§ Mr. Spensasked the Chancellor of the Exchequer whether he is aware that the requisitioning of foreign balances and securities under the Defence (Finance) Regulations may, in certain cases, result in the taxation of income which otherwise might not have been taxable; and what steps he proposes to take to relieve this hardship?
§ Sir J. SimonI am aware that a hardship may arise as regards Income Tax and Surtax in relation to such foreign income as would not be chargeable to Income Tax unless remitted to the United Kingdom, by reason of the fact that the operation of the Defence (Finance) Regulations may result in the compulsory remittance to the United Kingdom of income which might otherwise have been left abroad and the consequent taxation in some cases of income which would otherwise not have been taxable. In order to meet the taxation hardship that might thus be caused it is proposed to deal with these cases on the following lines:
- (a) Assessments will be made, in accordance with the relevant Income Tax provisions, on the basis of the total remittances to this country, including the amount of any consideration moneys received from the Treasury under the Regulations.
- (b) The Board of Inland Revenue will defer collection of the tax applicable to such amount (not exceeding the aggregate of the consideration moneys received from the Treasury), as the taxpayer shows has not been expended, or used in the United Kingdom and remains available, either in a specified bank account or in identified investments, for remittance abroad in conformity with the Regulations.
- (c) Any portion of the consideration moneys which is shown to have been remitted abroad, either while the Regulations continue in force or within six months of the expiry of the Regulations, will be treated for Income Tax purposes as if it had not been remitted to the United Kingdom, and the amount of the tax collectible will be reduced accordingly.
Any person wishing to avail himself of these arrangements should, when making his annual Income Tax return, indicate 2009W the amount of consideration moneys included therein in respect of which he claims that collection of tax should be deferred, and specify the bank account or investment in which the amount is held. In the meantime inquiries as to the application of the arrangements to particular cases and as to the procedure to be followed should be addressed to the Secretary, Board of Inland Revenue, Somerset House.