I beg to move, That the Clause be read a Second time.

I make no apology for keeping the Committee at this late hour, because it is important to get this matter cleared up. I am not clear whether my right hon. Friend is in sufficient sympathy with the new Clause to shorten the proceedings by telling me that he will give me what I have requested.

Hon. Members may think that it is a very odd situation that those who have suffered under Nazi persecution should be taxed on their compensation, but that is the case still for a few people. Using the words of my hon. Friend the Financial Secretary, I can only say that it is an unintentional anomaly.

Compensation was given—in many cases very much less than had been claimed—to those who had suffered under Nazi persecution, and later the House made changes in a Finance Bill to free those who received this compensation from tax on it. I may be wrong, but I believe that it was an international agreement that those who had suffered loss should not be taxed on the compensation. It is, after all, not an income which ought to be chargeable to tax. It is compensation for loss of property and goods which these people owned in countries which were taken over by the Nazis.

This seemed to be all set to right, but it has come to the notice of some of us that the German Government did not compensate all these people who were still alive—fortunately some of them are still alive—under this Federal compensation law.

One of my constituents, a Mr. Kollman, had his compensation claim changed from the ordinary Federal compensation law to another Federal law, but in respect of compensation for public service. That, in effect, is compensation for loss of office. Mr. Kollman—and I want to make it clear that he was not a German but a Czech—accepted the change in his compensation payment from the ordinary law to the one I mentioned because he was told, on being threatened by the German Government, that his claim would not be admitted unless he changed it to the other law.

No justification was given for the change. Several cases like this have come to my notice. Certainly in Mr. Kollman's case no reason or excuse was given by the German authorities. It should be remembered that under the ordinary Federal compensation law Mr. Kollman would have paid no tax. The Germans were recently asked why the change from one law to another was made, but they reply saying that our difficulties are domestic. One cannot blame Mr. Kollman for accepting the change, for at the time this House had not put to right the question of Income Tax payable on this compensation. It was at a later date that the Government attempted to do justice to these people.

When it was found that the Finance Act, 1961, and other legislation did not cover the situation, attempts were made to put the matter right. Those attempts were not successful in Britain, and Mr. Kollman wrote to the German Government asking them to put his claim back under the ordinary Federal compensation law so that he would not be liable to Income Tax, but they refused. The Germans claimed that this was a purely domestic matter for Mr. Kollman in this country, and I suppose that they were right.

In raising this matter I am not asking for any breach of the existing principles which operate in these cases. The principles, as I understand them, have been established so that compensation paid to these people, who lost everything in Czechoslovakia and elsewhere, should not be charged for Income Tax. As I said, this is not an income, but compensation for loss. Not much money is going to Mr. Kollman. The Germans whittled down his claim to the lowest possible figure.

It might interest the Committee to know some details in Mr. Kollman's case. He lost all but one of his relations. Including cousins and other relatives, 60 people went into the gas chamber. Every bit of the property owned by those 60 people was confiscated by the Germans. In terms of value, that property was worth about £30,000. Naturally Mr. Kollman is getting a very small part of that sum in compensation—a small, quarterly payment—but even that is subject to Income Tax. Fortunately, the man is able to earn a living as a teacher. He married a Birmingham girl, and they live in my constituency. He is subject to tax on his earnings as a teacher, of course, but this compensation should clearly not be taxed.

I will not go further into the argument, because it has all been discussed during the passage of an earlier Finance Bill. As I say, it was agreed, not only by this country but by others, that this compensation should not be taxed, and I therefore hope that my right hon. Friend will be able to accept this new Clause.