I am sorry that we cannot accept this new Clause. We have listened very carefully to the arguments which have been adduced in support of it, and we considered it very carefully when it was put on the Order Paper. What is the position? The Clause does not really raise the question of the rightness or wrongness of the tax. It is a tax on a single transaction on the issue of bonus shares, the making of a bonus issue. The question that arises is whether logically one can relate that tax and the charge to be made under it to some accident in the history of the company which may have taken place years before. There may have been a writing down which took place a long time back in the company's history, and it is said that because of that writing down, when there is a subsequent bonus issue made by the company, there should be a scaling down of tax.

11.45 p.m.

What is the position when the capital of a company is written down because a certain part of the assets have been lost? Really these assets have gone irretrievably. It is not as if the assets are regained by the company or for the company. Assets which have gone are gone for good. What happens in the company's history may be this. By earning profits with the remaining part of the capital which has not been lost and capitalising reserves made by the use of the remaining capital—the remaining capital assets —a company gets in a position where it feels it should make a bonus issue. As pointed out, it is free to make or not to make such an issue. It is a voluntary transaction and the tax is a tax which impinges on the transaction as a transaction. It is not a tax on reserves nor is it related to reserves. It is a tax on a single transaction which the company is free to enter into or not to enter into. We feel that in these circumstances it is really logical to say that we should not relate a tax on a transaction to what may have been far back in the company's history.

Shareholders who acquire bonus shares may or may not be the same shareholders who suffered loss when the capital of the company was written down. If a long time intervened between the two transactions, it may very well be that the shareholders will be entirely different. Therefore, we feel that we must, in order—to borrow a phrase used by the hon. Member for Chesterfield (Mr. Benson) in relation to his way of thinking—to keep the earlier decision tidy—adhere to the decision that the tax is a tax on nothing but a particular decision. When there is a bonus transaction, this demand for a scaling up or down is wholly and utterly irrelevant to the incidents which gave rise to the bonus issue. When the capital has gone and has led to the writing down of the company's capital, it has gone for good and all, and the profits which led to the issue of the bonus shares at the later stage relate to later profits which are made with the assets which remain and which cannot in any sense be related to the assets which have gone and gone for good.