asked the Chancellor of the Exchequer what is the practice of the Inland Revenue, under Section 29(5) of the Income Tax Act, 1952, with regard to the raising of assessments on income derived by non-residents from money invested in banks and other financial institutions which do not deduct Income Tax at source.
In some cases this interest is exempted from United Kingdom tax under double taxation agreements between the United Kingdom and other countries. Where this is not the case there would usually be no way of enforcing collection of tax on interest assessed on non-residents and it is not, therefore, the general practice of the Inland Revenue to raise assessments on such interest.
Is my right hon. Friend aware that in a case brought to my notice the working of this Section of the Act actively discourages investment from abroad? As this is clearly not his intention, will he take steps to introduce amending legislation?
Perhaps my hon. Friend will be good enough to send me details of that illustration. Since he put down his Question, I have been into this with great care and I did not find this Section to have the effect he describes.