§ Mr. DiamondI beg to move Amendment No. 616, in page 51, line 16, at the end, to insert:
Provided that in the case of preference dividends the tax chargeable and the amount of income represented by the dividends shall be determined by reference to the fixed gross rate of dividend.This is a slightly technical matter but I think that I can deal with it shortly and satisfy the Committee by saying that its purpose is to preserve the law as it now stands. Under the present law where a company is paying a preference dividend and there is a change in the rate of tax subsequent to the payment of that dividend, then, in as much as it is a contractual amount, that gross amount is not deemed to be altered. Whereas in the case of ordinary dividends the way of arriving at the gross amount is to take account of the cash actually received—that is, the net figure—and to gross it up and say, therefore, that the resulting answer is the gross figure. But for preference dividends this would cause injustice, because the gross amount of the preference dividend is the subject of the contract between the company and the preference shareholder. One must, therefore, maintain that position, and the Amendment is designed to bring the existing law and practice into the proposed new law.
§ Amendment agreed to.
§ Question proposed, That the Clause, as amended, stand part of the Bill.
2028§ Mr. BarberThis Clause, as the side note indicates, is concerned with the taxation treatment of distributions. The system which is chosen is basic to the form of Corporation Tax which has been selected by the Chancellor. The reasons why we object to this system were deployed at great length by my hon. Friends and I yesterday in the full debate we had on the first Amendment concerning Corporation Tax. I do not think that there is anything more that I need add to the objections which were expressed yesterday. This is such a basic part of the Corporation Tax that I hope that, in the circumstances, my hon. Friends will express their feelings by voting against the Clause.
§ Mr. Stratton Mills (Belfast, North)There is some uncertainty about the tax position of bonus shares issued by public companies. Three companies have already postponed bonus share issues following the announcement. Would the Chief Secretary clear up the position?
§ Mr. DiamondBonus debentures will count as a distribution. Bonus redeemable preference shares will count as a distribution. Simple bonus shares will not, in the ordinary case, count as a distribution, but there might be such movements in share capital associated with the bonus shares as to make it something different from a plain issue of bonus shares, which is a simple reallocation of the ownership of a company between shareholders, and affects paper, nothing else. If there were something different from that—for example, if the 2029 bonus issue had been preceded by a repayment of capital or was followed by a repayment of capital—to show that the bonus capital issue was associated with other transactions, in that case not tha amount of the bonus share but the effect on the capital would be taken into account. So that if, in effect, the capital had been reduced and part of it had been paid back to shareholders, that would count as a distribution. The matter will
§ be discussed in detail on the Schedule. While I do not claim that it is a straightforward matter, I hope that I have explained the principle to the satisfaction of the hon. Member for Belfast, North (Mr. Stratton Mills).
§ Question put, That the Clause, as amended, stand part of the Bill:—
§ The Committee divided: Ayes 275, Noes 273.
2033| Division No. 167.] | AYES | [6.55 p.m. |
| Abse, Leo | Fernyhough, E. | Kerr, Mrs. Anne (R'ter & Chatham) |
| Albu, Austen | Finch, Harold (Bedwellty) | Kerr, Dr. David (W'worth, Central) |
| Allaun, Frank (Salford, E.) | Fitch, Alan (Wigan) | Lawson, George |
| Alldritt, Walter | Fletcher, Sir Eric (Islington, E.) | Leadbitter, Ted |
| Allen, Scholefield (Crewe) | Fletcher, Ted (Darlington) | Ledger, Ron |
| Armstrong, Ernest | Fletcher, Raymond (Ilkeston) | Lee, Rt. Hn. Frederick (Newton) |
| Atkinson, Norman | Floud, Bernard | Lee, Miss Jennie (Cannock) |
| Bacon, Miss Alice | Foley, Maurice | Lever, Harold (Cheetham) |
| Bagier, Gordon A. T. | Foot, Michael (Ebbw Vale) | Lewis, Arthur (West Ham, N.) |
| Barnett, Joel | Ford, Ben | Lewis, Ron (Carlisle) |
| Baxter, William | Fraser, Rt. Hn. Tom (Hamilton) | Lipton, Marcus |
| Beaney, Alan | Freeson, Reginald | Lomas, Kenneth |
| Bence, Cyril | Galpern, Sir Myer | Loughlin, Charles |
| Benn, Rt. Hn. Anthony Wedgwood | Garrett, W. E. | Mabon, Dr. J. Dickson |
| Bennett, J. (Glasgow, Bridgeton) | Garrow, A. | MacColl, James |
| Binns, John | Ginsburg, David | MacDermot, Niall |
| Bishop, E. s. | Greenwood, Rt. Hn. Anthony | McGuire, Michael |
| Blackburn, F. | Gregory, Arnold | Mclnnes, James |
| Blenkinsop, Arthur | Grey, Charles | McKay, Mrs. Margaret |
| Boardman, H. | Griffiths, David (Rother Vailey) | Mackenzie, Gregor (Rutherglen) |
| Boston, T. G. | Griffiths, Rt. Hn. James (Llanelly) | Mackie, John (Enfield, E.) |
| Bottomley, Rt. Hn. Arthur | Griffiths, Will (M'chester, Exchange) | McLeavy, Frank |
| Bowden, Rt. Hn. H. W. (Leics S.W.) | Gunter, Rt. Hn. R. J. | MacPherson, Malcolm |
| Boyden, James | Hale, Leslie | Mahon, Peter (Preston, S.) |
| Braddock, Mrs. E. M. | Hamilton, James (Bothwell) | Mahon, Simon (Bootle) |
| Bradley, Tom | Hamilton, William (West Fife) | Mallalieu, E. L. (Brigg) |
| Bray, Dr. Jeremy | Hamling, William (Woolwich, W.) | Mallalieu,J.P.W.(Hudderstield,E.) |
| Broughton, Dr. A. D. D. | Harper, Joseph | Mapp, Charles |
| Brown, Hugh D. (Glasgow, Provan) | Harrison, Walter (Wakefield) | Mason, Roy |
| Buchanan, Richard | Hart, Mrs. Judith | Mayhew, Christopher |
| Butler, Herbert (Hackney, C.) | Hattersley, Roy | Mellish, Robert |
| Butler, Mrs. Joyce (Wood Green) | Hazell, Bert | Mendelson, J. J. |
| Carmichael, Neil | Healey, Rt. Hn. Denis | Mikardo, Ian |
| Carter-Jones, Lewis | Henderson, Rt. Hn. Arthur | Millan, Bruce |
| Castle, Rt. Hn. Barbara | Herblson, Rt. Hn. Margaret | Miller, Dr. M. S. |
| Chapman, Donald | Hill, J. (Midlothian) | Milne, Edward (Blyth) |
| Coleman, Donald | Hobden, Dennis (Brighton, K'town) | Molloy, William |
| Conlan, Bernard | Holman, Percy | Monslow, Walter |
| Corbet, Mrs. Freda | Horner, John | Morris, Alfred (Wythenshawe) |
| Craddock, George (Bradford, S.) | Houghton, Rt. Hn. Douglas | Morris, Charles (Openshaw) |
| Crawshaw, Richard | Howarth, Harry (Wellingborough) | Morris, John (Aberavon) |
| Cronin, John | Howarth, Robert L. (Bolton, E.) | Mulley,Rt.Hn.Frederick(SheffieldPk) |
| Crosland, Rt. Hn. Anthony | Howell, Denis (Small Heath) | Murray, Albert |
| Cullen, Mrs. Alice | Howie, W. | Neal, Harold |
| Dalyell, Tam | Hoy, James | Newens, Stan |
| Darling, George | Hughes, Cledwyn (Anglesey) | Noel-Baker, Francis (Swindon) |
| Davies, G. Elfed (Rhondda, E.) | Hughes, Emrys (S. Ayrshire) | Noel-Baker, Rt.Hn.Phillp(Derby,S.) |
| Davies, Harold (Leek) | Hughes, Hector (Aberdeen, N.) | Norwood, Christopher |
| Davies, Ifor (Gower) | Hunter, Adam (Dunfermline) | Oakes, Gordon |
| Delargy, Hugh | Hunter, A. E. (Feltham) | Ogden, Eric |
| Dell, Edmund | Hynd, H. (Accrington) | O'Malley, Brian |
| Dempsey, James | Irving, Sydney (Dartford) | Oram, Albert E. (E. Ham, S.) |
| Diamond, John | Jackson, Colin | Orbach, Maurice |
| Dodds, Norman | Jay, Rt. Hn. Douglas | Orme, Stanley |
| Doig, Peter | Jeger, George (Gool[...]e) | Owen, Will |
| Donnelly, Desmond | Jeger,Mrs.Lena(H'b'n&St.P'cras,S.) | Padley, Walter |
| Driberg, Tom | Jenkins, Hugh (Putney) | Page, Derek (King's Lynn) |
| Duffy, Dr. A. E. P. | Jenkins, Rt. Hn. Roy (Stechford) | Paget, R. T. |
| Dunn, James A. | Johnson, Carol (Lewisham, S.) | Palmer, Arthur |
| Dunnett, Jack | Johnson,James(K'ston-on-Hull,W.) | Pannell, Rt. Hn. Charles |
| Edwards, Rt. Hn. Ness (Caerphilly) | Jones, Dan (Burnley) | Pargiter, G. A. |
| English, Michael | Jones,Rt.Hrt.Sir Elwyn(W.Ham,S.) | Park, Trevor (Derbyshire, S.E.) |
| Ennals, David | Jones, J. Idwal (Wrexham) | Parker, John |
| Ensor, David | Jones, T. W. (Merioneth) | Parkin, B. T. |
| Evans, Albert (Islington, S.W.) | Kelley, Richard | Pavitt, Laurence |
| Evans, Ioan (Birmingham, Yardley) | Kenyon, Clifford | Pearson, Arthur (Pontypridd) |
| Peart, Rt. Hn. Fred | Silkin, John (Deptford) | Wainwright, Edwin |
| Pentland, Norman | Silkin, S. C. (Camberwell, Dulwich) | Walden, Brian (All Saints) |
| Perry, Ernest G. | Silverman, Julius (Alton) | Walker, Harold (Doncaster) |
| Popplewcll, Ernest | Skeffington, Arthur | Wallace, George |
| Prentice, R. E. | Slater, Mrs. Harriet (Stoke, N.) | Warbey, William |
| Price, J. T. (Westhoughton) | Slater, Joseph (Sedgefield) | Watkins, Tudor |
| Probert, Arthur | Small, William | Weitzman, David |
| Pursey, Cmdr. Harry | Smith, Ellit (Stoke, S.) | Wells, William (Walsall, N.) |
| Randall, Harry | Solomons, Henry | White, Mrs. Eirene |
| Rankin, John | Soskice, Rt. Hn. Sir Frank | Whitlock, William |
| Redhead, Edward | Stonehouse, John | Wigg, Rt. Hn. George |
| Rees, Merlyn | Stones, William | Wilkins, W. A. |
| Reynolds, G. W. | Strauss, Rt. Hn. G. R. (Vauxhall) | Willey, Rt. Hn. Frederick |
| Rhodes, Geoffrey | Summerskill, Hn. Dr. Shirley | Williams, Alan (Swansea, W.) |
| Richard, Ivor | Swain, Thomas | Williams, Clifford (Abertillery) |
| Roberts, Albert (Normanton) | Swingler, Stephen | Williams, Mrs. Shirley (Hitchin) |
| Roberts, Goronwy (Caernarvon) | Symonds, J. B. | Williams, W. T. (Warrington) |
| Robertson, John (Paisley) | Taylor, Bernard (Mansfield) | Willis, George (Edinburgh, E.) |
| Rodgers, William (Stockton) | Thomas, George (Cardiff, W.) | Wilson, William (Coventry, S.) |
| Rogers, George (Kensington, N.) | Thomas, Iorwerth (Rhondda, W.) | Winterbottom, R. E. |
| Rose, Paul B. | Thomson, George (Dundee, E.) | Woodburn, Rt. Hn. A. |
| Ross, Rt. Hn. William | Thornton, Ernest | Woof, Robert |
| Rowland, Christopher | Tinn, James | Wyatt, Woodrow |
| Sheldon, Robert | Tomney, Frank | |
| Shinwell, Rt. Hn. E. | Tuck, Raphael | TELLERS FOR THE AYES: |
| Shore, Peter (Stepney) | Urwin, T. W. | Mr. McCann and Mr. Gourlay. |
| Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.) | Varley, Eric G. | |
| NOES | ||
| Agnew, Commander Sir Peter | Corfield, F. V. | Hamilton, M. (Salisbury) |
| Alison, Michael (Barkston Ash) | Costain, A. P. | Harris, Frederic (Croydon, N.W.) |
| Allan, Robert (Paddington, S.) | Courtney, Cdr. Anthony | Harris, Reader (Heston) |
| Allason, James (Hemel Hempstead) | Craddock, Sir Beresford (Spelthorne) | Harrison, Brian (Maldon) |
| Anstruther-Cray, Rt. Hn. Sir W. | Crawley, Aidan | Harrison, Col. Sir Harwood (Eye) |
| Astor, John | Crosthwaite-Eyre, Col. Sir Oliver | Harvey, Sir Arthur Vere (Macclesf'd) |
| Awdry, Daniel | Crowder, F. P. | Harvey, John (Walthamstow, E.) |
| Baker, W. H. K. | Cunningham, Sir Knox | Harvie Anderson, Miss |
| Balniel, Lord | Curran, Charles | Hastings, Stephen |
| Barber, Rt. Hn. Anthony | Currie, G. B. H. | Hawkins, Paul |
| Barlow, Sir John | Dalkeith, Earl of | Hay, John |
| Batsford, Brian | Dance, James | Heald, Rt. Hn. Sir Lionel |
| Bennett, Sir Frederic (Torquay) | Davies, Dr. Wyndham (Perry Barr) | Heath, Rt. Hn. Edward |
| Bennett, Dr. Reginald (Gos & Fhm) | d'Avigdor-Goldsmid, Sir Henry | Hendry, Forbes |
| Berry, Hn. Anthony | Dean, Paul | Higgins, Terence L |
| Bessell, Peter | Deedes, Rt. Hn. W. F. | Hiley, Joseph |
| Biffen, John | Digby, Simon Wingfield | Hill, J. E. B. (S. Norfolk) |
| Biggs-Davison, John | Doughty, Charles | Hirst, Geoffrey |
| Bingham, R. M. | Douglas-Home, Rt. Hn. Sir Alec | Hobson, Rt. Hn. Sir John |
| Birch, Rt. Hn. Nigel | Drayson, G. B. | Hogg, Rt. Hn. Quintin |
| Black, Sir Cyril | du Cann, Rt. Hn. Edward | Hooson, H. E. |
| Blaker, Peter | Eden, Sir John | Hopkins, Alan |
| Bossom, Hn. Clive | Elliot, Capt. Walter (Carshalton) | Hordern, Peter |
| Bowen, Roderic (Cardigan) | Eyre, Reginald | Hornby, Richard |
| Box, Donald | Farr, John | Howard, Hn. G. R. (St. Ives) |
| Boyd-Carpenter, Rt. Hn. J. | Fell, Anthony | Howe, Geoffrey (Bebington) |
| Boyle, Rt. Hn. Sir Edward | Fisher, Nigel | Hunt, John (Bromley) |
| Braine, Bernard | Fletcher-Cooke, Charles (Darwen) | Iremonger, T. L. |
| Brewis, John | Fletcher-Cooke, Sir John (S'pton) | Irvine, Bryant Godman (Rye) |
| Brinton, Sir Tatton | Foster, Sir John | Jenkin, Patrick (Woodford) |
| Bromley-Davenport,Lt.-Col.SirWalter | Fraser,Rt.Hn.Hugh(St'fford & Stone) | Jennings, J. C. |
| Brooke, Rt. Hn. Henry | Galbraith, Hn. T. G. D. | Johnson Smith, C. (East Grinstead) |
| Brown, Sir Edward (Bath) | Gammans, Lady | Johnston, Russell (Inverness) |
| Bryan, Paul | Gardner, Edward | Jones, Arthur (Northants, S.) |
| Buchanan-Smith, Alick | Gibson-Watt, David | Jopling, Michael |
| Buck, Antony | Giles, Rear-Admiral Morgan | Joseph, Rt. Hn. Sir Keith |
| Bullus, Sir Eric | Gilmour, Ian (Norfolk, Central) | Kaberry, Sir Donald |
| Burden, F. A. | Gilmour, Sir John (East Fife) | Kerby, Capt. Henry |
| Butcher, Sir Herbert | Glover, Sir Douglas | Kerr, Sir Hamilton (Cambridge) |
| Buxton, Ronald | Glyn, Sir Richard | Kilfedder, James A. |
| Campbell, Gordon | Goodhart, Philip | Kimball, Marcus |
| Carlisle, Mark | Goodhew, Victor | King, Evelyn (Dorset, S.) |
| Carr, Rt. Hn. Robert | Gower, Raymond | Kirk, Peter |
| Cary, Sir Robert | Grant, Anthony | Lagden, Godfrey |
| Chataway, Christopher | Grant-Ferris, R. | Lambton, Viscount |
| Chichester-Clark, R. | Gresham Cooke, R. | Lancaster, Col. C. G. |
| Clark, Henry (Antrim, N.) | Grieve, Percy | Langford-Holt, Sir John |
| Clark, William (Nottingham, S.) | Griffiths, Eldon (Bury St. Edmunds) | Lewis, Kenneth (Rutland) |
| Clarke, Brig. Terence (Portsmth, W.) | Griffiths, Peter (Smethwick) | Litchfield, Capt. John |
| Cole, Norman | Grimond, Rt. Hn. J. | Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield) |
| Cooke, Robert | Gurden, Harold | Lloyd, Ian (P'tsm'th, Langstone) |
| Cooper, A. E. | Hall, John (Wycombe) | Longbottom, Charles |
| Cooper-Key, Sir Neill | Hall-Davis, A. G. F. | Longden, Gilbert |
| Cordle, John | Hamilton, Marquess of (Fermanagh) | Loveys, Walter H. |
| Lubbock, Eric | Page, John (Harrow, W.) | Taylor, Sir Charies (Eastbourne) |
| Lucas, Sir Jocelyn | Page, R. Graham (Crosby) | Taylor, Edward M. (G'gow.Cathcart) |
| McAdden, Sir Stephen | Pearson, Sir Frank (Clitheroe) | Taylor, Frank (Moss Side) |
| MacArthur, Ian | Percival, Ian | Teeling, Sir William |
| Mackenzie, Alasdair (Ross&Crom'ty) | Peyton, John | Temple, John M. |
| McLaren, Martin | Pickthorn, Rl. Hn. Sir Kenneth | Thatcher, Mrs. Margaret |
| Maclean, Sir Fitzroy | Pike, Miss Mervyn | Thomas, Sir Leslie (Canterbury) |
| McMaster, Stanley | Pitt, Dame Edith | Thomas, Rt. Hn. Peter (Conway) |
| McNair-Wilson, Patrick | Powell, Rt. Hn. J. Enoch | Thompson, Sir Richard (Croydon,S.) |
| Maginnis, John E. | Price, David (Eastleigh) | Thorneycroft, Rt. Hn. Peter |
| Maitland, Sir John | Prior, J. M. L. | Tiley, Arthur (Bradford, W.) |
| Marples, Rt. Hn. Ernest | Pym, Francis | Tilney, John (Wavertree) |
| Marten, Neil | Quennell, Miss J. M. | Turton, Rt. Hn. R. H. |
| Maude, Angus | Ramsden, Rt. Hn. James | Tweedsmuir, Lady |
| Mawby, Ray | Redmayne, Rt. Hn. Sir Martin | van Straubenzee, W. R. |
| Maxwell-Hyslop, R. J. | Rees-Davies, W. R. | Vaughan-Morgan, Rt. Hn. Sir John |
| Maydon, Lt.-Cmdr. S. L. C. | Renton, Rt. Hn. Sir David | Vickers, Dame Joan |
| Meyer, Sir Anthony | Ridsdale, Julian | Walder, David (High Peak) |
| Mills, Peter (Torrington) | Roberts, Sir Peter (Heeley) | Walker, Peter (Worcester) |
| Mills, Stratton (Belfast, N.) | Robson Brown, Sir William | Walker-Smith, Rt. Hn. Sir Derek |
| MisCampbell, Norman | Rodgers, Sir John (Sevenoaks) | Walters, Dennis |
| Mitchell, David | Roots, William | Ward, Dame Irene |
| Monro, Hector | Royle, Anthony | Weatherill, Bernard |
| Morgan, W. G. | Russell, Sir Ronald | Wells, John (Maidstone) |
| Morrison, Charles (Devizes) | St. John-Stevas, Norman | Whitelaw, William |
| Mott-Radclyffe, Sir Charles | Scott-Hopkins, James | Williams, Sir Rolf Dudley (Exeter) |
| Munro-Lucas-Tooth, Sir Hugh | Sharples, Richard | Wills, Sir Gerald (Bridgwater) |
| Murton, Oscar | Shepherd, William | Wilson, Geoffrey (Truro) |
| Neave, Airey | Smith, Dudley (Br'ntf'd & Chiswick) | Wise, A. R. |
| Nicholls, Sir Harmar | Smyth, Rt. Hn. Brig. Sir John | Wolrige-Gordon, Patrick |
| Nicholson, Sir Godfrey | Spearman, Sir Alexander | Wood, Rt. Hn. Richard |
| Noble, Rt. Hn. Michael | Speir, Sir Rupert | Woodhouse, Hon. Christopher |
| Nugent, Rt. Hn. Sir Richard | Stainton, Keith | Woodnutt, Mark |
| Onslow, Cra[...]ley | Stanley, Hn. Richard | Wylie, N. R. |
| Orr, Capt. L. P. S. | Stodart, Anthony | Younger, Hn. George |
| Orr-Ewing, Sir Ian | Stoddart-Scott, Col. Sir Malcolm | |
| Osborn, John (Hallam) | Studholme, Sir Henry | TELLERS FOR THE NOES: |
| Osborne, Sir Cyril (Louth) | Talbot, John E. | Mr. S. W. Elliott and Mr. More. |