HL Deb 24 July 1958 vol 211 cc204-16

5.2 p.m.

Order of the Day for the Third Reading read.


My Lords, I beg to move that this Bill be read a third time. If it is convenient, as is the practice in your Lordships' House, we can deal with the Amendments now and there will be a Motion that the Bill do now pass, and on that Motion there can be the general debate. In the meantime I beg to move that the Bill be read a third time.

Moved, That the Bill be now read 3a.—(Lord Meston.)

On Question, Bill read 3a.

Clause 1 [New rules for determining domicile]:

THE LORD CHANCELLOR (VISCOUNT KILMUIR) moved to leave out "be applied in" and insert "replace the rules of the Common Law for". The noble and learned Viscount said: My Lords, this Amendment is moved in deference to the doubts expressed on the Report stage by the noble Lords, Lord Silkin and Lord Pethick-Lawrence, speaking on behalf of the noble Lord, Lord Denning, as well as by my noble friend, Lord Meston, as to whether the Bill as it stands makes it sufficiently clear that the new rules prescribed by the rule determining a person's domicile would apply to a married woman as they apply to any other person of full age and capacity. I am bound to say, as I said on the last stage of the Bill, that I think that this fear is misconceived. I have considered the point again and, apart from the reasons I gave when the point was raised, noble Lords will see that the purpose of the Bill, as appears from its Long Title, is to amend the law relating to domicile; from this it is difficult to see how it could well be argued that the law must be presumed to be the same after the passing of the Bill as it was before.

Clause 1 requires that the new rules for determining a person's domicile be applied without any suggestion of qualification or exception. Clause 2, which is the first of a group of clauses under the heading of "Independent Domicile", is expressly made subject to Clause 5, which is headed "Dependent Domicile", from which the inference seems irresistible that Clause 5 is the only exception to the general rule stated in Clause 2. If there were to be any other exception, based on an applied intention to exclude the rule of the Interpretation Act, 1889, that the masculine gender is to include females, Clause 2 would then be as inapplicable to unmarried women as to married women and the effect of the Bill would be confined to the male sex.

Despite these reasons for my view—and I wanted to show your Lordships that I had considered the matter—as your Lordships know, I am always anxious to meet the wishes of noble Lords. A matter of this importance should be crystal clear. Therefore, although I consider that there was no need for the Amendment, I equally believe that there is no objection to stating in the terms of Clause 1 that the rules prescribed by the Bill are to replace the rules of the Common Law. I hope that that will meet the anxieties of the noble Lords who spoke and I beg to move.

Amendment moved— Page 1, line 6, leave out ("he applied in") and insert ("replace the rules of the common law for").—(The Lord Chancellor.)


My Lords, I am very grateful to the noble and learned Viscount for having given this matter the consideration he has done, and for having decided in the end that, in spite of his certainly that the Bill met the apprehensions that I have expressed, and those of my noble friend Lord Pethick-Lawrence, he would nevertheless put down an Amendment to make certainty even more certain than it was already. This is a matter of such great importance that one cannot be too careful in ensuring that the Bill does what it sets out to do. In its present form it will be welcomed by a great many people who have been looking forward to some such reform as this. Therefore I am sure that the noble and learned Viscount the Lord Chancellor need have no apprehension that he has gone beyond what is proper in a case of this kind. I am perfectly satisfied that this meets the case, so much so that I do not propose to move the Amendment which stands in my name.


My Lords, I should like just to add my thanks to those of my noble friend, and to say that we appreciate very much the courtesy which the noble and learned Viscount on the Woolsack has shown in this matter and the very wise form of Amendment which he has put down. I will say only this regarding the position as it was without this Amendment. Some of us are aware that in times gone by, although matters of this kind were perfectly clear as we understood them, this very question of the position of women has been negatived by the authorities of the day. That has occurred when, apparently, the whole legislation was to the other effect. Having been several times bitten, we were shy in this particular case. The noble and learned Viscount has completely met our difficulties, and we thank him very much.


My Lords, I am grateful to the two noble Lords for what they have said and I am glad to think they are satisfied.

On Question, Amendment agreed to.


Amendment 2 is not moved. This concludes the Amendments and, as the noble Lord, Lord Meston, said, he can now move that the Bill do now pass.


My Lords, I beg to move that this Bill do now pass.

Moved, That the Bill do now pass.—(Lord Meston.)

5.9 p.m.


My Lords, I must apologise for butting in at this late hour in the life of the Bill in which I have taken no part until to-day. However, yesterday I heard for the first time certain fears expressed in very responsible quarters, and I find that there is nothing in the official record so far in which these fears have been mentioned. Therefore I thought it my duty to get them on the record. The Bill, in origin, is to deal with matrimonial difficulties, but there is a section of the business community who fear unforeseen and unpredictable consequences in the field of taxation—taxation both of their incomes while living and of their estates after they are dead. Now, these people are largely foreigners, but to some extent are people—I will not use the word "citizens"—from the Commonwealth working in this country. My noble friend, Lord Baillieu, wanted to be here to voice the fears of these people, but unfortunately he is unavoidably prevented from getting here, so he has asked me to do it for him.

Now the field of taxation and the law of domicile thereon is an extraordinary and tricky one, and no layman would dare to venture into that field, so I merely content myself with expressing the fears of these people so that at another time and in another place those fears can be assuaged. As I understand it, those people from abroad who live and work here are for tax purposes regarded at present as domiciled in the country of their origin and are presumed to be going to return there in due course. If the Inland Revenue wish it to be otherwise, they have to prove it to be otherwise. By and large, these people are taxed on their British income, on the remittances they make to this country, and, when they die, on the possessions they leave in this country. But if they were held to be domiciled here they might be taxed during their lives on their entire world income, regardless of whether it ever came to this country, and on their death perhaps on their world possessions.

Now, Clause 3 of this Bill lays down that a man has the intention to live permanently in the country where he has a home unless he can prove to the contrary under Clause 4. The people I am talking about may well have only one house in the world, and live in it with their families in this country. The Bill uses the word "home", and I am informed that even the word "home" may give rise to considerable legal argument. But if one assumes that "home" and "house" are synonymous, then one has to consider what their taxation position might be after the passing of this Bill. They fear that this new definition of domicile might be applied to them for tax purposes, in which case their whole status would change. The onus of proof that they did not intend to live here for the rest of their lives would rest on them and not on the Inland Revenue, and if they failed in that proof they would be taxed on their world income instead of on their British income. Those, very briefly, are the fears of my friends, and I may say that they are based on the opinions of some eminent lawyers skilled in this international field.

One may say, of course, that these fears are quite fanciful and that the promoters of the Bill and Her Majesty's Government have no intention whatsoever of allowing the Bill to alter the status of any man for taxation purposes; but one must remember that most of these people are foreigners. Our tax law is to them foreign. Our taxgatherers are foreigners, and they definitely fear having to prove future intentions to a foreign revenue collector. If there is going to be any doubt in their minds, and if they think that by coming to this country they are going to "buy a lawsuit", or that their executors are going to "buy a lawsuit", they will take care to keep away. Then we shall lose their services and very often the capital that comes in with them—the very things that we want to encourage.

The best remedy, from their point of view, of course, would be that the Bill should never pass, but that would be a little hard on those people for whom the Bill has been introduced. If the Bill is really wanted, I would suggest that it may be a long time before it is dealt with by another place, and I hope that the promoters and Her Majesty's Government will in that event fully consider the tax angle. I do not think that any ordinary assurance would really do much to reassure these people. My friends know perfectly well that the Legislature makes laws and that the Judicature interprets them. They also know that the Inland Revenue is bound to collect its lawful dues, and the Inland Revenue might find itself in the position of having to collect taxes on monies as to which the Government of the day had given an assurance that they were never intended to be assessable. Of course, that could be put right, but it would require a clause in the Finance Bill, and that always takes time. Time and delay would lead to fear and confusion, and that would cause damage to our interests if we really want these people to live and work within our country.

I realise that I am much too late to expect any considered opinion now from my noble friend on the Woolsack, as I only gave notice yesterday of what I was going to say, but I hope that if and when the Bill appears in another place the promoters and the Government will he able to cast it in such a form that there is no doubt left whatsoever in the mind of any foreigner working in this country that his status for taxation purposes is not going to be changed by this Bill.

5.18 p.m.


My Lords, I had heard that certain fears were held in certain quarters as to the effect of Clause 3, subsection (1), of this Bill, and as Clause 3, subsection (1), is exactly in accordance with the unanimous recommendation of the Royal Commission on Marriage and Divorce, of which I was Chairman, I thought that perhaps it would be right to say a few words about it.

The change in the law which is brought about by that subsection can be very shortly and simply stated. At the present time a man retains his domicile of origin unless it can be proved by anyone who desires to assert the contrary that he has formed a fixed and settled intention to make his permanent home in another country. It is not only the Inland Revenue who are concerned with this question, though sometimes they are: sometimes it is a man's relatives, and sometimes it is a question that arises under his will. All Clause 3 (1) does is to provide that, subject to subsection (2) of the same clause, a person who has a home in a country is presumed to intend to live permanently in that country. It applies only where a man has only one home, because if he has two homes then subsection (2) comes into play. Subsection (2) is as follows: If a person has a home in more than one country he is presumed to intend to live permanently in that one of them with which he is most closely connected. Now, the previous law gave rise to some very curious situations. For instance, a man who had lived in this country for between thirty and forty years and who had never shown the slightest intention of going away from it was held in the celebrated case of Winans not to have acquired the domicile of this country because in certain rather farfetched events he might possibly have wanted to go back to America. It seemed to the Commission and also to the Standing Committee on International Law that that was an absurd situation, and that the sensible and sane thing to do was to provide that if a man makes his only home in a country it is for him to show, if he wants to, and if he can, that he has not formed a permanent intention to live where he has his one and only home. It seems to me fair enough that, if he spends all his days in this country and has his only home in this country, the presumption that he intends to live here should prevail.

I have not given any personal attention to the tax problems which may or may not arise. All I would say is that on the face of it the change in the law seems to me a fair and reasonable one. If it has unfortunate effects as regards tax in the case of certain individuals, I think it does not seem unfair, that if a man lives here, his only home is here and he dies here, he should be presumed to have formed an intention to reside here permanently. If he never does move, it seems to me not an undue hardship that when he dies, still living here and never having manifested an intention to go elsewhere, his estate should share in the burden of taxation which might arise at his death.

5.22 p.m.


My Lords, I find my name on the list of speakers without really having had any intention of speaking, and I shall not detain your Lordships for any length of time. As has been said, this Bill has a much wider content than that of merely fixing domicile for matrimonial purposes. That, I think, is one of the merits of the Bill. The Royal Commission on Marriage and Divorce were only concerned with dealing with domicile for purely matrimonial purposes, and could not go further. This Bill deals with the question not only for matrimonial purposes but for other purposes as well, and from that point of view it seems to me a very fair Bill.

All that Clause 3 does, after all, is to establish certain presumptions, and these may be set aside by proof of a different intention. As my noble and learned friend Lord Morton of Henryton has just said, if a person lives in this country and dies in this country, after having had his home, and his only home, here for many years, I see no great hardship in saying that unless his executors can prove that he had a different intention during his life, the State is entitled to tax him as if he had died domiciled in this country. I welcome the Bill, and before it passes from your Lordships' House, as I hope it will pass, I should like to congratulate the noble Lord, Lord Meston, on having introduced it and having effected, as I hope he will effect, a very important alteration in the law of domicile.

5.24 p.m.


My Lords, with your Lordships' permission, I should like to intervene for a moment to clear up one point. Like the noble Lord, Lord Hawke, I am beginning to have some fears whether this Bill is perhaps not all that it appears to be on the face of it, especially after reading an article in last night's London Evening Standard dealing with this Bill, entitled "When is a Scotsman not a Scotsman?" The article points out that if this Bill is passed into law, hundreds of thousands of people—and obviously the suggestion is that they will be mainly Scotsmen—will be affected.

I should like to ask the noble Lord who is promoting the Bill, and the noble and learned Viscount the Lord Chancellor, than whom there is no stouter Scot in this country, whether there is any ground for that suspicion. Like many Scotsmen living in England, I value, as we all value, our Scottish nationality. I should like to be assured that there is nothing in this Bill that affects our Scottish nationality or prevents us from claiming and enjoying this privilege here in England.


My Lords, may I be allowed to intervene to say that as a Scotsman I have no apprehensions about the effect of this Bill?

5.27 p.m.


My Lords, if I may add a second Scottish opinion to that of my noble and learned friend who has just intervened, I can assure the noble Lord, Lord Macpherson of Drumochter, that I should never be a party to a Bill which would endanger anyone's Scottish nationality. He may take it that I entirely support both my noble and learned friends. I am glad that my noble friend Lord Hawke has raised the point about taxation, because I gather that there has been some apprehension about it, and any sort of apprehension of that kind ought to be carefully considered, as I assure him that his speech will be. It may be convenient if I state broadly the general tax position as I see it to-day, though I hope that no one, including my noble and learned friends, will consider that this is an opinion to the foot of the letter.

In general, a foreign resident ordinarily resident in this country (and my noble friend will appreciate that that is a term of art, to be distinguished from domiciled) is liable to the United Kingdom taxes on income in respect of foreign income which is remitted to this country. If he is also domiciled in this country, he is liable on the full amount of the income arising abroad, irrespective of whether it is remitted to this country or not, except that earnings and pensions from business or employment abroad are liable only on a remittance basis. Foreign income for this purpose includes not only income from property abroad but also earnings from employment exercised in this country where the employer is resident abroad. Of course that is subject to the proviso that a credit may be due, under double taxation agreements or unilaterally against United Kingdom tax, for tax payable in the country where the income arises. That is broadly and generally the position in life.

On the death of a person who is ordinarily resident in this country but not domiciled here, estate duty is payable on movable and immovable property situated here, except for certain Government stock; the liability is in general the same as on the death of a person not resident in this country. If the person is domiciled in this country estate duty is payable on any movable property situate abroad. A credit may be due, again, under double taxation agreements for tax paid in the country where the property is situated, as well as on movable and immovable property situated here. Therefore the noble Lord has made a correct point, if he will allow me to say so, in saying that the question of domicile is an important one. I recognise that it makes the differences which I have tried briefly to explain.

But when one turns to the Bill, I think one ought to start with Clause 2, because that says: Subject to section five of this Act, a person's domicile is in the country in which he has his home and intends to live permanently. It is important that the original definition has the two limbs: "in which he has his home and intends to live permanently." It is true that Clause 3 (1) says: Subject to subsection (2) of this section, a person who has a home in a country is presumed to intend to live permanently in that country. As my noble and learned friend Lord Morton of Henryton pointed out, that is limited to the case where there is one home. But, again, one must take into account, as indeed my noble friend Lord Hawke mentioned, Clause 4 (1), which says: The presumptions set out in section three of this Act may be displaced by proof of a different intention In the case of somebody who is alive, and presumably has many opportunities to make clear his intention, I cannot see that putting the presumption in this way would place him in any difficulty. If one takes the ordinary case—that is, apart from these public service employees who have been dealt with by Clause 4 (2)—of, say, an employee of a world-wide business, possibly from New York or Chicago, who is over here for a long period, and who, it may be, has his only home in this country, it is almost inconceivable that during his lifetime he would not have made it clear that this was an incident of his earning his living and that he intended to return to the United States at the conclusion of his tour of duty.

When someone is dead, although he may not have a personal interest in the problem it is still his interest, from the point of view of the disposal of his property, that the law of domicile should be clear. My noble and learned friend Lord Morton of Henryton will correct me if my memory of Winan's case is wrong, but I think I am right in saying that this House, in its Judicial capacity, by a majority, reversed the decision of both Courts below. One cannot say that that reflects a crystal clear state of the law. I think everyone agrees that it was beneficial that the law should be put right, and we shall never have better guidance on the method of putting it right than that of the Royal Commission presided over by my noble and learned friend Lord Morton of Henryton and the Private International Law Committee of experts on Private International Law, presided over by Mr. Justice Wynn Parry. Therefore, the noble Lord, Lord Meston, was proceeding on very high authority indeed. I should like my noble friend Lord Hawke to consider the point of view that, the law having been clearly stated in the Bill, it will be quite open to those people, the foreigners coming here either for work or, if you like, for health, to make clear and create the evidence of the position, which is that they want to maintain their domicile.

There is one other point, though I do not wish to stress it too much, because I want to be scrupulously fair in putting this. My noble friend Lord Hawke has got the point, of course, that where you have very finely balanced evidence, the presumption is now the other way—that it is for somebody to displace it by proof of a different intention. But I think my noble and learned friends will agree that in nine cases out of ten a case is not decided on the first presumption; it is decided on a consideration at the end of the day of the evidence as a whole. I cannot but believe that, when the law is clarified, it will be easier to come to the right decision and the decision which the person wanted to preserve.

I was anxious that my noble friend Lord Hawke, and those who have communicated their anxiety to him, should know that this point has been considered. But, as he says, to-day cannot be the end of the matter; and if those who have—I will not say briefed him, because I do not want to apply words of my own profession to my noble friend, but those who have communicated their anxieties to him, would care to elaborate them and communicate them to me, and bring to my attention any points of special difficulty which I have not seen at the moment, and, above all, to suggest any methods by which they would like the problem dealt with, then I assure him at once that I shall give them my fullest consideration; and knowing the generous heart and mind of the noble Lord, Lord Meston, I am sure that he would be in complete accord and would also be ready to give them consideration. I hope that my noble friend Lord Hawke will feel that what I have said meets the point. I have tried to set out the problem as I see it, for the convenience of those who have communicated their anxiety to him as well as of my noble friend; if they have any further points I shall be glad to consider them.

5.38 p.m.


My Lords, in conclusion, I should like to thank the noble and learned Viscount the Lord Chancellor for the great help he has given us on this Bill, as indeed he gives on every measure which comes before your Lordships' House. I should also like to thank the various noble Lords who have assisted in an active and constructive way in making this Bill what it is, including the noble Lord, Lord Silkin. I feel that I should emphasise once more that this Bill is not restricted to matrimonial affairs: on the contrary, it applies to all matters.

I should like to reply to the noble Lord, Lord Macpherson of Drumochter, who asked the question: "When is a Scotsman not a Scotsman?" As your Lordships know, many Scottish people leave Scotland and come down to England but do not cut away every connection they have with Scotland. While they are in this country they enjoy themselves greatly and frequently evince a desire to return to their native country one day, but they never tell you precisely when that day is going to come. Some of your Lordships are among those Scottish people who come here and at the same time do not cut adrift entirely from your native land. If you want to prove to the satisfaction of your executors and administrators, to the Inland Revenue and to the Bank of England that you are domiciled in Scotland, my advice to you is that, while in England, you should walk about wearing a kilt, with a sporran, carrying a bottle of whisky in one hand and in the other hand a banner bearing the words: "My home is in Peterhead in Aberdeenshire and not in Petersfield in Hampshire." I feel quite sure that conduct of that description will induce the authorities to hold that you are domiciled in Scotland. I can only say that it has been a great pleasure and an honour to be allowed to introduce and pilot this Bill through your Lordships' House.

On Question, Bill passed, and sent to the Commons.