§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Sir H. d'Avigdor-Goldsmid
I am in a slight difficulty because my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) has given me some instructions about some matters that he wished to raise but he is not here. I therefore take the opportunity of drawing the attention of my hon. Friend the Economic Secretary to the Amendment in the name of my hon. Friend, in Page 18, line 17, at the end to add a new subsection (8).
The Amendment has not been called, but it deals with a form of activity which is very much more common than all the 363 matters that we have been discussing, and about which the hon. Member for Gloucester (Mr. Diamond) was so eloquent, these matters of tax avoidance.
§ Mr. Mitchison
On a point of order. Is the hon. Baronet allowed to discuss an Amendment which has not been called on the Question, "That the Clause stand part of the Bill"?
§ The Deputy-Chairman
The hon. and learned Member is quite correct, but I was allowing the hon. Baronet to go a little further so that I could be certain that that was in fact what he was doing.
§ Sir H. d'Avigdor-Goldsmid
I am grateful to the hon. and learned Gentleman for his courteous rebuke. I will address myself to the Clause, and ask my hon. Friend the Economic Secretary to consider the effect of the Clauses that we have been discussing and this Clause on amalgamations between property companies, because on such amalgamations considerable difficulties will accrue, and great uncertainties will accrue, unless some action such as that proposed by my hon. Friend—which I know it is out of order to discuss—is considered by the Economic Secretary.
§ The Solicitor-General
The purpose of the Clause is to anticipate avoidance of Clauses 19 and 20. It makes special provision for cases where another company is—or indeed other companies are —interspersed between a company which would be within Clause 19 or Clause 20 and its ultimate proprietors, and the holding company shares are sold to the customer who wishes to acquire the trading company's shares. It is designed to anticipate devices aimed at the avoidance of earlier Clauses which have been approved by the Committee.
It deals with two main possibilities—the intermediate company is simply a holding company, or the intermediate company is itself a company whose trading stock the customer wants to acquire together with the trading stock of another company in which the intermediate company holds shares. That is subsection (6).
The Committee will not at this stage want me to go through the various ways in which this is worked out.
§ The Solicitor-General
I am prepared to do so, but I thought I was collecting not the voices but the minds of the majority of the Committee in saying what I did.
I understand the apprehension of my hon. Friend that this Clause may stand in the way of some perfectly genuine agreements.
I would like to consider that point again before the Report stage. Obviously we must consider it carefully, so as not to provide a loophole through the Clause. On the other hand, my hon. Friend is quite right in saying that this may go too far in preventing quite reasonable and proper amalgamations. If he and the Committee are content with that assurance I would ask them to agree to the Clause.
§ 10.45 p.m.
§ Mr. Diamond
The Clause is peculiarly free from Amendments, if only for the reason that it is virtually unintelligible to anybody outside the Treasury. It is the most complicated Clause of the lot, and illustrates the extent to which we have to go in order to attempt to stop up loopholes. I am glad that the Solicitor-General did not say on this occasion—as he did on a previous one when we were introducing a Clause to stop up loopholes—that this Clause was likely to stop up the loopholes. Unfortunately, in every Finance Bill we are dealing with Clauses to stop up loopholes in Clauses introduced to stop up loopholes in Clauses which were introduced to stop tax avoidance. This complicated Clause is the fourth of our anti-tax avoidance Clauses, and the fourth one which arises because we have this antiquated tax structure, under which we are driven to these enormous lengths and unsatisfactory methods of attempting, quite unsuccessfully, to deal with the tax avoider, who has the simple opportunity open to him of switching his income into capital and so avoiding taxation.
I say "unsuccessfully," because it can now be relied on that when we have a Clause of this complexity, which deals specifically and precisely with a good deal of the ground which one must not walk on lest one is caught for tax purposes, it equally shows one where one has to walk if one is to avoid tax. Wherever we have a long Clause which 365 sets out specifically what must not be done, to a person who reads it carefully it automatically sets out the things he can do in order to avoid tax. This will never be a satisfactory method of dealing with attempts at tax avoidance. No doubt in two or three years' time we shall have another Finance Bill dealing with the same sort of problem, unless by that time we have a sensible tax structure, including a capital gain tax.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.