capt. F. V.||Galbraith, Hon. T. G. D.|
|Black, C. W.||Craddock, Beresford (Spelthorne)||Gammans, Lady|
|Body, R. F.||Crosthwaite-Eyre, Col. O. E.||George, J. C. (Pollok)|
|Bossom, Sir Alfred||Crowder, sir John (Finchley)||Gibson-Watt, D.|
|Bowen, E. R. (Cardigan)||Cunningham, Knox||Godber, J. B.|
|Boyd-Carpenter, Rt. Hon. J. A.||Currie, G. B. H.||Gomme-Duncan, Col. Sir Alan|
|Goodhart, Philip||Lindsay, Martin (Solihull)||Remnant, Hon. P.|
|Gough, C. F. H.||Linstead, Sir H. N.||Renton, D. L. M.|
|Gower, H. R.||Lloyd, Maj. Sir Guy (Renfrew, E.)||Ridsdale, J. E.|
|Graham, Sir Fergus||Low, Rt. Hon. A. R. W.||Rippon, A. G. F.|
|Grant, W. (Woodside)||Lucas, Sir Jocelyn (Portsmouth, S.)||Robertson, Sir David|
|Green, A.||Lucas-Tooth, Sir Hugh||Robinson, sir Roland (Blackpool, S.)|
|Gresham Cooke, R.||McAdden, S. J.||Rodgers, John (Sevenoaks)|
|Grimond, J.||Macdonald, Sir Peter||Roper, Sir Harold|
|Grimston, Hon. John (St. Albans)||Mackeson, Brig. Sir Harry||Ropner, Col. Sir Leonard|
|Grimston, Sir Robert (Westbury)||McKibbin, A. J.||Russell, R. S.|
|Gurden, Harold||Mackie, J. H. (Galloway)||Schofield, Lt.-Col. W.|
|Hall, John (Wycombe)||Maclay, Rt. Hon. John||Scott-Miller, Cmdr. R.|
|Harris, Frederic (Croydon, N. W.)||Maclean, Sir Fitzroy (Lancaster)||Sharples, R. C.|
|Harris, Reader (Heston)||Macleod, Rt. Hn. Iain (Enfield, W.)||Shepherd, William|
|Harrison, Col. J. H. (Eye)||Macmillan, Maurice (Halifax)||Smithers, Peter (Winchester)|
|Harvey, Sir Arthur Vere (Maoclesfd)||Macpherson, Niall (Dumfries)||Soames, Christopher|
|Harvey, Ian (Harrow, E.)||Maitland, Hon. Patrick (Lanark)||Spearman, Sir Alexander|
|Harvey, John (Walthamstow, E.)||Marlowe, A. A, H.||Speir, R. M.|
|Hay, John||Marples, Rt. Hon. A. E.||Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)|
|Heath, Rt. Hon. E. R. G.||Marshall, Douglas||Stevens, Geoffrey|
|Henderson, John (Cathcart)||Mathew, R.||Steward, Harold (Stockport, S.)|
|Henderson-Stewart, sir James||Maudling, Rt. Hon. R.||Steward, Sir William (Woolwich, W.)|
|Hicks-Beach, Maj. W. W.||Mawby, R. L.||Storey, S.|
|Hinchingbrooke, Viscount||Maydon, Lt.-Comdr. S. L. C.||Stuart, Rt. Hon. James (Moray)|
|Holland-Martin, C. J.||Milligan, Rt. Hon. W. R.||Studholme, Sir Henry|
|Hope, Lord John||Molson, Rt. Hon. Hugh||Sumner, W. D. M. (Orpington)|
|Hornby, R. P.||Moore, Sir Thomas||Taylor, Sir Charles (Eastbourne)|
|Horobin, Sir Ian||Nabarro, G. D. N.||Taylor, William (Bradford, N.)|
|Howard, Hon. Greville (St. Ives)||Neave, Airey||Teeling, W.|
|Howard, John (Test)||Nicholls, Harmar||Temple, John M.|
|Hughes Hallett, Vice-Admiral J.||Nicholson, Godfrey (Farnham)||Thomas, Leslie (Canterbury)|
|Hutchison, Michael Clark (E'b'gh, S.)||Nicolson, N.(B'n'm'th, E. & Chr'ch)||Thompson, Lt.-Cdr. R.(Croydon, E.)|
|Hylton-Foster, Rt. Hon. Sir Harry||Nugent, G. R. H.||Thorneycroft, Rt. Hon. P.|
|Iremonger, T. L.||Oakshott, H. D.||Thornton-Kemsley, G. N.|
|Irvine, Bryant Godman (Rye)||Orr, Capt. L. P. S.||Tiley, A. (Bradford, W.)|
|Jenkins, Robert (Dulwich)||Osborne, C.||Turton, Rt. Hon. R. H.|
|Jennings, J. C. (Burton)||Page, R. G.||Vane, W. M. F.|
|Johnson, Dr. Donald (Carlisle)||Pannell, N. A. (Kirkdale)||Vaughan-Morgan, J. K.|
|Johnson, Eric (Blackley)||Peyton, J. W. W.||Vickers, Miss Joan|
|Jones, Rt. Hon. Aubrey (Hall Green)||Pickthorn, K. W. M.||Wakefield, Edward (Derbyshire, W.)|
|Joseph, Sir Keith||Pike, Miss Mervyn||Wall, Major Patrick|
|Joynson-Hicks, Hon. Sir Lancelot||Pilkington, Capt. R. A.||Ward, Rt. Hon. G. R. (Worcester)|
|Kerby, Capt. H. B.||Pitt, Miss E. M.||Ward, Dame Irene (Tynemouth)|
|Kerr, Sir Hamilton||Pott, H. P.||Watkinson, Rt. Hon. Harold|
|Kershaw, J. A.||Powell, J. Enoch||Whitelaw, W. S. I.|
|Kimball, M.||Price, David (Eastleigh)||Williams, Paul (Sunderland, S.)|
|Kirk, P. M.||Price, Henry (Lewisham, w.)||Williams, R. Dudley (Exeter)|
|Lagden, G. W.||Prior-Palmer, Brig. O. L.||Wills, G. (Bridgwater)|
|Lancaster, Col. C. G.||Profumo, J. D.||Wood, Hon. R.|
|Langford-Holt, J. A.||Raikes, Sir Victor||Woollam, John Victor|
|Leavey, J. A.||Rawlinson, peter|
|Legge-Bourke, Maj. E. A. H.||Redmayne, M.||TELLERS FOR THE AYES:|
|Lindsay, Hon. James (Devon, N.)||Rees-Davies, W. R.||Mr. Legh and Mr. Hughes-Young.|
|Ainsley, J. W.||Clunie, J.||Grenfell, Rt. Hon. D. R.|
|Allaun, Frank (Salford, E.)||Coldrick, W.||Grey, C. F.|
|Allen, Arthur (Bosworth)||Collick, P. H. (Birkenhead)||Griffiths, Rt. Hon. James (Llanelly)|
|Allen, Scholefield (Crewe)||Collins, V. J.(Shoreditch & Finsbury)||Griffiths, William (Exchange)|
|Bacon, Miss Alice||Craddock, George (Bradford, S.)||Hall, Rt. Hn, Glenvil (Colne Valley)|
|Bellenger, Rt. Hon. F. J.||Cronin, J. D.||Hamilton, W. W.|
|Bence, C. R. (Dunbartonshire, E.)||Crossman, R. H. S.||Hannan, W.|
|Benn, Hn. Wedgwood (Bristol, S. E.)||Dalton, Rt. Hon. H.||Harrison, J. (Nottingham, N.)|
|Benson, G.||Darling, George (Hillsborough)||Hastings, S.|
|Beswick, Frank||Davies, Ernest (Enfield, E.)||Hayman, F. H.|
|Blackburn, F.||Davies, Harold (Leek)||Healey, Denis|
|Blenkinsop, A.||Deer, G.||Henderson, Rt. Hn. A. (Rwly Regis)|
|Blyton, W. R.||Delargy, H. J.||Hewitson, Capt. M.|
|Boardman, H.||Dodds, N. N.||Hobson, C. R. (Keighley)|
|Bottomley, Rt. Hon. A. G.||Donnelly, D. L.||Holman, P.|
|Bowden, H. W. (Leicester, S. w.)||Dugdale, Rt. Hn. John (W. Brmwch)||Holmes, Horace|
|Bowles, F. G.||Ede, Rt. Hon. J. C.||Houghton, Douglas|
|Boyd, T. C.||Edelman, M.||Howell, Charles (Perry Barr)|
|Braddock, Mrs. Elizabeth||Edwards, Rt. Hon. Ness (Caerphilly)||Hoy, J. H.|
|Brockway, A. F.||Edwards, Robert (Bilston)||Hughes, Cledwyn (Anglesey)|
|Brown, Thomas (Ince)||Edwards, W. J. (Stepney)||Hughes, Emrys (S. Ayrshire)|
|Burke, W. A.||Evans, Albert (Islington, S. W.)||Hughes, Hector (Aberdeen, N.)|
|Butler, Herbert (Hackney, C.)||Fletcher, Eric||Hynd, H. (Accrington)|
|Callaghan, L. J.||Forman, J. C.||Hynd, J. B. (Attercllffe)|
|Champion, A. J.||Fraser, Thomas (Hamilton)||Irving, Sydney (Dartford)|
|Chapman, W. D.||Gibson, C, W.||Isaacs, Rt. Hon. G. A.|
|Chetwynd, G. R.||Greenwood, Anthony||Janner, B.|
|Jay, Rt. Hon. D. P. T.||Oram, A. E.||Sorensen, R. W.|
|Jeger, George (Goole)||Oswald, T.||Soskice, Rt. Hon. Sir Frank|
|Jeger, Mrs. Lena (Holbn & St. Pncs, S.)||Owen, w. J.||Steele, T.|
|Jenkins, Roy (Stechford)||Padley, W. E.||Stewart, Michael (Fulham)|
|Johnson, James (Rugby)||Paget, R. T.||Stones, W. (Consett)|
|Jones, David (The Hartlepools)||Paling, Rt. Hon. W. (Dearne Valley)||Strachey, Rt. Hon. J.|
|Jones, Elwyn (W. Ham, S.)||Pannell, Charles (Leeds, W.)||Strauss, Rt. Hon. George (Vauxhall)|
|Kenyon, C.||Parker, J.||Stross, Dr. Barnett (Stoke-on-Trent, C.)|
|Key, Rt. Hon. C. w.||Pearson, A.||Summerskill, Rt. Hon. E.|
|King, Dr. H. M.||Peart, T. F.||Swingler, S. T.|
|Lawson, G. M.||Pentland, N.||Sylvester, G. O.|
|Ledger, R. J.||Popplewell, E.||Taylor, Bernard (Mansfie'd)|
|Lee, Frederick (Newton)||Prentice, R. E.||Thomas, Iorwerth (Rhondda, W.)|
|Lee, Miss Jennie (Cannock)||Price, J. T. (Westhoughton)||Tomney, F.|
|Lindgren, G. S.||Probert, A. R.||Ungoed-Thomas, Sir Lynn|
|Lipton, Marcus||Proctor, W. T.||Viant, S. P.|
|Logan, D. G.||Randall, H. E.||Watkins, T. E.|
|Mabon, Dr. J. Dickson||Rankin, John||Wells, Percy (Faversham)|
|MacColl, J. E.||Redhead, E. C.||Wells, William (Walsall N.)|
|McInnes, J.||Reeves, J.||West, D. G.|
|McKay, John (Wallsend)||Re[...]d, William||Wheeldon, W. E.|
|MacPherson, Malcolm (Stirling)||Rhodes, H.||White, Henry (Derbyshire, N. E.)|
|Mallalieu, E. L. (Brigg)||Robens, Rt. Hon. A.||Wilkins, W. A.|
|Mallalieu, J. P. W. (Huddersfd, E.)||Robinson, Kenneth (St. Pancras, N.)||Willey, Frederick|
|Marquand, Rt. Hon. H. A.||Ross, William||Williams, Rev. Llywelyn (Ab'tillery)|
|Mason, Roy||Royle, C.||Williams, Ronald (Wigan)|
|Mayhew, C. P.||Shinwell, Rt. Hon. E.||Williams, Rt. Hon. T. (Don Valley)|
|Mellish, R. J.||Short, E. W.||Williams, W. R. (Openshaw)|
|Mikardo, Ian||Shurmer, P. L. E.||Willis, Eustace (Edinburgh, E.)|
|Mitchison, G. R.||Silverman, Julius (Aston)||Woodburn, Rt. Hon. A.|
|Monslow, W.||Silverman, Sydney (Nelson)||Woof, R. E.|
|Moody, A. S.||Skeffington, A. M.||Yates, V. (Ladywood)|
|Morrison, Rt. Hn. Herbert (Lewis'm, S.)||Slater, J. (Sedgefield)||Younger, Rt. Hon. K.|
|Mulley, F. w.||Smith, Ellis (Stoke, S.)|
|Oliver, G. H.||Snow, J. W.||TELLERS FOR THE NOES:|
|Mr. John Taylor and Mr. Rogers.|