§ Mr. BurnsTo ask the Chancellor of the Exchequer, what are the consequences of the decision in Esso Petroleum Company Limited v. Ministry of Defence for the tax treatment of interest paid by Government Departments.
§ Mr. DorrellThe effect of this decision is that the provisions of schedule C of the Taxes Acts apply only to interest on Government securities and do not extend to other types of interest payments made by Government Departments. In accordance with this view, payments of interest, other than on Government securities, made by Government Departments after the decision, have not been subject to deduction of tax at source under schedule C. In the light of legal advice, the Inland Revenue and the Government Departments concerned are not taking any steps to seek out, nor make further payments to, the recipients of earlier payments of interest. An Inland Revenue press release which is being issued today provides further details; a copy has been placed in the Library.