HC Deb 25 July 1977 vol 936 cc171-4
Mr. Joel Barnett

I beg to move Amendment No. 79, in page 68, line 23, leave out ' during ' and insert ' in the course of '.

The amendment meets an undertaking that was given in Committee.

Amendment agreed to.

Amendment made: No. 80, in page 69, line 8, at end insert— '(5) In relation to the year 1977–78 references in sub-paragraphs (1) and (4) above to a qualifying period include references to any period beginning before and ending after the commencement of that year which—

  1. (a) is a continuous period of absence from the United Kingdom as defined in paragraph 2 of Schedule 2 to the Finance Act 1974; and
  2. (b) so far as it falls after the commencement of that year, is (or is part of) a qualifying period as defined in sub-paragraph (2) above.'.—[Mr. Joel Barnett.]

Mr. Joel Barnett

I beg to move Amendment No. 81, in page 69, line 13, leave out paragraph (b) and insert— '(b) the number of days in that year which are qualifying days in relation to the employment (together with any which are qualifying days in relation to other employments) amounts to at least 30,'.

Mr. Deputy Speaker

With this we may take Government Amendments Nos. 82, 86 and 87.

Mr. Barnett

This group of amendments meets an undertaking that I gave in Committee.

Mr. Ian Stewart (Hitchin)

At the risk of spoiling the rhythm of the House, I wish to raise one specific problem in relation to this group of amendments and the question of qualification by apportionment of time. We had a long discussion in Committee which has borne fruit. The Chief Secretary has brought forward a number of amendments.

After the Budget, the Inland Revenue issued a Press announcement on the subject of foreign earnings, and in relation to the qualifications for the 25 per cent. deduction the announcement included the following statement: An employee with a separate employment with the foreign company, the duties of which are performed wholly abroad (for example, a director of an overseas company in a multinational group) will be entitled to a deduction of 25 per cent. from his earnings from that employment, regardless of the length of his absence abroad. Does the Bill as it stands, or with this group of amendments, give effect to this undertaking?

There is one case in which I think the question is rather doubtful. That is where an individual who is resident in the United Kingdom, and has regular employment with a company in this country, also has another regular employment with a company abroad in the same group. This is quite a common instance in the case of British companies with extensive interests overseas. As things stand, the income from such a foreign employment has generally been taxable in the hands of the individual under Schedule E, Case 1, but there was a 25 per cent. exemption on the whole of that income under the Finance Act 1974, so long as the amount of that income would not have been affected whether or not the same person carried out his duties in the United Kingdom.

Under the provisions of the Bill, the income from a foreign employment in these circumstances would not apparently attract the 25 per cent. exemption automatically, and it seems that the exemption would now be subject to an apportionment qualification. If that is the case. it would not be a concession for this particular group of exporters. It would be an additional qualification, or in many cases it would add to their burden of taxation.

I understand that representations have already been made to the Chancellor about this point, and therefore the Treasury Ministers will have had time to consider it. Do these amendments relieve this problem? If, as I fear, they do not, is it a deliberate but an unannounced change in Revenue intentions? If that is what it is, will the Chief Secretary, either now or as soon as he is in a position to do so, explain why such a change may have Waken place?

Mr. Joel Barnett

In fact, Amendment No. 81 is a drafting amendment, but the others relate to the question of a day and how one defines a day. I assure the hon. Gentleman that this fulfils the undertaking which I gave in Committee. However, I have taken careful note of what he said, and if by any chance we have not met the point which he made, I shall be in touch with him.

Amendment agreed to.

Amendments made: No. 82, in page 69, leave out lines 20 to 27 and insert— '(2) For the purposes of this paragraph a qualifying day in relation to an employment is a day of absence from the United Kingdom—

  1. (a) which is substantially devoted to the performance outside the United Kingdom of the duties of that employment or of that and other employments; or
  2. (b) which is one of at least seven consecutive days on which the person concerned is absent from the United Kingdom for the purpose of the performance of such duties outside the United Kingdom and which (taken as a whole) are substantially devoted to the performance of such duties as aforesaid; or
  3. (c) on which the person concerned is travelling in or for the purpose of the performance of such duties outside the United Kingdom.'

No. 86, in page 70, line 24, leave out from 'assessment' to 'the' in line 27 and insert: 'which are shown to be qualifying days (as defined in paragraph 2(2) above) in relation to'.

No. 87, in page 70, line 32, leave out from 'where' to end of line 36 and insert: 'a day is a qualifying day in relation both to the relevant employment and one or more other employments that day shall, for the purposes of paragraph (a) above, count in relation to the relevant employment as the fraction arrived at by dividing the day equally between the different employments '.—[Mr. Joel Barnett.]

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