This is obviously a subject that commands the sympathy of the Committee and, if I may say so, I particularly admire and respect the characteristic persistence with which my hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) has pursued two successive Financial Secretaries on the particular case to which he referred, and which, as he has indicated, lies behind this new Clause. I am afraid, however, that there are very real difficulties in meeting him on it, and it might be helpful to the Committee if I were briefly to describe what has been done on the subject.

To begin with, the payments made by way of compensation by the German Government were subject to tax in this country in the ordinary way as income, but by Section 22 of the Finance Act, 1961, a provision was inserted in our law on the following lines. It was provided that where the compensation was not subject to tax in Germany, that type of compensation should not be taxable here As my hon. Friend has indicated, a number of other countries concerned took similar action.

That, of course, still left taxable here those forms of compensation which would have been taxable if the person concerned had been in Germany. There were two good reasons for this. The kind of compensation which German law exempted from tax—and which we therefore followed in the Finance Act, 1961—was true compensation payments in the sense of payments for personal injuries, loss of and damage to trade or profession, and so on. On the other hand. German law did not exempt from tax such matters as the restitution to an individual of the social security benefits or public service pensions which, if they had never been withdrawn by the Nazis but had continued to be payable, would have been taxable. The German Government have restored them, but restored them on that basis. Therefore, our legislation in 1961, as did the legislation of other countries, left them similarly exposed to tax.

The Committee will probably think that reasonable, and it is also right to assume that the German benefits—which, under German law, are taxable—were calculated for compensation purposes on the basis that they would be subject to tax. Therefore, the recipient here remains subject to our tax. There is no question of double taxation; in so far as German tax is paid, that will be credited to the taxpayer under the double taxation agreement with the Federal German Republic.

I agree that this case, from the point of view both of my hon. Friend and of his constituent, is rather provoking. The original claim was in respect of a form of compensation exempt from tax under German law and, therefore, since 1961, under ours; but the discussions and negotiations of my hon. Friend's constituent had with the German Government resulted in the matter being settled on the basis of the restitution of his public service pension which, had he been in Germany, and had there been no Nazi persecution, would have been taxable. Had he been in Germany now and had it been restored to him it would have been taxable and, therefore, under our 1961 legislation it is also taxable here.

I can understand his disappointment with the result of his discussions with the German Government and that the compensation awarded to him was in a taxable form, but I think my hon. Friend will appreciate that it would do violence to the very proper course on which this Committee decided in 1961 if we were to go further than the German Government and other countries and proceed to exempt from taxation here payments which are taxable in Germany and which the Germans no doubt calculated on the basis that they would be taxable.

Therefore, much as I sympathise with my hon. Friend's constituent and much as I admire the pertinacity of my hon. Friend in pressing this case, I really do not think that I can advise the Committee to meet him by an alteration of the law which, I think, from every significant point of view would do violence to the not unsatisfactory solution at which we arrived on this problem.