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House of Lords (Members’ Taxation Status) Bill [HL]

moved Amendment No. 3: 3: Clause 1, page 1, line 4, at end insert— ““(1A) Subsection (1) shall not apply to a Member of the House of Lords who is domiciled in the United Kingdom but is employed outside the United Kingdom by the Crown or by an international organisation of which the United Kingdom is a member.”” The noble Lord said: I have tabled Amendment No. 3 at the suggestion of my noble friend Lord Oakeshott. Amendment No. 5 is purely consequential and I shall not speak to it further. During his opening speech at Second Reading my noble friend pointed out that there were some cases where Members of your Lordships’ House had been employed outside the United Kingdom as British or international public servants. He mentioned two specific cases. I have not asked their permission to give their names, but I doubt that they will object: one is my noble friend Lord Ashdown and the other is the noble Lord, Lord Robertson of Port Ellen, in his role as Secretary-General of NATO. I might add that I think the late Lord Cockfield had already become a Member of the House by the time he was appointed to be a Commissioner of the European Community, as it then was, in Brussels. No doubt there may be similar cases in future. We therefore think it would be appropriate to exclude from the operation of the Bill Members of your Lordships’ House who are in the service of the Crown—for example, as diplomats or as members of the Armed Forces—although in fact people in those categories are mostly treated as residents anyway. We wish to extend that to employment with the international organisations of which the United Kingdom is a member. Those include, obviously, organisations such as the United Nations, NATO, the European Union, the World Bank, the International Monetary Fund, the World Trade Organisation, the Council of Europe—and one could go on for some time further. Persons working for organisations of that kind are performing a public service on behalf of a body of which the United Kingdom is a member. We see no justification for excluding people in this category and giving the exemption only to those in the service of the Crown, as is proposed by Amendment No. 4, which is also in this group. We believe the exemption should extend only to those who retain domicile in the United Kingdom. An existing domicile is retained unless an individual decides to live permanently in another jurisdiction; it cannot be changed merely by taking up residence there. An appointment to work for an international organisation in another country is entirely consistent with the retention of the United Kingdom domicile. In our view, however, the exemption does not and should not apply to people who are employed outside the United Kingdom in the private sector or are employed by foreign Governments. I am not for a moment suggesting that there is anything improper about taking up employment abroad; of course not. But, increasingly, people are appointed to your Lordships’ House to do a job here. That appointment is for life, and I believe that it involves an implicit commitment by Members to make themselves available to participate in the work of your Lordships’ House so long as they are capable of doing so. If such Members choose to take residence abroad, we believe they should be prepared either to surrender their right to participate in the business of your Lordships’ House or, if they wish to retain the right so that they can return to active membership later, to continue to meet the tax liabilities that they would undergo if they were residents of the United Kingdom. Depending on the terms of the double tax treaty with the county of actual residence and the tax law in that country, that might involve paying tax in both countries. There are ways of dealing with that to involve the exercise of double taxation. The simplest, perhaps, is one that is used in relation to countries with which we have no double tax agreement; that is, to allow the tax paid in the country of actual residence as a donation from income for the purposes of United Kingdom tax. That, though, is plainly a matter for a future Finance Bill and not appropriately for this Bill. I have considered whether it would be possible to extend the exemption to people who are employed abroad by a charity. That looks attractive at first sight—for instance, one might think, ““Why should someone who is employed overseas by Oxfam not be exempted from this?””—but it would be difficult to monitor the rules if the exemption were extended that far, and it offers an opportunity for too many loopholes. The exemption would not apply to Clause 1(6), which requires an appointee to your Lordships' House to be ordinarily resident and domiciled in the UK at the time of their appointment. If someone who would be suitable for appointment to your Lordships' House is employed for the time being outside the United Kingdom, that appointment can and should be deferred until that person’s return to residence in the United Kingdom. The problem therefore arises only where someone who is already a Member of your Lordships' House is offered a non-resident job by an international organisation. Amendment No. 3 would allow Members of your Lordships' House to take up posts of public service involving residence abroad without having either to pay double tax or to surrender permanently all rights to participate in the business of your Lordships' House. Restriction to employment by international organisations of which the United Kingdom is a member will prevent abuse and ensure that the service in question has links to the United Kingdom. The amendment is obviously not fundamental to the Bill, but it is useful. It should, and I hope will, be adopted without disagreement. I beg to move.