Statutes
| DOI | http://doi.org/10.1111/j.1468-2230.1950.tb00182.x |
| Published date | 01 October 1950 |
| Date | 01 October 1950 |
S
T
A
1'
I.
J
T
E
S
FINANCE
Am,
1950
Some Reflections on Retrospective Legislation and
Lrgnl
hinguage
THIS year's Finance Act contains' nothing of particular novelty
or
interest from the point of view of pure revenue law. Nevertheless
it raises two matters of general interest which have inspired con-
siderable discussion in the lay and legal press.
The first of these is the question of retrospective (or retro-
active) legislation raised by section
26
designed
to
strike at the
practice of paying large sums to directors 'and managers in con-
sideration of undcrtakings by them not to enter employment with
other concerns.
As
a result of protracted litigation, it was
decided in
Beak
v.
Robson
[1943]
AX.
352,
that such sums were
capital in the hands
of
the recipient and therefore not liable to
income
or
sur-tax.
It
can hardly be doubted that the practice of obtaining these
covenants is objectionable under present conditions as liable to
cause ill-feeling between workers and management, and the Chan-
cellor had therefore given a warning that he would not hesitate
to overrule, with retrospective effect, the decision in the
Robson
Case
if
the practice continued. Two particularly glaring examples
caused him
to
take this action in section
26
of
the new Act which
renders such payments liable to surtax in the hands
of
the recipient.
The section is retrospective for the tax year
1949-50
but wide-
spread expressions of righteous indignation have caused
it
to
be
much qualified, and
it
only applies where the payment is made in
respect of an undertaking entered into after the date of the
Chancellor's warning.
In part the indignation was
no
doubt synthetic and based
on
political rather than on high moral principles. In this connection,
however, the Opposition was not
on
very strong grounds for, as
Dr.
Farnsworth has pointed out in an interesting article in
The
Solicitor,'
there was respectable precedent for the Government's
action, Mr. Neville Chamberlain and Sir John Simon having done
precisely the same in
1086-7.'
What was surprising, however,
was the opposition aroused among lawyers, academic and practis-
ing, which can certainly not be dismissed as based (consciously
at
any rate) on political prejudice.
I
June,
1950,
p.
135.
2
Hanaard,
Jnly
1,
1936,
cola.
51-2.
F.
A.
1937,
a.
14 (5).
See
8180
F.
A.
1936.
8.
18.
482
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