asked the Chancellor of the Exchequer whether his attention has been drawn to the case of two Swiss citizens resident in Switzerland who derive a considerable income from a British company; that pending a settlement of Excess Profits Tax and Income Tax, they desired to make a payment on account to the Treasury out of the funds standing to their credit in this country, but were informed by the Bank of England Foreign Exchange Control, that before it will be permissible for this payment to be made, it will be necessary for the bank to be satisfied that these sums are available for transfer to Switzerland; and why he is preventing foreigners discharging their obligations in respect of United Kingdom taxation for which they are liable?
Yes, Sir, but I am quite unable to accept the implications contained in my hon. Friend's Question. The effect of the Defence (Finance) Regulations is that any debt due in the sterling area by a person resident elsewhere can only be paid by the remittance of foreign exchange or by the use of sterling funds properly due and transferable to a resident outside the sterling area. It is therefore not permissible for residents in the sterling area to pay debts on behalf of non-residents except with such funds. I am satisfied that this provision is necessary in order to protect the country's foreign exchange position. Under these circumstances I think that my hon. Friend will agree that the inquiries in this case were properly and reasonably made in order to secure satisfactory evidence to show that the funds in question were properly due and transferable to nonresidents and could therefore be used to discharge their obligations.
Is it not rather absurd that when two Swiss gentlemen earn money in this country and it is placed to their credit in this country and they want to pay their taxes, the Bank of England writes to the custodian company that they must not pay the money to the Chancellor?