I should like to ask for some explanation on this important question of double taxation in Great Britain and in the Irish Free State. Perhaps I may be allowed to put my remarks somewhat in the form of questions, and, if the learned Attorney-General can answer them in the affirmative, well and good. In the first place, as regards relief from double Income Tax, am I right in supposing that, the moment the Irish Free States becomes a Dominion, persons who are living either in the Free State or in this country will become entitled to the same exemption in regard to double Income Tax as in the case of any of the other Dominions? In other words, will they get exemption under Section 27 of the Finance Act, 1920? I think they will, but I should be glad to receive an assurance. The importance of this matter is that that relief is granted automatically, whether the Dominion in question acts reciprocally or not. There are some duties in the ease of which no relief is granted unless there is reciprocity between this country and the Dominions concerned, but I believe I am right in saying that relief from double Income Tax is granted by this country whether the Dominions act reciprocally or not.
The second tax to which I desire to refer is Estate Duty. I take it that, as soon as the Irish Free State becomes a Dominion, the existing provisions in Section 20 of the Finance Act, 1894, will apply, giving relief from double Estate Duty. There is, however, this difference between double Estate Duty and double Income Tax, that relief is granted from double Income Tax even when there is no reciprocity by the Dominion, but that, in the case of double Estate Duty, there must be reciprocity. Now I come to the cases of two taxes as to which at present there is, I believe, no provision made in any existing Act, namely, Stamp Duties and Corporation Profits Tax. I take it that Clause 5 would in certain cases give certain relief from double taxation in respect of Stamp Duty and Corporation Profits Tax, but I would point out that that relief cannot be given unless the provisions of Sub-section (1, b) of this Clause are complied with. That means that, unless the Irish Free State is willing to make arrangements as to relief from this double taxation in the case of these taxes, nothing can be done. If I am right in that, I would ask the Attorney-General whether that is a desirable state of things. If it is too late to deal with the matter now, perhaps he would be able to give us some assurance to the effect that provision could be made, possibly in the Finance Act of next year, for giving relief from double duty in the case of these two taxes, even though no reciprocity is granted by the Irish Free State. That seems to me to be only reasonable. Otherwise, if the Irish Free State does not choose to come into line, this vary heavy double taxation might be imposed upon persons who are liable, whether they be residents in the United Kingdom or in the Irish Free State.
As has been pointed out by the hon. and learned Member who has just sat down, great hardships will arise with regard to double taxation in some cases, unless safeguards are provided. Equal difficulties will also be caused to the authorities in collecting taxes from people who reside in one or the other country. For example, shareholders of English companies might be resident in Ireland and vice, versâ. There is some reference in the Report of the Royal Commission on Income Tax to leakage of Income Tax, and I see no provision in this Bill under which Regulations can be agreed upon between the Government of Great Britain and the Government of the Free State to see, at any rate, that no leakage of that kind occurs. It is not only a question of relief from double taxation, but is also one of seeing that there is none of that kind of leakage, which is so frequently referred to in the evidence before the Royal Commission on Income Tax. I hope that some machinery of that kind is going to be set up. Another point to be borne in mind is that during the transition period there must be brought before the authorities a large number of cases of arrears of Income Tax and other taxes, which will have to be dealt with. I should like to know whether those cases are to be dealt with by two entirely different pieces of machinery—whether the Irish Free State will set up machinery of their own to deal with them, or whether we are going to have in the Free State, until these arrears are collected, officials from Somerset House in addition to the new officials appointed by the Free State. If that be so, surely it will not be economical. I think we ought to know what is going to be the line taken by the Government in this matter.
With regard to assessments to be made in Ireland in respect of past periods, assessments are often made long after the periods in which the profit or income has accrued, and I should like to ask whether assessments are going to be made in respect of these past periods by the new machinery set up by the Free State Government, or are going to be dealt with by the Board of Inland Revenue of Great Britain. In these matters we want to see that there is real harmony of working between the Inland Revenue authorities of this country and the new authorities set up by the Free State, and that there shall at any rate be no overlapping and shall be reasonable economy in setting up the machinery.
I think the hon. and learned Member for York (Sir J. Butcher) is quite right as to the Sections to which he referred of the Finance Act, 1920, and the Finance Act, 1894, and as to the effect which those Sections have in relation to double Income Tax and Estate Duty. In the former case the relief need not necessarily be reciprocal, in the latter case it must. The provisions in this Clause are directed more particularly to the question of Stamp Duties and Corporation Profits Tax, with regard to which some provision has to be made. The object is to enable us to make reciprocal arrangements with the Irish Free State under which we may, so far as possible, avoid double taxation in respect of these matters. I do not think the Committee would wish that we should pass now a provision under which we let off people in this country if they paid taxes in the Irish Free State, without any reciprocal provision, because that might be something of a temptation to the authorities in the Irish Free State to collect revenue at our expense. We hope to make an equitable provision, and I think I am at liberty to tell the Committee that, as long ago as July last, the late Government submitted to the Irish Free State authorities an exhaustive memorandum dealing with questions of finance, and that the matter is, therefore, under discussion between the two Governments, although I cannot say that final arrangements have yet been arrived at, because, as the Committee knows, the Irish Provisional Government has been pre-occupied with matters of very great importance and urgency in Ireland, which prevented their giving as much attention as they otherwise would have given to some of these matters. In answer to the hon. Member for the Hillsborough Division of Sheffield (Mr. W. Alexander), the question of assessment of Income Tax is provided for in the Irish Free State Constitution Bill, which has already passed through Committee. That Bill contains an express provision with regard to the assessment and collection of taxes notwithstanding the creation of the Irish Free State, and, if the hon. Member will look at Sub-section (1, a) of Clause 2, he will find that it deals with the point which he raised. The question of leakage of Income Tax is, of course, one which will have to be dealt with on broad lines in the light of the Report of the Royal Commission, and it is not quite a matter, I think, which can be effectively dealt with or provided for in this Bill.