HC Deb 03 July 1968 vol 767 cc1647-51


Mr. Diamond

I beg to move Amendment No. 157, in page 62, line 9, leave out from beginning to 'made'.

Mr. Deputy-Speaker (Sir Eric Fletcher)

I suggest that we take with this Amendment, Amendment Nos. 158, 159, 160, 161, 162, and 163.

Mr. Diamond

The first four of these Amendments are relieving Amendments dealing with paragraph 5 of this Schedule. There is at the moment a provision that annual interest and life assurance premiums can be made by a child and set off against the child's income. It is intended that it should be allowable where a child's income is aggregated with the parents' income. That is not absolutely clear in the Bill and this provision makes it clear.

The remaining three Amendments are purely drafting. As was stated by the hon. Member for the Cities of London and Westminster (Mr. John Smith) in standing Committee, it is necessary to make absolutely clear what is the position with regard to the extra tax which a parent may have to find where there is trust income. It is necessary to make it clear that he is not required to find the tax twice over.

Amendment agreed to.

Further Amendments made: No. 158, in page 62, line 12, after 'computing', insert ' for that period.'

No. 159, in page 62, line 14, after ' payments ', insert ' in that period'.

No. 160, in page 62, line 20 leave out ' and in respect of.'—[Mr. Diamond.]

Amendment proposed: No. 161, in page 62, line 34, leave out from ' tax' to 'if' in line 36 and insert: 'chargeable on and payable by him or her for the year exceeds that which would have been so chargeable and payable'—[Mr. Diamond.]

Mr. Deputy Speaker

I think that it would be convenient if we were to take with this Amendment, Amendments Nos. 162 and 163.

Mr. John Smith

I would like, very briefly, to say something on Amendment No. 163. This relates to the recovery of children's tax by parents from trustees, and there are two points here. I think that it must be cleared up whether the child's income is to be treated as the top slice of the parents' income or as an average of the parents' total income. This is obviously a very important point, and it will arise immediately this enactment comes into force.

The second point is that we still do not know how foreign trustees are to be dealt with. Will they accept the certificate mentioned in this part of the Schedule, and how are parents to enforce this against foreign trustees? How does a parent recover tax from foreign trustees? As the Chief Secretary knows, I have actual cases in mind. Indeed, it may well be that the foreign trustee has an actual duty not to pay this money to the parent. It seems to me that there is a difficulty here and I would be grateful if it could be cleared up.

Mr. Diamond

I am not quite clear what difficulty the hon. Gentleman still has in mind. If there is a foreign trustee who has remitted income to a resident child, the first question is whether that remittance is taxable income or not. One would have to find out all the circumstances, such as whether it is at present income of the child taxable in this country or not. But generally, the Revenue would not propose to pursue this matter with any unnecessary vigour.

The parent would be required to make a return of the child's income, and the income would be aggregated with the parent's. If the income is known then it is aggregated, and if the tax is payable, the parent has a right of recovery as against the trustee. It cannot be the case that the trustee is unable to provide the tax. It is part of the income which the trustee would pay to the children.

It may be that to that extent in future years the income of the child would be reduced, but there would be no particular difficulty there. This is a normal circumstance so far as trusts are concerned; when income is diverted for one purpose it is not available for another purpose.

If the hon. Gentleman is anxious about the attitude of the Revenue, I repeat that it will not pursue this with undue vigour, but will try to carry out the law, as Parliament places a duty upon it to do.

Amendment agreed to.

Further Amendments made: No. 162, in page 62, leave out lines 37 to 43 and insert: Provided that, so far as the excess is attributable to trust income which has not been distributed, the right conferred by this paragraph shall be exercisable against that income instead of against the infant.

No. 163, in line 46, leave out 'sub-paragraph (2) above' and insert 'this paragraph from trustees'.—[Mr. Diamond.]

Mr. Diamond

I beg to move Amendment No. 164, in page 63, line 7, at end insert:

Loss relief

7A.—(1) A claim for relief under section 341 of the Income Tax Act 1952 (set off of trade etc. losses against general income) may require that the relief be given without any reference to income treated by virtue of this Schedule as income of the person sustaining the loss or of that person's spouse. (2) Where income so treated is not excluded by virtue of sub-paragraph (1) above, it shall be treated for the purposes of section 15 (1) of the Finance Act 1953 (relief to be given by treating loss as reducing claimant's income first, and then income of claimant's spouse) as distinct from that of the claimant, and as if referred to therein after that of the spouse.

This Amendment meets a point which was raised with the Revenue by the Accountants Joint Parliamentary Committee and it prescribes the order in which trading losses are to be allowed against income where the option under sub-paragraph (1) of the Amendment is not exercised.

At present, as the House is aware, there is an option which the taxpayer has that where a trading loss has been incurred it can be set against the taxpayer's income only and not be set against the spouse's income if the taxpayer does not wish that.

In that case, any unsatisfied loss can be carried forward. It was requested that a similar option should be given with regard to aggregated income, and this subsection provides for that. It provides that the loss is to be set against the child's income only after it has been used against the claimaint's income first.

Amendment agreed to.

11.15 p.m.

Mr. Diamond

I beg to move, That further consideration of the Bill, as amended, be adjourned.

We have completed what is on the Amendment Paper concerning Clause 15 and Schedule 8. I think that perhaps this would be a convenient time to adjourn our consideration of the Bill.

Mr. Patrick Jenkin


Mr. Deputy Speaker

I am obliged to put the Question immediately without debate.

Mr. Jenkin

I believe that, under the Standing Orders, one Opposition spokesman is allowed to make a brief reply.

Mr. Deputy Speaker

No. If the hon. Gentleman rose to a point of order, the answer to it is that I am obliged by the Resolutions of the House to put the Motion without debate.

Mr. Jenkin

Further to that point of of order. We are in some difficulty. As the Chief Secretary knows, we on this side of the House indicated that we were prepared to go on and deal with the wholly uncontentious matters dealt with in Clause 16 and Schedule 9 because we are on the last lap of the Bill before the Guillotine. This is the second time we have offered to do this late at night or in the small hours of the morning.

Mr. Deputy Speaker

I appreciate the hon. Gentleman's difficulty. I am also in a difficulty that I am governed by the Resolutions of the House which require me to put the Motion forthwith without debate. Therefore, I have no alternative but to put the Motion forthwith.

Question put and agreed to.

Bill, as amended (in the Standing Committee), to be further considered Tomorrow.