HC Deb 02 July 1930 vol 240 cc2049-109
Sir A. POWNALL

I beg to move, in page 27, line 20, after the word "time" to insert the words "after the commencement of this Act and."

The reason for the Amendment is that without these words there is a danger of retrospective legislation in this respect. Feeling has already been expressed about the introduction of retrospective legislation in the Finance Bill and the Amendment seeks to make sure that this Clause, at any rate, shall not apply until after the commencement of the Act.

Mr. P. SNOWDEN

The effect of the Amendment would be that all companies already in existence would get the advantage of the legal opportunities which they have had in the past of evading duties whereas others would not be in that position. That would be unjust and I regret that I cannot accept the Amendment.

Viscount WOLMER

I submit that what is unjust in this matter is retrospective legislation and that this legislation is retrospective. Parties who have been acting within their rights according to the law are now to be told that they have been tax dodgers, that they have been doing something disgraceful and that they are to be subjected to special legislation. The Amendment raises the whole question of how far the proposals of the right hon. Gentleman in this matter are legitimate. He is trying to wipe out arrangements which have been made in the past perfectly openly and under the law as it existed at the time. I suggest that the right hon. Gentleman is not going to achieve the purpose which he has in view either by Clause 29 or by this Clause for a very fundamental reason. All Chancellors of the Exchequer have found that when a tax strikes the ordinary average man as fundamentally unjust and unfair, that tax at once becomes immensely difficult to collect. On the Second Reading of this Bill we had a very interesting speech from the right hon. Gentleman the Member for Seven-oaks (Sir H. Young) on that point. What the Chancellor of the Exchequer is trying to do here is to ignore that principle. He says that the arrangements by which the holders of the life interest and the remainderman in an estate pooled their interests under an estate company are altogether unfair to the State. I cannot admit that proposition. As long as both parties take their interests in shares, they are only pooling their interests in the property. They are putting the management of the property on a business footing and they are turning their interests into shares.

The unfairness of the Government proposal is that, on the death of the holder of the life interest, the estate will be taxed not on what it is bringing in, but on the hypothetical value of the land. This is a point which I tried to put to the Attorney-General—I fear with little success—last night. It applied to Clause 29 and it applies particularly to this Clause which is devoted entirely to these settled agricultural estates. The Attorney-General accused me of defending people who were trying to evade their fair share of taxation. At the right hon. and learned Gentleman's invitation I have read my remarks, and I find that I did nothing of the sort. Our objections to this proposal are not based on any desire to protect people who are trying to avoid the payment of taxation on wealth which comes to them. I know that there are such cases, and we all admit the necessity of tightening up the law in that respect, but I submit that the ordinary case dealt with by this Clause is not such a case. The Chancellor of the Exchequer is only entitled to say that there is tax evasion on the assumption that these people are going to be taxed fairly on wealth that will come to them. Neither the Attorney-General nor the Chancellor of the Exchequer has attempted to deny that the opposite is the case in this instance.

The whole reason for the existence of this type of estate company has been to avoid these crushing Death Duties, which bear no relation at all to the income which the estate produces, or which it can legitimately produce as long as it is adequately maintained, as long as the rents are not unduly high and as long as the landlord carries out his duties. It is just because this class of property owner has taken a low rate of interest on his property, it is just because he has not accumulated great wealth, that this taxation upon the theoretical value of his property has become such a crushing burden and is felt by him to be altogether unfair taxation. I put it to the Chancellor of the Exchequer and to hon. Members opposite that they would be far more likely to succeed in their endeavour to secure that all wealth should pay its fair share of taxation, if they got the sense of justice of the individual once more on the side of the State in this matter, just as it is in regard to our normal system of taxation. If agricultural land paid Death Duties on the revenue which was brought in, and not on its theoretical value, there would be no need for these estate companies and they would disappear. The right hon. Gentleman would find that owners would not go to the trouble of trying to get in the same boat as ordinary commercial firms, such as Selfridge's, or Morris's, and you would not be chasing them through this legal tangle, but if you persist in taxing agricultural land at a rate which, judged from——

The DEPUTY-CHAIRMAN

The Noble Lord is really discussing the general principles of the Clause, and not the Amendment now before the Committee.

Viscount WOLMER

I bow entirely to your Ruling, but this Amendment, I submit, does raise the whole question of retrospective legislation, in that it seeks to limit the effect of the Clause to transactions which may take place in the future. This Clause comes down upon transactions which have taken place in the past, hut, in view of your Ruling, I will not pursue that general topic. I only want to say, in conclusion, that the ordinary language used by some hon. Members opposite, and I think by the Attorney-General more than once, is a type of language which is intensely resented by the agricultural interests. I am afraid it may be a matter of small moment to some hon. Members opposite, but I can assure them that people do not like being called tax dodgers when they are conscious of having done nothing to deserve that epithet.

I hope my hon. Friend will press this Amendment, because I think it is an act of injustice to attempt to break up these estate companies, which have been formed with the perfectly legitimate object of pooling the interests of the life tenants and the remainder men and getting their benefit in the form of shares, on which they are liable to pay taxation for every penny that they receive. The right hon. Gentleman tries to break up these companies, and I believe it is unjust to the individuals concerned, and that it will be extremely bad for agriculture as a whole. One thing that has kept agriculture going in the past has been the amount of capital that the landlord has had at his disposal with which to help his tenants. That capital has been gradually whittled away, and the result of this Clause will be further to destroy that capital. That is going to hit, not only the landowner, but, hardest of all, his tenants and the people working on the farms, and it is going to be an act Which will cause the gravest injury to agriculture in this country.

Captain BOURNE

I wish to support the Amendment, because, although the Attorney-General objects to the use of the word "retrospective" in connection with this Clause, I think it may be termed "retroactive." I admit that we have a good many precedents where Parliament has altered the law relating to Death Duties, and under which people in many cases have spent large sums of money, as they have done in the case of these companies, on the understanding that the law was in one form, and subsequently the Treasury has pocketed that money and proceeded to alter the law to the disadvantage of these people. In ordinary commercial life that would be called very sharp practice. I do not deny the right of Parliament to do it, but I think that Parliament should try to observe the bargain that it tacitly makes with its citizens. In the case of these companies, it has accepted Stamp Duty on their transactions at the time when they were made. It is not disputed that they were absolutely legal, and it is undesirable that Parliament should subsequently penalise people who have taken a perfectly legitimate method of avoiding taxation.

There is no obligation on the citizen whatever so to arrange his affairs as to be liable to the highest amount of taxation payable. The citizen is perfectly free to arrange to pay the least amount of tax to which he is legally liable, and I do not think that doctrine will be disputed, but it is unfair for the Government to get Stamp Duty and then to penalise them in this way. For that reason alone, if for no other, I feel that this legislation is at least undesirable. Also I cannot help feeling that the effect of altering the law in this way will be to have an unsettling effect. This particular Clause merely affects people who happen to own settled property, but if you do that, who is to say that you will not later be proposing to pass retroactive legislation affecting coal merchants or fishmongers? Nobody will deny the right of this House to do it. We could undoubtedly pass legislation avoiding every contract that has been entered into in this country, but no one would suggest that such legislation would be desirable, and we ought to be very careful before we legislate to interfere with anything which, when it was undertaken, was perfectly legitimate.

When we discussed the last Clause on a somewhat similar Amendment, the question was asked as to how far back the Inland Revenue were going to dig into these matters, and the Chancellor of the Exchequer suggested that he might consider, between now and the Report stage, the advisability of introducing some limitation, so that the Clause should not apply to companies formed, say, before the end of the War. If he is going to take such action in respect of Clause 29, I think he might very well consider the desirability of taking it in regard to Clause 30. The particular class of companies which I understand the right hon. Gentleman wishes to tax is one which has only grown up in very recent years in the form which is obnoxious to the Inland Revenue. So long as the practice was legal, people were entitled to make these companies, but I will not pursue that argument now. There are certain estate companies, I think, which are a good deal older than the one-man company which the Clause attacks, and I suggest that it would be convenient for all concerned that the right hon. Gentleman should at least put a limitation on the distance back into which investigations could be carried. I might suggest 1918 or 1921 as the limit, and that he should leave any transaction before that date as valid and binding.

Mr. LEIF JONES

I suggest that the Amendment goes further than the Mover really intends, because it would exempt companies created only for the purpose of tax dodging. The Noble Lord the Member for Aldershot (Viscount Wolmer) was careful to say—and I agreed with him—that he had no wish to help such people escape paying tax, but the effect of the Amendment would undoubtedly be to enable such people to evade the tax. The Attorney-General gave us a case yesterday where such a company had been formed, and nobody would have any sympathy with the person who formed that, company, yet this Amendment would exempt him.

Viscount WOLMER

It is not enough for the promoters of the Bill to point to scandalous cases that would be redressed by the Clause. What they have to show is that the Clause would only catch various objectionable cases, and no others. Our contention is that this Clause as drafted will cover a number of transactions which are innocent.

Mr. JONES

If that were intended, I should not support the Clause. All that is required is that these companies, if they are not tax-dodgers, can prove that they are not tax-dodgers. The injustice, if there be any, is that that onus is laid upon them by the Clause, but provided that they are merely land companies, or estates which have been genuinely converted for the purposes described by the Noble Lord, I do not think that there is anything in this Clause to touch them at all. I am going on that happy assumption, and I hope that experience will prove me right. This Amendment goes further than that, however, and will actually be a protection to those whom we all agree the Chancellor of the Exchequer ought to tax in the interest of the other taxpayers.

Mr. ATKINSON

I do not think that the right hon. Gentleman can appreciate what the Clause does. If this penalty were going to be imposed on the man who had sought, even in the past, to evade his obligations, I would not say a word; or even if it imposed a penalty only on a one-man company, meaning by that a company in which that individual alone was concerned, or in which he and an immediate member of his family were concerned, I would not object; but the companies under this Bill which will be taxed in that way are companies in which a great many other people may be interested. These people, through their company, have entered in the past into a bargain of an absolutely legitimate kind for a purchase with full consideration, but as it happens, the terms agreed upon were perhaps, in their own interest, not the paying of cash all at once at the time of the sale, but an agreement to pay by instalments. In cases of that kind, neither the individual nor the com- pany has the slightest idea of evading duty, at any rate, so far as the company is concerned, and it would not be a matter that would even interest them.

Here you have a great many people combined in the form of a company making a purchase of land of equitable terms with full consideration, but not paying the purchase money all at once, and then this Bill is passed, the man dies, and they suddenly find that they are liable for, perhaps, a very heavy payment. It is unfair that people, who really gain nothing by the transaction in the sway of evading duties, who are quite unconnected with the supposed wrongdoer who is seeking to evade duties, who are entering into a carefully considered bargain, should suddenly find all their calculations upset, and have to pay a huge sum by way of additional purchase price in the form of Estate Duty. I agree that it is not enough for the Government to say that it covers this and that bad case, but if the form of words which they adopt makes it apply to a great many other cases, where the Clause operates unjustly it becomes important to cut it down to such a form of expression that it does not work injustice. If my right hon. Friend the Member for Camborne (Mr. Leif Jones) thinks that this Clause will not do an injustice of that kind, he is very mistaken. If he will read paragraph (a), he will see that, in supporting this Clause, he will be a party to imposing a tax upon companies who have entered, with a great many other people interested, into transactions in the past against which nothing can be said from their point of view, and who will suddenly find that they are taxed in this way. That is why I submit that this Amendment ought to be accepted.

Dr. BURGIN

This is an extremely technical matter, and it occurs to me that it might simplify matters if I asked the learned Attorney-General whether I entirely understand this Clause in its bearing upon this Amendment. One cannot, of course, be uninfluenced by the fact that there are later Amendments on the Paper, which we cannot now discuss. One of them which will entirely alter the meaning of this Clause, stands in the name of the Chancellor of the Exchequer. The Clause, as drafted, relates clearly only to transactions which take place after the Bill becomes an Act, where property is transferred. We cannot blind ourselves to the fact that the Chancellor has seen that, and the word "is" is going to be changed to "was." It will do away with the point that occurred to my mind. Obviously, if the Clause had remained as drafted, this Amendment would be unnecessary, because on the plain reading of the English, where property is transferred it can only mean after this Bill is passed. That is not the point which we are for the moment discussing. It is rather important that we should remember how far the law has already gone in dealing with matters in relation to settled estates. As the Attorney-General is aware, Section 11 of the Finance Act, 1900, has already dealt with the case of a man who surrendered settled property to a remainderman within a certain number of years of his death. What was not dealt with was a transfer by the settler to a remainderman, and, both concurring, sold to a third party; and the object of this Clause is to fill that gap. I make that point because the note to this Clause is singularly inaccurate. It is not a transfer of life-interest; it is the absence of certain conditions when there is an entire settled estate transfer. I only make this point by way of explanation.

This Amendment raises the whole question whether it is ever right to interfere with a transaction, legal and valid at the time it was made, and to impose some new conditions upon it. The Amendment raises the whole question

in Clause 29 as to whether Parliament is right in penalising somebody at a date subsequent to the time when he made a transaction, which was valid and legal at the time. It is undoubtedly within the power of this House and of this Committee to do that. Whether it is wise and expedient is a matter for the House on the suggestion of the Government of the day, and the Government of the day here have told us by their whole series of Clauses between 29 and 33 that in their opinion, owing to the growth of these companies, apparently with the object of tax evasion, it is necessary for them to strike backward and not merely forward. That is the opinion underlying the whole of these Clauses. I have objected to Clause 29 on that ground, and it follows that I must object, to the best of my lights, to this Clause on the same ground. This Amendment raises in succinct terms the whole question as to whether this should apply only to the future, in which case many companies will escape, or whether it is to apply to and include certain notorious instances which are known to the Committee, and which it is the intention of the Clause should be included. For the reasons I leave given, and finding that I am rightly understanding the point in dispute, I am obliged to support this Amendment in principle.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 114; Noes, 257.

Division No. 402.] AYES. [8.34 p.m.
Acland-Troyte, Lieut.-Colonel. Culverwell, C. T. (Bristol, West) Haslam, Henry C.
Allen, Sir J. Sandeman (Liverp'l., W.) Dalkeith, Earl of Henderson, Capt. R. R. (Oxf'd, Henley)
Alien, W. E. D. (Belfast, W.) Davies, Dr. Vernon Hennessy, Major Sir G. R. J.
Atkinson, C. Davies, Maj. Geo. F. (Somerset, Yeovil) Herbert, Sir Dennis (Hertford)
Balfour, George (Hampstead) Dixon, Captain Rt. Hon. Herbert Hills, Major Rt. Hon. John Waller
Balfour, Captain H. H. (I. of Thanet) Dugdale, Capt. T. L. Hurd, Percy A.
Betterton, Sir Henry B. Edmondson, Major A. J. Hutchison, Maj.-Gen. Sir R.
Bevan, S. J. (Holborn) Elliot, Major Walter E. Jones, Sir G. W. H. (Stoke New'gton)
Bird, Ernest Roy England, Colonel A. Kindersley, Major G. M.
Birkett, W. Norman Everard, W. Lindsay King, Commodore Rt. Hon. Henry D.
Bourne, Captain Robert Croft Ferguson, Sir John Lamb, Sir J. O.
Bowater, Col. Sir T. Vansittart Ford, Sir P. J. Law, Sir Alfred (Derby, High Peak)
Bowyer, Captain Sir George E. W. Forestier-Walker, Sir L. Lewis, Oswald (Colchester)
Braithwaite, Major A. N. Fremantle, Lieut.-Colonel Francis E. Long, Major Eric
Brass, Captain Sir William Galbraith, J. F. W. Lymington, Viscount
Brown, Col. D. C. (N'th'l'd., Hexham) Gault, Lieut.-Col. Andrew Hamilton McConnell, Sir Joseph
Buchan, John George, Megan Lloyd (Anglesea) Maitland, A. (Kent, Faversham)
Bullock, Captain Malcolm Graham, Fergus (Cumberland, N.) Margesson, Captain H. D.
Burgin, Dr. E. L. Grattan-Doyle, Sir N. Merriman, Sir F. Boyd
Burton, Colonel H. W. Greaves-Lord, Sir Walter Monsell, Eyres, Com. Rt. Hon. Sir B.
Christie, J. A. Greene, W. P. Crawford Morrison, W. S. (Glos., Cirencester)
Colfox, Major William Philip Grenfell, Edward C. (City of London) Nathan, Major H. L.
Courthope, Colonel Sir G. L. Hacking, Rt. Hon. Douglas H. Nelson, Sir Frank
Cowan, D. M. Hall, Lieut.-Col. Sir F. (Dulwich) Oliver, P. M. (Man., Blackley)
Cranborne, Viscount Harvey, Major S. E. (Devon, Totnes) Ormsby-Gore, Rt. Hon. William
Percy, Lord Eustace (Hastings) Sandeman, Sir N. Stewart Turton, Robert Hugh
Peto, Sir Basil E. (Devon, Barnstaple) Sassoon, Rt. Hon. Sir Philip A. G. D. Vaughan-Morgan, Sir Kenyon
Pownall, Sir Assheton Sinclair, Sir A. (Caithness) Wallace, Capt. D. E. (Hornsey)
Ramsbotham, H. Smith, Louis W. (Sheffield, Hallam) Ward, Lieut.-Col. Sir A. Lambert
Rawson, Sir Cooper Smith, R. W. (Aberd'n & Kinc'dine, C.) Wayland, Sir William A.
Reid, David D. (County Down) Smith-Carington, Neville W. Wells, Sydney R.
Remer, John R. Smithers, Waldron Wilson, G. H. A. (Cambridge U.)
Rentoul, Sir Gervals S. Somerville, D. G. (Willesden, East) Wolmer, Rt. Hon. Viscount
Reynolds, Col. Sir James Steel-Maitland, Rt. Hon. Sir Arthur Womersley, W. J.
Richardson, Sir P. W. (Sur'y, Ch'ts'y) Stuart, Hon. J. (Moray and Nairn) Worthington-Evans, Rt. Hon. Sir L.
Ross, Major Ronald D. Thomas, Major L. B. (King's Norton) Young, Rt. Hon. Sir Hilton
Ruggles-Brise, Lieut.-Colonel E. A. Titchfield, Major the Marquess of
Russell, Alexander West (Tynemouth) Train, J. TELLERS FOR THE AYES.—
Samuel, A. M. (Surrey, Farnham) Tryon, Rt. Hon. George Clement Sir George Penny and Sir Victor Warrender.
NOES.
Adamson, Rt. Hon. W. (Fife, West) Gould, F. McGovern, J. (Glasgow, Shettleston)
Adamson, W. M. (Staff., Cannock) Graham, D. M. (Lanark, Hamilton) McKinlay, A.
Addison, Rt. Hon. Dr. Christopher Graham, Rt. Hon. Wm. (Edin., Cent.) MacLaren, Andrew
Aitchison, Rt. Hon. Craigie M. Gray, Milner Maclean, Neil (Glasgow, Govan)
Alexander, Rt. Hon. A. V. (Hillsbro') Grenfell, D. R. (Glamorgan) McShane, John James
Alexander, Sir Wm. (Glasgow, Cent'l) Griffiths, T. (Monmouth, Pontypool) Malone, C. L'Estrange (N'thampton)
Alpass, J. H. Groves, Thomas E. Mander, Geoffrey le M.
Ammon, Charles George Grundy, Thomas W. Mansfield, W.
Arnott, John Hall, F. (York, W. R., Normanton) March, S.
Aske, Sir Robert Hall, G. H. (Merthyr Tydvil) Marcus, M.
Attlee, Clement Richard Hall, Capt. W. P. (Portsmouth, C.) Markham, S. F.
Ayles, Walter Hardie, George D. Marley, J.
Baker, John (Wolverhampton, Bilston) Harris, Percy A. Marshall, Fred
Baldwin, Oliver (Dudley) Hartshorn, Rt. Hon. Vernon Mathers, George
Barr, James Hastings, Dr. Somerville Matters, L. W.
Bellamy, Albert Haycock, A. W. Maxton, James
Benn, Rt. Hon. Wedgwood Henderson, Arthur, Junr. (Cardiff, S.) Messer, Fred
Bennett, Capt. Sir E. N. (Cardiff C.) Henderson, Thomas (Glasgow) Middleton, G.
Bennett, William (Battersea, South) Henderson, W. W. (Middx., Enfield) Millar, J. D.
Benson, G. Herriotts, J. Milner, Major J.
Bentham, Dr. Ethel Hirst, G. H. (York W. R. Wentworth) Morgan, Dr. H. B.
Bevan, Aneurin (Ebbw Vale) Hirst, W. (Bradford, South) Morley, Ralph
Bondfield, Rt. Hon. Margaret Hoffman, P. C. Morris, Rhys Hopkins
Bowen, J. W. Horrabin, J. F. Morrison, Herbert (Hackney, South)
Bowerman, Rt. Hon. Charles W. Hudson, James H. (Huddersfield) Morrison, Robert C. (Tottenham, N.)
Brooke, W. Hunter, Dr. Joseph Mort, D. L.
Brothers, M. Isaacs, George Moses, J. J. H.
Brown, C. W. E. (Notts, Mansfield) Jenkins, W. (Glamorgan, Neath) Mosley, Lady C. (Stoke-on-Trent)
Brown, Ernest (Leith) John, William (Rhondda, West) Mosley, Sir Oswald (Smethwick)
Brown, Rt. Hon. J. (South Ayrshire) Johnston, Thomas Muff, G.
Buchanan, G. Jones, F. Llewellyn- (Flint) Muggeridge, H. T.
Burgess, F. G. Jones, Henry Haydn (Merioneth) Murnin, Hugh
Buxton, C. R. (Yorks. W. R. Elland) Jones, J. J. (West Ham, Silvertown) Naylor, T. E.
Caine, Derwent Hall- Jones, Rt. Hon. Leif (Camborne) Newman, Sir R. H. S. D. L. (Exeter)
Cameron, A. G. Jones, Morgan (Caerphilly) Noel Baker, P. J.
Cape, Thomas Jowett, Rt. Hon. F. W. Owen, Major G. (Carnarvon)
Charleton, H. C. Jowitt, Rt. Hon. Sir W. A. Palin, John Henry
Chater, Daniel Kelly, W. T. Paling, Wilfrid
Clarke, J. S. Kennedy, Thomas Palmer, E. T.
Cluse, W. S. Kenworthy, Lt.-Com. Hon. Joseph M. Parkinson, John Alien (Wigan)
Clynes, Rt. Hon. John R. Kinley, J. Perry, S. F.
Cocks, Frederick Seymour Kirkwood, D. Pethick-Lawrence, F. W.
Compton, Joseph Lang, Gordon Phillips, Dr. Marion
Cove, William G. Lansbury, Rt. Hon. George Pole, Major D. G.
Daggar, George Lathan, G. Potts, John S.
Dallas, George Law, Albert (Bolton) Price, M. P.
Davies, E. C. (Montgomery) Law, A. (Rosendale) Quibell, D. F. K.
Dickson, T. Lawrence, Susan Ramsay, T. B. Wilson
Dukes, C. Lawrie, Hugh Hartley (Stalybridge) Raynes, W. R.
Duncan, Charles Lawson, John James Richards, R.
Ede, James Chuter Lawther, W. (Barnard Cattle) Richardson, R. (Houghton-le-Spring)
Edmunds, J. E. Leach, W. Riley, Ben (Dewsbury)
Edwards, C. (Monmouth, Bedwellty) Lee, Frank (Derby, N. E.) Ritson, J.
Edwards, E. (Morpeth) Lee, Jennie (Lanark, Northern) Roberts, Rt. Hon. F. O. (W. Bromwich)
Egan, W. H. Lees, J. Romeril, H. G.
Elmley, Viscount Lewis, T. (Southampton) Rosbotham, D. S. T.
Evans, Capt. Ernest (Welsh Univer) Lloyd, C. Ellis Rowson, Guy
Foot, Isaac Logan, David Gilbert Russell, Richard John (Eddisbury)
Freeman, Peter Longbottom, A. W. Salter, Dr. Alfred
Gardner, B. W. (West Ham, Upton) Longden, F. Samuel, Rt. Hon. Sir H. (Darwen)
Gardner, J. P. (Hammersmith, N.) Lowth, Thomas Sanders, W. S.
Gibbins, Joseph Lunn, William Sandham, E.
Gibson, H. M. (Lancs, Mossley) Macdonald, Gordon (Ince) Sawyer, G. F.
Gill, T. H. MacDonald, Rt. Hon. J. R. (Seaham) Scrymgeour, E.
Gillett, George M. MacDonald, Malcolm (Bassetlaw) Scurr, John
Glassey, A. E. McElwee, A. Sexton, James
Gossling, A. G. McEntee, V. L. Shaw, Rt. Hon. Thomas (Preston)
Sherwood, G. H. Stewart, J. (St. Rollox) Wellock, Wilfred
Shield, George William Strachey, E. J. St. Loe Welsh, James (Paisley)
Shiels, Dr. Drummond Sullivan, J. Welsh, James C. (Coatbridge)
Shillaker, J. F. Sutton, J. E. West, F. R.
Shinwell, E. Taylor, R. A. (Lincoln) Westwood, Joseph
Short, Alfred (Wednesbury) Thurtle, Ernest White, H. G.
Simmons, C. J. Tinker, John Joseph Whiteley, Wilfrid (Birm., Ladywood)
Sinkinson, George Tout, W. J. Williams, David (Swansea, East)
Sitch, Charles H. Townend, A. E. Williams, Dr. J. H. (Llanelly)
Smith, Ben (Bermondsey, Rotherhithe) Vaughan, D. J. Wilson, C. H. (Sheffield, Attercliffe)
Smith, Frank (Nuneaton) Viant, S. P. Wilson, J. (Oldham)
Smith, H. B. Lees- (Keighley) Walkden, A. G. Wilson R. J. (Jarrow)
Smith, Rennie (Penistone) Walker, J. Winterton, G. E. (Leicester, Loughb'gh)
Smith, Tom (Pontefract) Wallace, H. W. Wise, E. F.
Smith, W. R. (Norwich) Wallhead, Richard C. Wood, Major McKenzie (Banff)
Snell, Harry Walters, Rt. Hon. Sir J. Tudor Wright, W. (Rutherglen)
Snowden, Rt. Hon. Philip Watkins, F. C. Young, R. S. (Islington, North)
Sorensen, R. Watson, W. M. (Dunfermline)
Stamford, Thomas W. Watts-Morgan, Lt.-Col. D. (Rhondda) TELLERS FOR THE NOES.—
Stephen, Campbell Wedgwood, Rt. Hon. Josiah Mr. Hayes and Mr. William Whiteley.
Sir B. MERRIMAN

I beg to move, in page 27, line 22, to leave out the words "at any time," and to insert instead thereof the words "within three years from the date of his death."

At the time when this Amendment was put down, the Government Amendment was not there, and as the Clause originally stood it was immaterial whether the transfer to the company was a transfer by the deceased or not. The property might have gone through two or three hands, and therefore it was necessary to have some time limit. The question whether my Amendment is necessary or not depends upon the replies to certain questions. What is intended to be the significance of the omission of the words "at any time"? Does it mean that the time at which the deceased had the interest is limited to the time of the transfer or does it refer to the time of the death or to some other time? Secondly, what is the exact intention of inserting the words, "by the deceased and the person interested in the remainder or the reversion." Are the words intended to ensure that, although in form there may be two separate transactions the Clause only operates when, in substance, the transaction is a joint transfer by the tenant for life and the reversioner?

The ATTORNEY-GENERAL

I think it will be convenient for me to reply now. In the case of property in strict settlement, the tenant for life has wide powers to sell and so have the trustees under the settlement or the Settled Lands Act. In that case the money they realised goes back into strict settlement, and the machinery of this Act is not necessary. Accordingly, such transactions are taken out of the way. The case in which money will be brought back into strict settlement would normally be a case in which the sale is not a sale by the tenant for life., or the remainderman, but a sale by the trustees or the tenant for life alone acting by virtue of the powers under the settlement, or under the Settled Lands Act. The reason why we strike out the words "at any time" is that it occurred to us that those words might have an effect which we never intended. We want the Clause to deal with the case where a deceased person with a life interest in property had transferred property in which he had power of transfer at the time. Take, for example, two persons A and B, A being the life tenant and B being the remainderman. B sells to C and C is not a company but an individual, and they receive full consideration, and put the money back into strict settlement. That is not a transfer within the scope of this Clause at all. Our proposal is meant to meet that kind of case.

Sir B. MERRIMAN

I would like to ask another question to make the point perfectly clear. In the ease of the trustee of the settlement selling the interest of the tenant for life and some subsequent and quite unconnected sale of his interest by the reversioner to the company, I understand the Attorney-General is not dealing with that transaction at all, but only with the case in which the two concur in the sale of both interests.

The ATTORNEY-GENERAL indicated assent.

Sir B. MERRIMAN

In view of the explanation that has been given by the Attorney-General, I do not think it necessary for me to press my Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 27, line 22, leave out the words "at any time."—[Mr. P. Snowden.]

Mr. STUART BEVAN

I beg to move, in page 27, line 23, after the word "interest," to insert the words "in possession."

The Clause as it stands does not require a life interest or estate to have been an interest or estate in possession, and, as I read it, it would apply on the death of a second, third, fourth or later tenant for life who died during the lifetime of the tenant in possession. The result would be that the property which had passed to the company would in those circumstances have to pay duty on the death of each of the successive life tenants. I should be glad to hear from the Attorney-General whether he agrees with that as being the construction of the Clause as it stands. If that be the construction of the Clause, as I suggest it is, there would be no difficulty, by the insertion of the words "in possession," in making the position perfectly plain, so as not to expose the company to the liability of having to pay over and over again so long as there are successive tenants for life.

The ATTORNEY-GENERAL

I am not quite sure that I have got the point which has been put by the hon. and learned Member, but perhaps he will allow me to see if I have it correctly. Wherever you have, under the present law, the case of a series of interests—say a life interest for A, and upon the death of A, B taking a life interest, and thereafter, upon the death of B, the property passing to C, and so on—the existing law is this: A is in possession of the property, and, consequently, on the death of A, the property passes and Estate Duty is payable; and the Committee, of course, will realise that it is payable, not merely on the value of the life interest, but on the value of the property in which A had a life interest. Then, after the death of A, if B succeeds, equally, under the existing law, on the death of B also, Estate Duty would have to be paid, and so on down the line. Suppose, however, that B in my illustration dies before A; that is to say, while A is still in enjoyment of the property, B dies, so that B never acquires his estate in possession. Then, under the existing law, B does not have to pay Estate Duty. That is provided for by Sub-section (5) of Section 5 of the Finance Act, 1894. Our intention is not to alter that law, but to reproduce it, and I think it will be seen that we do so. It will be seen that Sub-section (1, b) of Clause 30 provides that, where there is a transfer of property, the property shall be deemed for the purposes of Estate Duty to pass on the death in like manner as if the estate or interest of the deceased therein had continued until the death. We are confident that these words will merely reproduce the existing law as it would have been in the case which I have illustrated, of B dying before A.

9.0 p.m.

Mr. BEVAN

I am much obliged to the Attorney-General for his explanation. I am in complete agreement with the first part of it; but, taking the case of A and B, the position under Clause 30 is that B, who never has an estate or interest in possession, inasmuch as he dies in A's lifetime, has none the less an estate or interest in the property, and, therefore, he is directly hit by Sub-section (1) of Clause 30. The death of a man, therefore, who has no interest or estate in possession, brings the Clause into operation against the company, and that is what I am anxious to prevent by the insertion, after the words "estate or interest," of the words "in possession." With regard to the provision to which the Attorney-General has referred in Sub-section (1, b) of Clause 30, I confess that I am unable to read it in the same manner as the Attorney-General. It seems to me to have no application to the case which I am putting, where B, who has never been in possession, dies, and brings into operation against the company the provisions of Sub-section (1) of Clause 30. The matter could be made quite clear by the insertion of the words which I suggest.

The ATTORNEY-GENERAL

I am glad to say that I am advised that I am right in the construction that I have given, but equally, if there is any doubt about it, it had better be made plain, and, accordingly, I will go into the question and see if there is any doubt.

Mr. BEVAN

I am very much obliged to the Attorney-General. In those circumstances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 27, line 23, leave out the word "is," and insert instead thereof the word "was."—[Mr. P. Snowden.]

Mr. P. SNOWDEN

I beg to move, in page 27, line 24, after the word "transferred," to insert the words: by the deceased and the person interested in the remainder or reversion. The object of inserting these words is to make perfectly clear a point which was referred to earlier.

Sir BASIL PETO

I notice that this is one of the cases in which the Chancellor of the Exchequer has benefited from the careful scrutiny that has been given to this Clause as it was originally drafted, and it is interesting to note, although the Chancellor of the Exchequer did not mention it, that the words which it is now proposed to insert are identical with those proposed in an Amendment which stands later on the Paper in the name of my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) and other hon. Members on this side. I am very pleased that the Chancellor of the Exchequer has adopted the words which we have suggested, and has thereby clarified the purpose of the Clause.

Mr. W. S. MORRISON

I should like to ask the Chancellor of the Exchequer to consider whether this Clause, as he now proposes to amend it, covers the case of the Scottish heir of entail. I do not ask him for an answer on this point at the moment, but I hope that he will consider it. It seems to me that the words suggested in this Amendment are not apt to describe the position of a Scottish heir of entail, since you can have a Scottish heir of entail with no person at all interested in the reversion or remainder, because the property is disentailed. You might have a case such as this: Suppose that A were a Scottish heir of entail, and entitled to a life interest. He agrees to sell the property. He obtains the leave of the Court, disentails the property, and sells to some third person, X, who then undoubtedly becomes the person interested in the reversion or remainder, because he is the person who has the whole interest in the property, the whole thing having been sold. Then, supposing that X, who has bought the property in this way, transfers it to a company in which A has no conceivable interest of any kind, and X, who has bought the property, does the transfer, then, if A dies within three years—I say three years because of the saving in the following paragraph of the Sub-section—having entirely denuded himself of all interest in the property, might not this position arise, that the company would have to pay duty, although it did not acquire the property by any tax-dodging device, and also that A's estate would have to pay duty on the purchase price of the property? It is a point of some difficulty. I suggest that the right hon. Gentleman would find it worth his while to consider it and see if the words he uses will meet not only an English settlement but the slightly more complicated Scotch case.

Mr. A. M. SAMUEL

I do not know, Mr. Dunnico, whether you are going to call a later Amendment to leave out the words "whether directly or indirectly." If they are left in, will they not confuse the meaning of the words the Chancellor is now putting in? If they will not, I should like to hear from the Chancellor why he thinks they will not confuse the issue. I think they ought to come out unless he can give us a very valid reason for keeping them in.

The DEPUTY-CHAIRMAN

I intend to call on the right hon. Gentleman.

Amendment agreed to.

Sir A. STEEL-MAITLAND

I beg to move, in page 27, line 24, to leave out the word "whether."

I am in this difficulty. If we confine ourselves to the word "directly," I think there may be evasion, but, on the other hand, if you have "whether directly or indirectly" without any words safeguarding it, there may be some very undesirable consequences to people who are themselves quite innocent. Take a case such as the Attorney-General has given. A, a tenant for life, may have transferred to B, and there are a series of transactions—C has transferred to D and D has again transferred to a company E. D may have taken payment otherwise than in cash and E may not even know of the existence of A. In a case like that you may have a good deal of genuine hardship. There are one or two other cases of the kind which may perfectly naturally occur in the ordinary course of business and, while I have grave doubt with regard to the immediate effects of the two Amendments I suggest, because I think they open the door too wide, yet as it now stands, a good deal of injustice might be done and I would ask whether the Government could see their way, if we do not press the Amendment, to suggest words which would meet such a case as I have given, and others that one could mention, without unduly opening the door to evasion.

Viscount WOLMER

Would it not be better really to leave out all these words, "whether directly or indirectly"? If the transaction is a transfer from A to E, an intervening person is merely an agent of A. If it is a transfer from one to another, the fact that he employs intermediaries, who are merely acting on behalf of A, does not prevent it being a transfer from A to E. The people who intervene are agents either of A or of E and, therefore, it is a transfer from A to E. It all depends on the facts of the particular case. If it is not a transfer from A to E, but a series of separate transactions, it is not a transfer and, therefore, I should have thought these words, "whether directly or indirectly," were quite unnecessary and simply confusing. As long as it is a transfer from a man to a company, or to anybody else, whether he employs an agent or not does not make any difference.

Mr. A. M. SAMUEL

I do not want to go down to so narrow a point as my Noble Friend has adduced, but, on broad lines, is it good legislation to have an indefinite expression like this? I do not know whether the Attorney-General can tell us what is an indirect transfer. We on this side do not know. Is it right to throw upon the taxpayer the necessity to go to the courts to get the word "indirect" defined, when we could make a much clearer definition here in Committee?

Sir B. PETO

Last night we discussed exactly the same point, and I notice to-day, in going through the new Clause 12 which the Government have put down, these same words in that Clause. The Attorney-General has told us there are plenty of cases in previous Income Tax Acts where these words occur. We have no desire to delay the proceedings and we do not want the same words to come up again and again, so I suggest that we should have a general statement from the Attorney-General as to why it is necessary to introduce these apparently vague words which may, however, be necessary to cover certain contingencies and which have been used in common practice in previous Income Tax Acts.

The ATTORNEY-GENERAL

We had exactly the same discussion last night, and the hon. and learned Gentleman the Member for Moss Side (Sir G. Hurst) expressed the view, which I had previously expressed, that the words were necessary, for this reason. The words of a taxing Act have to be construed strictly in favour of the taxpayer. Supposing you have this case. Property is transferred, not to the company but to some individual who is in fact trustee for the company. In a case like that it would be very open to argument, without these words, whether you could say that was a transfer to the company. In truth, there are more complicated reasons which, I think, make these words necessary. For instance, one way in which you might transfer property is that you might transfer it to a man as trustee, to hold the property for such use as you should subsequently by deed appoint, and then you might by deed appoint that he should transfer the property to a company. A case of that kind came to my knowledge only the other day. What had been done was the transfer of the property to someone to hold for such use as should by deed be appointed, and it was a clear case of indirect transfer. I would point out, in answer to the right hon. Gentleman, that if you transfer it, say, from "A" to "B," and have nothing to do with the company at all, no human being could say that "A" had transferred indirectly. It would be out of the question altogether. For the reasons which I gave last night, I adhere to the view I expressed, that the effect of leaving out the phrase "whether directly or indirectly" might lead to evasion in a form which no right hon. Gentleman or hon. Gentleman opposite would desire or contemplate.

Mr. S. BEVAN

May I point out that cases where there is the intervention of a trustee are sufficiently covered by the provision where property is transferred "to or for the benefit of any private company." Of course, if transferred to a trustee to hold it would clearly be a transfer not to, but for the benefit of, the company. If the Clause read "transferred to or for the benefit of any private company" the cases instanced by my hon. and learned Friend would be fully covered.

Mr. CROOM-JOHNSON

I was rather under the impression that as a result of our discussion las night the Attorney-General promised to consider this question on Clause 29 on the Report stage. I agree with the view which he has expressed, and which, I think, was expressed by my hon. and learned Friend the Member for Moss Side (Sir G. Hurst), that some sort of amending words are needed here, and the real point that we are discussing is, whether the words which are being used are words which ought to appear in a Section of this nature in a taxing Statute. I cannot help thinking that the Attorney-General might meet us quite well if he would promise to give the same consideration to the words in this Clause as he has already promised, without binding himself in any way, to give with regard to the words used in Clause 29.

Sir A. STEEL-MAITLAND

The Attorney-General will realise the difficulty we are in, because it is obvious that we must not open the door too wide. On the other hand, the instance which I quoted is not the only instance where people might easily be prejudiced. Could not the learned Attorney-General look at the matter in the same way as he did on the previous occasion? Could he not consider the matter before the Report stage? If he is prepared to do so, I do not wish to press the Amendment to a Division. Of course, it will not bind him.

The ATTORNEY-GENERAL

If I were to assent to the proposition on the invitation which has been given to me by the right hon. Gentleman, I think I might be in danger of misleading the Committee if I did not tell them that since last night I have been looking into the question of the phrase "whether directly or indirectly," in view of the promise which I made yesterday to consider the matter on the Report stage. I find, as I anticipated, that the words have frequently appeared in taxing Acts and that there is no precedent for the substitution of other words. I am advised that it is better to stick to the phrase "whether directly or indirectly." Having come to that conclusion in the light of what I said last night, it would perhaps be misleading the Committee if I were to repeat the promise which I made last night.

Sir A. STEEL-MAITLAND

Is it not really better to leave out the words "whether directly or indirectly"? The Chancellor of the Exchequer has sometimes said that you must leave a good deal more than many Members of the House are willing to do to the discretion of the executive acting on the advice of the Inland Revenue authorities, as to whether action should be taken or not in a particular case. The presence of the words "whether directly or indirectly" almost forces action to be taken, possibly in cases in which no Chancellor of the Exchequer, either the present Chancellor of the Exchequer or any succeeding Chancellor of the Exchequer, would wish to do so. I do not know whether the Attorney-General is of the same opinion. It seems to me that they would have the powers they want without having these words in the Clause at all.

Question put, "That the word 'whether' stand part of the Clause."

The Committee divided: Ayes, 268 Noes, 122.

Division No. 403.] AYES. [9.19 p.m.
Adamson, Rt. Hon. W. (Fife, West) Ayles, Walter Bevan, Aneurin (Ebbw Vale)
Adamson, W. M. (Staff., Cannock) Baker, John (Wolverhampton, Bilston) Birkett, W. Norman
Addison, Rt. Hon. Dr. Christopher Baldwin, Oliver (Dudley) Bondfield, Rt. Hon. Margaret
Aitchison, Rt. Hon. Craigie M. Barr, James Bowen, J. W.
Alexander, Rt. Hon. A. V. (Hillsbro') Bellamy, Albert Bowerman, Rt. Hon. Charles W.
Alpass, J. H. Benn, Rt. Hon. Wedgwood Brooke, W.
Ammon, Charles George Bennett, Capt. Sir E. N. (Cardiff C.) Brothers, M.
Arnott, John Bennett, William (Battersea, South) Brown, C. W. E. (Notts, Mansfield)
Aske, Sir Robert Benson, G. Brown, Ernest (Leith)
Attlee, Clement Richard Bentham, Dr. Ethel Brown, Rt. Hon. J. (South Ayrshire)
Buchanan, G. Jones, Morgan (Caerphilly) Richardson, R. (Houghton-le-Spring)
Burgess, F. G. Jowett, Rt. Hon. F. W. Riley, Ben (Dewsbury)
Burgin, Dr. E. L. Jowitt, Rt. Hon. Sir W. A. Ritson, J.
Buxton, C. R. (Yorks, W. R. Elland) Kelly, W. T. Roberts, Rt. Hon. F. O. (W. Bromwich)
Caine, Derwent Hall- Kennedy, Thomas Romeril, H. G.
Cameron, A. G. Kenworthy, Lt.-Com. Hon. Joseph M. Rosbotham, D. S. T.
Cape, Thomas Kinley, J. Rowson, Guy
Charleton, H. C. Kirkwood, D. Russell, Richard John (Eddisbury)
Chater, Daniel Knight, Holford Salter, Dr. Alfred
Clarke, J. S. Lang, Gordon Samuel, Rt. Hon. Sir H. (Darwen)
Cluse, W. S. Lathan, G. Sanders, W. S.
Clynes, Rt. Hon. John R. Law, Albert (Bolton) Sandham, E.
Cocks, Frederick Seymour Law, A. (Rosendale) Sawyer, G. F.
Compton, Joseph Lawrence, Susan Scrymgeour, E.
Cove, William G. Lawrie, Hugh Hartley (Stalybridge) Scurr, John
Cowan, D. M. Lawson, John James Sexton, James
Daggar, George Lawther, W. (Barnard Castle) Shaw, Rt. Hon. Thomas (Preston)
Dallas, George Leach, W. Shepherd, Arthur Lewis
Dalton, Hugh Lea, Frank (Derby, N. E.) Sherwood, G. H.
Davies, E. C. (Montgomery) Lee, Jennie (Lanark, Northern) Shield, George William
Dickson, T. Lees, J. Shiels, Dr. Drummond
Dukes, C. Lewis, T. (Southampton) Shillaker, J. F.
Duncan, Charles Lloyd, C. Ellis Shinwell, E.
Ede, James Chuter Logan, David Gilbert Short, Alfred (Wednesbury)
Edmunds, J. E. Longbottom, A. W. Simmons, C. J.
Edwards, E. (Morpeth) Longden, F. Sinkinson, George
Egan, W. H. Lowth, Thomas Sitch, Charles H.
Elmley, Viscount Lunn, William Smith, Ben (Bermondsey, Rotherhithe)
England, Colonel A. Macdonald, Gordon (Ince) Smith, Frank (Nuneaton)
Evans, Capt. Ernest (Welsh Univer.) MacDonald, Rt. Hon. J. R. (Seaham) Smith, H. B. Lees- (Keighley)
Foot, Isaac MacDonald, Malcolm (Bassetlaw) Smith, Rennie (Penistone)
Freeman, Peter McElwee, A. Smith, Tom (Pontefract)
Gardner, B. W. (West Ham, Upton) McEntee, V. L. Smith, W. R. (Norwich)
Gardner, J. P. (Hammersmith, N.) McGovern, J. (Glasgow, Shettleston) Snell, Harry
George, Megan Lloyd (Anglesea) McKinlay, A. Snowden, Rt. Hon. Philip
Gibbins, Joseph Maclean, Neil (Glasgow, Govan) Sorensen, R.
Gibson, H. M. (Lancs, Mossley) McShane, John James Stamford, Thomas W.
Gill, T. H. Malone, C. L'Estrange (N'thampton) Stephen, Campbell
Gillett, George M. Mander, Geoffrey le M. Stewart, J. (St. Rollox)
Glassey, A. E. Mansfield, W. Strachey, E. J. St. Loe
Gossling, A. G. March, S. Sullivan, J.
Gould, F. Marcus, M. Sutton, J. E.
Graham, D. M. (Lanark, Hamilton) Markham, S. F. Taylor, R. A. (Lincoln)
Graham, Rt. Hon. Wm. (Edin., Cent.) Marley, J. Thurtle, Ernest
Granville, E. Marshall, Fred Tinker, John Joseph
Gray, Milner Mathers, George Tout, W. J.
Grenfell, D. R. (Glamorgan) Maxton, James Townend, A. E.
Griffiths, T. (Monmouth, Pontypool) Messer, Fred Trevelvan, Rt. Hon. Sir Charles
Groves, Thomas E. Middleton, G. Vaughan, D. J.
Grundy, Thomas W. Millar, J. D. Viant, S. P.
Hall, F. (York, W. R., Normanton) Milner, Major J. Walkden, A. G.
Hall, G. H. (Merthyr Tydvil) Morgan, Dr. H. B. Walker, J.
Hall, Capt. W. P. (Portsmouth, C.) Morley, Ralph Wallace, H. W.
Hamilton, Mary Agnes (Blackburn) Morris, Rhys Hopkins Wallhead, Richard C.
Hardie, George D. Morrison, Robert C. (Tottenham, N.)
Harris, Percy A. Mort, D. L. Walters, Rt. Hon. Sir J. Tudor
Hartshorn, Rt. Hon. Vernon Moses, J. J. H. Watkins, F. C.
Hastings, Dr. Somerville Mosley, Sir Oswald (Smethwick) Watson, W. M. (Dunfermline)
Haycock, A. W. Muff, G. Watts-Morgan, Lt.-Col. D. (Rhondda)
Hayes, John Henry Muggeridge, H. T. Wedgwood, Rt. Hon. Josiah
Henderson, Arthur, Junr. (Cardiff, S.) Murnin, Hugh Wellock, Wilfred
Henderson, Thomas (Glasgow) Nathan, Major H. L. Welsh, James (Paisley)
Henderson, W. W. (Middx., Enfield) Naylor, T. E. Welsh, James C. (Coatbridge)
Herriotts, J. Newman, Sir R. H. S. D. L. (Exeter) Westwood, Joseph
Hirst, G. H. (York W. R. Wentworth) Noel Baker, P. J. White, H. G.
Hirst, W. (Bradford, South) Oliver, P. M. (Man., Blackley) Whiteley, Wilfrid (Birm., Ladywood)
Hoffman, P. C. Owen, Major G. (Carnarvon) Whiteley, William (Blaydon)
Hollins, A. Palin, John Henry Williams, David (Swansea, East)
Hore-Bellsha, Leslie Paling, Wilfrid Williams, Dr. J. H. (Llanelly)
Horrabin, J. F. Palmer, E. T. Wilson C. H. (Sheffield, Attercliffe)
Hudson, James H. (Huddersfield) Parkinson, John Allen (Wigan) Wilson, J. (Oldham)
Hunter, Dr. Joseph Perry, S. F. Wilson, R. J. (Jarrow)
Hutchison, Maj.-Gen. Sir R. Pethick-Lawrence, F. W. Winterton, G. E. (Leicester, Loughb'gh)
Isaacs, George Phillips, Dr. Marion Wise, E. F.
Jenkins, W. (Glamorgan, Neath) Pole, Major D. G. Wood, Major McKenzie (Banff)
John, William (Rhondda, West) Potts, John S. Wright, W. (Rutherglen)
Johnston, Thomas Price, M. P. Young, R. S. (Islington, North)
Jones, F. Llewellyn- (Flint) Quibell, D. J. K.
Jones, Henry Haydn (Merioneth) Ramsay, T. B. Wilson TELLERS FOR THE AYES.—
Jones, J. J. (West Ham, Silvertown) Raynes, W. R. Mr. Charles Edwards and Mr. A. Barnes.
Jones, Rt. Hon. Leif (Camborne) Richards, R.
NOES.
Acland-Troyte, Lieut-Colonel. Allen, W. E. D. (Belfast, W.) Atkinson, C.
Allen, Sir J. Sandeman (Liverp'l., W.) Astor, Viscountess Balfour, George (Hampstead)
Balfour, Captain H. H. (I. of Thanet) Fremantle, Lieut.-Colonel Francis E. Reid, David D. (County Down)
Betterton, Sir Henry B. Galbraith, J. F. W. Remer, John R.
Bevan, S. J. (Holborn) Gault, Lieut.-Col. Andrew Hamilton Reynolds, Col. Sir James
Bird, Ernest Roy Graham, Fergus (Cumberland, N.) Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Bourne, Captain Robert Croft Grattan-Doyle, Sir N. Ross, Major Ronald D.
Bowater, Col. Sir T. Vansittart Greaves-Lord, Sir Walter Ruggles-Brise, Lieut.-Colonel E. A.
Brass, Captain Sir William Greene, W. P. Crawford Russell, Alexander West (Tynemouth)
Briscoe, Richard George Grenfell, Edward C. (City of London) Salmon, Major I.
Brown, Col. D. C. (N'th'l'd., Hexham) Hacking, Rt. Hon. Douglas H. Samuel, A. M. (Surrey, Farnham)
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Hall, Lieut.-Col. Sir F. (Dulwich) Sandeman, Sir N. Stewart
Buchan, John Harvey, Major S. E. (Devon, Totnes) Sassoon, Rt. Hon. Sir Philip A. G. D.
Bullock, Captain Malcolm Haslam, Henry C. Savery, S. S.
Butler, R. A. Henderson, Capt. R. R. (Oxl'd, Henley) Smith, Louis W. (Sheffield, Hallam)
Cadogan, Major Hon. Edward Heneage, Lieut.-Colonel Arthur P. Smith, R. W. (Aberd'n & Kinc'dine, C.)
Cayzer, Sir C. (Chester, City) Hennessy, Major Sir G. R. J. Smith-Carington, Neville W.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) Herbert, Sir Dennis (Hertford) Smithers, Waldron
Chadwick, Capt. Sir Robert Burton Hills, Major Rt. Hon. John Waller Somerville, D. G. (Willesden, East)
Christie, J. A. Iveagn, Countess of Steel-Maitland, Rt. Hon. Sir Arthur
Colfox, Major William Philip Jones, Sir G. W. H. (Stoke New'gton) Stuart, Hon. J. (Moray and Nairn)
Colville, Major D. J. Kindersley, Major G. M. Thomas, Major L. B. (King's Norton)
Courthope, Colonel Sir G. L. King, Commodore Rt. Hon. Henry D. Titchfield, Major the Marquess of
Cranborne, Viscount Lamb, Sir J. Q. Train, J.
Crichton-Stuart, Lord C. Law, Sir Alfred (Derby, High Peak) Tryon, Rt. Hon. George Clement
Croft, Brigadier-General Sir H. Leigh, Sir John (Clapham) Turton, Robert Hugh
Croom-Johnson, R. P. Leighton, Major B. E. P. Vaughan-Morgan, Sir Kenyon
Culverwell, C. T. (Bristol, West) Lewis, Oswald (Colchester) Wallace, Capt. D. E. (Hornsey)
Dalkeith, Earl of Long, Major Eric Ward, Lieut.-Col. Sir A. Lambert
Davies, Dr. Vernon Lymington, Viscount Warrender, Sir Victor
Davies, Maj. Geo. F. (Somerset, Yeovil) McConnell, Sir Joseph Waterhouse, Captain Charles
Dixon, Captain Rt. Hon. Herbert Macdonald, Capt. P. D. (I. of W.) Wayland, Sir William A.
Dugdale, Capt. T. L. Maitland, A. (Kent, Faversham) Wells, Sydney R.
Eden, Captain Anthony Margesson, Captain H. D. Wilson, G. H. A. (Cambridge U.)
Edmondson, Major A. J. Merriman, Sir F. Boyd Wolmer, Rt. Hon. Viscount
Elliot, Major Walter E. Monsell, Eyres, Com. Rt. Hon. Sir B. Womersley, W. J.
Erskine, Lord (Somerset, Weston-s-M.) Morrison, W. S. (Glos., Cirencester) Worthington-Evans, Rt. Hon. Sir L.
Falle, Sir Bertram G. Ormsby-Gore, Rt. Hon. William Young, Rt. Hon. Sir Hilton
Ferguson, Sir John Percy, Lord Eustace (Hastings)
Fielden, E. B. Peto, Sir Basil E. (Devon, Barnstaple) TELLERS FOR THE NOES.—
Ford, Sir P. J. Pownall, Sir Assheton Captain Sir George Bowyer and
Forestier-Walker, Sir L. Ramsbotham, H. Sir George Penny.
Mr. PETHICK-LAWRENCE

I beg to move, in page 27, line 24, after the word "indirectly," to insert the words and whether by one or more transactions. The object of this Amendment is to include the case where the life tenant and the remainderman both concur with the transfer, but do not do it by a single transaction. The transactions of the life tenant and the remainderman are not absolutely simultaneous in one document, and it is necessary to insert there words to ensure that the case in which those two transactions are done separately should enter into the purview of the Clause.

Sir B. PETO

I am not altogether satisfied with the reason that the hon. Gentleman has given for the insertion of these words. He gave us no explanation, except one case which he said these words were intended to meet. That is not the situation with which we find ourselves confronted in the words of the Clause as now amended. We have just taken a decision on the question of whether the words "directly or indirectly" are necessary. There has been a division of opinion upon that. We then proceed to an Amendment which proposes to insert the words and whether by one or more transactions. Those are almost exactly the same words in another form. We then have the words "to or for," which indicate a direct or indirect transaction, and we have here again a further instance of making assurance doubly sure. I do really think the Chancellor of the Exchequer is a little stretching the limit when he asks the Committee to accept phrase after phrase really operating in the same direction, practically to do the same thing—variations of the same words in different phrases, and really making assurance, so far as the Treasury is concerned, trebly sure. That may be very sound doctrine from the Treasury point of view, but what we have to consider is whether or not, taking the generality of cases, we are overloading this Clause with phrases. I think we have to ask for a more definite explanation of why it is necessary, after the Attorney-General has insisted on the words "directly or indirectly," which he tells us are commonly used in taxing Acts in order to prevent the evasion of the purpose of the Act by some indirect transaction, and then to say immediately after "whether by one or more transactions." Obviously if you do a thing indirectly, you do it by more than one transaction. These two phrases are so nearly identical that we want a much better explanation than we have had from the Financial Secretary before the Committee agrees to insert the Amendment.

Sir HENRY BETTERTON

I am sorry to see the learned Attorney-General has not come back on to the bench. I would like to ask from the Financial Secretary an assurance that the case of successive transfers of life interest A to B, B to C and C to D which would be transfers by more than one transaction, are not the sort of case that it is the object of this Clause to cover. I want an assurance that in the opinion of the Attorney-General, we may safely accept the view he takes as the true construction in law. On the face of it I am bound to say it sounds a very vague and ambiguous phrase.

Mr. PETHICK-LAWRENCE

The answer to the hon. Member for Barnstaple (Sir Basil Peto) is that the effect of the two phrases is quite different. The effect of "directly or indirectly" is to deal with a case of transfer by a man to a company by way of an intermediary. The case of this Amendment is where the life tenant by one transaction and his remainderman by another produce a result which comes within the ambit of the Clause. I do not personally see the difficulty anticipated by the hon. Member for Rushcliffe (Sir H. Betterton); the meaning which is shortly conveyed by this Clause is the one to which I have referred. I do not anticipate any difficulties on the lines he suggests, but I am quite willing to consult my right hon. and learned Friend the Attorney-General in regard to the danger which the right hon. Member I think quite unnecessarily foresees.

Mr. SMITHERS

Is it not rather unfair? The people who are supposed to be before the Committee at the moment are the tenants for life and one or more remainders. The Financial Secretary presumes that there is collusion between these two for the purpose of tax dodging. I would ask him to suppose that the tenant for life, for some reason or other, is in financial difficulties and has to pass over his interest to some company, and then quite a long time afterwards the next in succession for some perfectly good reason, also has to part with his reversion. Those are two perfectly genuine instances, neither of them wishing to evade or to have any collusion. Does the Financial Secretary mean that there shall be no time limit between these two transactions, between these two transfers of reversionary rights to a private company? It seems to me that here again is another instance of where the Government is trying to stop tax dodging, in which we all agree, but by providing measures to cover that particular case it is going to hurt transactions which will be quite innocent, which the Government itself never intended to hit.

Mr. REID

Might I ask the Financial Secretary what all this means? Let us take the case I want to put, and that my hon. Friend behind me has put. There are societies—as the Financial Secretary must know, unless he lives with his head in a bag—like the Law Reversion Society, which deals with principals. I hope the Financial Secretary has real knowledge of his own without having to send for his Treasury experts. There are societies who deal with life interest and reversionary interests on actuarial principles. There are quite a number of very well-known and highly respected societies dealing with these life interests. [An HON. MEMBER: "Insurance companies!"] Yes, but there are other companies who deal with them on the same principles as those on which insurance companies deal with insurance.

Suppose that a man is a tenant for life and he wants to raise some money. He goes to a particular company, whether an insurance company or a reversionary company, and he applies to them for sale of his life interest in the property. They estimate on their tables what the rate of interest should be, and make him an offer. He accepts the offer. At some future time, it may be next week, or months or years afterwards, a remainder, knowing nothing about the transaction with the life interest, goes to a company and it happens to be the same company, and offers that company his reversionary interest. The company looks at its tables, considers the matter and makes him an offer on an actuarial basis for a reversionary interest. There are two transactions—"one or more" transactions. The company has made two perfectly genuine, separate, independent transactions. It is now going to run the risk of being saddled with Duty because it has made two transactions with two different people on the same estate on an entirely different basis. Why should anybody be saddled with Duty?

Mr. PETHICK-LAWRENCE

I do not think the hon. and learned Member can have read one of the later Clauses, a Sub-section of which provides that where the property is subject to a bona fide sale for cash, the transaction is outside the Clause. If I understand the case of my hon. and learned Friend, those are cases of bona fide sales for cash. There is no doubt whatever that those are outside the Clause by reason of the words further on which we have not yet dealt with.

Mr. ATKINSON

I am not sure that the Financial Secretary appreciates one or two points that have been put. Ought there not to be some identity between the various branches of this transaction. Supposing the life tenant signs one year and three or four years afterwards the reversioner signs. You say "whether by one or more transactions." That is what I object to. I agree that if one signs

to-day and the other signs to-morrow, that that is all part of the same bargain and that that ought to come within the provision. That would be covered by the words that we have already got; but when you introduce the words "whether by one or more transactions" you are destroying the identity and, therefore, the continuity of the transaction and permitting a totally different transaction to be treated as one with the former transaction. It is not the transfer of the life estate which makes the duty payable, but the transfer of the reversion which makes the duty payable. The life tenant may have made a transfer one year without any knowledge of an intended transfer by the remainder, and then because in a totally separate transaction, of which he knew nothing, the reversioner sells to the same purchaser his reversion, lo and behold, the personal transaction by the tenant for life becomes one which is hit by this Bill. It is essential to have something which connects the two transactions and makes them really one, although carried out at two separate dates. I object to the proposed words, and I do not think that they are necessary to do what the Financial Secretary wants.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 270; Noes, 135.

Division No. 404.] AYES. [9.44 p.m.
Adamson, Rt. Hon. W. (Fife, West) Burgess, F. G. Freeman, Peter
Adamson, W. M. (Staff., Cannock) Burgin, Dr. E. L. Gardner, B. W. (West Ham, Upton)
Addison, Rt. Hon. Dr. Christopher Buxton, C. R. (Yorks. W. R. Elland) Gardner, J. P. (Hammersmith, N.)
Aitchison, Rt. Hon, Craigie M. Caine, Derwent Hall- George, Megan Lloyd (Anglesea)
Alexander, Rt. Hon. A. V. (Hillsbro') Cameron, A. G. Gibbins, Joseph
Alpass, J. H. Cape, Thomas Gibson, H. M. (Lancs, Mossley)
Ammon, Charles George Charleton, H. C. Gill, T. H.
Arnott, John Chater, Daniel Gillett, George M.
Aske, Sir Robert Clarke, J. S. Glassey, A. E.
Attlee, Clement Richard Cluse, W. S. Gossling, A. G.
Ayles, Walter Clynes, Rt. Hon. John R. Gould, F.
Baker, John (Wolverhampton, Bilston) Cocks, Frederick Seymour Graham, D. M. (Lanark, Hamilton)
Baldwin, Oliver (Dudley) Compton, Joseph Graham, Rt. Hon. Wm. (Edin., Cent.)
Barnes, Alfred John Cove, William G. Granville, E.
Barr, James Cowan, D. M. Gray, Milner
Bellamy, Albert Daggar, George Grenfell, D. R. (Glamorgan)
Benn, Rt. Hon. Wedgwood Dallas, George Griffiths, T. (Monmouth, Pontypool)
Bennett, Capt. Sir E. N. (Cardiff C.) Dalton, Hugh Groves, Thomas E.
Bennett, William (Battersea, South) Davies, E. C. (Montgomery) Grundy, Thomas W.
Benson, G. Day, Harry Hall, F. (York, W. R., Normanton)
Bentham, Dr. Ethel Dickson, T. Hall, G. H. (Merthyr Tydvil)
Birkett, W. Norman Dukes, C. Hall, Capt. W. P. (Portsmouth, C.)
Bondfield, Rt. Hon. Margaret Duncan, Charles Hamilton, Mary Agnes (Blackburn)
Bowen, J. W. Ede, James Chuter Hardie, George D.
Bowerman, Rt. Hon. Charles W. Edmunds, J. E. Harris, Percy A.
Brooke, W. Edwards, E. (Morpeth) Hartshorn, Rt. Hon. Vernon
Brothers, M. Egan, W. H. Hastings, Dr. Somerville
Brown, C. W. E. (Notts. Mansfield) Elmley, Viscount Haycock, A. W.
Brown, Ernest (Leith) England, Colonel A. Hayes, John Henry
Brown, Rt. Hon. J. (South Ayrshire) Evans, Capt. Ernest (Welsh Univer.) Henderson, Arthur, Junr. (Cardiff, S.)
Buchanan, G. Foot, Isaac Henderson, Thomas (Glasgow)
Henderson, W. W. (Middx., Enfield) Mansfield, W. Sherwood, G. H.
Herriotts, J. March, S. Shield, George William
Hirst, G. H. (York W. R. Wentworth) Marcus, M. Shiels, Dr. Drummond
Hirst, W. (Bradford, South) Markham, S. F. Shillaker, J. F.
Hoffman, P. C. Marley, J. Shinwell, E.
Hollins, A. Marshall, Fred Short, Alfred (Wednesbury)
Hore-Belisha, Leslie Mathers, George Simmons, C. J.
Horrabin, J. F. Maxton, James Sinkinson, George
Hudson, James H. (Huddersfield) Messer, Fred Sitch, Charles H.
Hunter, Dr. Joseph Middleton, G. Smith, Ben (Bermondsey, Rotherhithe)
Hutchison, Maj.-Gen. Sir R. Millar, J. D. Smith, Frank (Nuneaton)
Isaacs, George Milner, Major J. Smith, H. B. Lees- (Keighley)
Jenkins, W. (Glamorgan, Neath) Morgan, Dr. H. B. Smith, Rennie (Penistone)
John, William (Rhondda, West) Morley, Ralph Smith, Tom (Pontefract)
Johnston, Thomas Morris, Rhys Hopkins Smith, W. R. (Norwich)
Jones, F. Llewellyn- (Flint) Morrison, Herbert (Hackney, South) Snell, Harry
Jones, Henry Haydn (Merioneth) Morrison, Robert C. (Tottenham, N.) Snowden, Rt. Hon. Philip
Jones, J. J. (West Ham, Silvertown) Mort, D. L. Sorensen, R.
Jones, Rt. Hon. Leif (Camborne) Moses, J. J. H. Stamford, Thomas W.
Jones, Morgan (Caerphilly) Mosley, Sir Oswald (Smethwick) Stephen, Campbell
Jowett, Rt. Hon. F. W. Muff, G. Stewart, J. (St. Rollox)
Jowitt, Rt. Hon. Sir W. A. Muggeridge, H. T. Sullivan, J.
Kelly, W. T. Murnin, Hugh Sutton, J. E.
Kennedy, Thomas Nathan, Major H. L. Taylor, R. A. (Lincoln)
Kenworthy, Lt.-Com. Hon. Joseph M. Naylor, T. E. Thurtle, Ernest
Kinley, J. Newman, Sir R. H. S. D. L. (Exeter) Tinker, John Joseph
Kirkwood, D. Noel Baker, P. J. Tout, W. J.
Lang, Gordon Oliver, P. M. (Man., Blackley) Townend, A. E.
Lathan, G. Owen, Major G. (Carnarvon) Trevelyan, Rt. Hon. Sir Charles
Law, Albert (Bolton) Palin, John Henry Vaughan, D. J.
Law, A. (Rosendale) Paling, Wilfrid Viant, S. P.
Lawrence, Susan Palmer, E. T. Walkden, A. G.
Lawrie, Hugh Hartley (Stalybridge) Perry, S. F. Walker, J.
Lawson, John James Pethick-Lawrence, F. W. Wallace, H. W.
Lawther, W. (Barnard Castle) Phillips, Dr. Marion Wallhead, Richard C.
Leach, W. Pole, Major D. G. Walters, Rt. Hon. Sir J. Tudor
Lee, Frank (Derby, N. E.) Potts, John S. Watkins, F. C.
Lee, Jennie (Lanark, Northern) Price, M. P. Watson, W. M. (Dunfermline).
Lees, J. Quibell, D. J. K. Watts-Morgan, Lt.-Col. D. (Rhondda)
Lewis, T. (Southampton) Ramsay, T. B. Wilson Wedgwood, Rt. Hon. Josiah
Lloyd, C. Ellis Raynes, W. R. Wellock, Wilfred
Logan, David Gilbert Richards, R. Welsh, James (Paisley)
Longbottom, A. W. Richardson, R. (Houghton-le-Spring) Welsh, James C. (Coatbridge)
Longden, F. Riley, Ben (Dewsbury) Westwood, Joseph
Lowth, Thomas Ritson, J. White, H. G.
Lunn, William Roberts, Rt. Hon. F. O. (W. Bromwich) Whiteley, Wilfrid (Birm., Ladywood)
Macdonald, Gordon (Ince) Romeril, H. G. Whiteley, William (Blaydon)
MacDonald, Rt. Hon. J. R. (Seaham) Rosbotham, D. S. T. Williams, David (Swansea, East)
MacDonald, Malcolm (Bassetlaw) Rowson, Guy Williams, Dr. J. H. (Llanelly)
Macdonald, Sir M. (Inverness) Russell, Richard John (Eddisbury) Wilson, C. H. (Sheffield, Attercliffe)
McElwee, A. Salter, Dr. Alfred Wilson, J. (Oldham)
McEntee, V. L. Samuel, Rt. Hon. Sir H. (Darwen) Wilson, R. J. (Jarrow)
McGovern, J. (Glasgow, Shettleston) Sanders, W. S. Winterton, G. E. (Leicester, Loughb'gh)
McKinlay, A. Sandham, E. Wise, E. F.
MacLaren, Andrew Sawyer, G. F. Wood, Major McKenzie (Banff)
Maclean, Sir Donald (Cornwall, N.) Scrymgeour, E. Wright, W. (Rutherglen)
Maclean, Neil (Glasgow, Govan) Scurr, John Young, R. S. (Islington, North)
McShane, John James Sexton, James
Malone, C. L'Estrange (N'thampton) Shaw, Rt. Hon. Thomas (Preston) TELLERS FOR THE AYES.—
Mander, Geoffrey le M. Shepherd, Arthur Lewis Mr. Allen Parkinson and Mr. Charles Edwards.
NOES.
Acland-Troyte, Lieut.-Colonel Cadogan, Major Hon. Edward Eden, Captain Anthony
Ainsworth, Lieut.-Col. Charles Cayzer, Sir C. (Chester, City) Edmondson, Major A. J.
Allen, Sir J. Sandeman (Liverp'l., W.) Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) Elliot, Major Walter E.
Allen, W. E. D. (Belfast, W.) Chadwick, Capt. Sir Robert Burton Erskine, Lord (Somerset, Weston-s.-M.)
Astor, Viscountess Christie, J. A. Everard, W. Lindsay
Atholl, Duchess of Colfox, Major William Philip Falle, Sir Bertram G.
Atkinson, C. Colman, N. C. D. Ferguson, Sir John
Balfour, George (Hampstead) Colville, Major D. J. Fielden, E. B.
Balfour, Captain H. H. (I. of Thanet) Courthope, Colonel Sir G. L. Ford, Sir P. J.
Betterton, Sir Henry B. Cranborne, Viscount Forestier-Walker, Sir L.
Bevan, S. J. (Holborn) Crichton-Stuart, Lord C. Fremantle, Lieut.-Colonel Francis E.
Bird, Ernest Roy Croft, Brigadier-General Sir H. Ganzoni, Sir John
Bourne, Captain Robert Croft Croom-Johnson, R. P. Gault, Lieut.-Col. Andrew Hamilton
Bowater, Col. Sir T. Vansittart Culverwell, C. T. (Bristol, West) Graham, Fergus (Cumberland, N.)
Bowyer, Captain Sir George E. W. Cunliffe-Lister, Rt. Hon. Sir Philip Grattan-Doyle, Sir N.
Briscoe, Richard George Dalkeith, Earl of Greaves-Lord, Sir Walter
Brown, Col. D. C. (N'th'l'd., Hexham) Davies, Dr. Vernon Greene, W. P. Crawford
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Davies, Maj. Geo. F. (Somerset, Yeovil) Grenfell, Edward C. (City of London)
Buchan, John Dixon, Captain Rt. Hon. Herbert Hacking, Rt. Hon. Douglas H.
Bullock, Captain Malcolm Duckworth, G. A. V. Hall, Lieut.-Col. Sir F. (Dulwich)
Butler, R. A. Dugdale, Capt. T. L. Harvey, Major S. E. (Devon, Totnes)
Haslam, Henry C. O'Connor, T. J. Smithers, Waldron
Henderson, Capt. R. R. (Oxf'd, Henley) O'Neill, Sir H. Somerville, D. G. (Willesden, East)
Heneage, Lieut.-Colonel Arthur P. Ormsby-Gore, Rt. Hon. William Stanley, Lord (Fylde)
Nennessy, Major Sir G. R. J. Peake, Captain Osbert Steel-Maitland, Rt. Hon. Sir Arthur
Herbert, Sir Dennis (Hertford) Percy, Lord Eustace (Hastings) Stewart, W. J. (Belfast South)
Hills, Major. Rt. Hon. John Waller Peto, Sir Basil E. (Devon, Barnstaple) Stuart, Hon. J. (Moray and Nairn)
Iveagh, Countess of Pownall, Sir Assheton Thomas, Major L. B. (King's Norton)
Jones, Sir G. W. H. (Stoke New'gton) Ramsbotham, H. Train, J.
Kindersley, Major G. M. Rawson, Sir Cooper Tryon, Rt. Hon. George Clement
Lamb, Sir J. Q. Reid, David D. (County Down) Turton, Robert Hugh
Lane Fox, Col. Rt. Hon. George R. Remer, John R. Vaughan-Morgan, Sir Kenyon
Law, Sir Alfred (Derby, High Peak) Reynolds, Col. Sir James Wallace, Capt. D. E. (Hornsey)
Leigh, Sir John (Clapham) Richardson, Sir P. W. (Sur'y, Ch't'sy) Ward, Lieut.-Col. Sir A. Lambert
Leighton, Major B. E. P. Roberts, Sir Samuel (Ecclesall) Warrender, Sir Victor
Lewis, Oswald (Colchester) Ross, Major Ronald D. Waterhouse, Captain Charles
Long, Major Eric Ruggles-Brise, Lieut.-Colonel E. A. Wayland, Sir William A.
Lymington, Viscount Russell, Alexander West (Tynemouth) Wells, Sydney R.
McConnell, Sir Joseph Salmon, Major I. Wilson, G. H. A. (Cambridge U.)
Macdonald, Capt. P. D. (I. of W.) Samuel, A. M. (Surrey, Farnham) Wolmer, Rt. Hon. Viscount
Maitland, A. (Kent, Faversham) Sandeman, Sir N. Stewart Womersley, W. J.
Makins, Brigadier-General E. Sassoon, Rt. Hon. Sir Philip A. G. D. Worthington-Evans, Rt. Hon. Sir L.
Margesson, Captain H. D. Savery, S. S. Young, Rt. Hon. Sir Hilton
Merriman, Sir F. Boyd Smith, Louis W. (Sheffield, Hallam)
Monsell, Eyres, Com. Rt. Hon. Sir B. Smith, R. W. (Aberd'n & Kinc'dine, C.) TELLERS FOR THE NOES.—
Morrison, W. S. (Glos., Cirencester) Smith-Carington, Neville W. Sir George Penny and Major the Marquess of Titchfield.
Mr. PETHICK-LAWRENCE

I beg to move, in page 27, line 25, to leave out the words "any private company," and to insert instead thereof the words: a company to which this Part of this Act applies.

Sir D. HERBERT

Can the Financial Secretary tell us what is a company "to which this Part of this Act Applies"; and also whether he is going to stick to the definition in Clause 33, or whether there is to be any other definition of a company "to which this Part of this Act applies"?

Mr. PETHICK-LAWRENCE

As at present advised, we intend to adhere to the definition in Clause 33.

Amendment agreed to.

The ATTORNEY-GENERAL

I beg to move, in page 27, line 26, to leave out paragraph (a), and to insert instead thereof the words: (a) the share of the consideration payable to the deceased in respect of the transfer was satisfied otherwise than by an allotment of shares in the company or the grant to him by the company of an annuity or the right to some other periodical payment. The reasons which led the Chancellor of the Exchequer to make this alteration are very much the same as those which led him to make a similar alteration on Clause 29. In the Clause as drafted the words "full consideration" occur, and it was thought that possibly the phrase might lead to some difficulty in that it might be said that the "consideration" was not full. The Committee will observe that in the new Clause we are proposing to treat debentures in a company as being equivalent to cash. An explanation of this Clause involves an understanding of the whole principle on which it is based. On the death of a life tenant in the ordinary case Death Duty is to be paid, not on the value of the life interest, but on the value of the property in which the life interest subsists. If a life tenant sells or disposes of his interest to an outsider, notwithstanding the fact that he has completely disposed of his interest for cash, on his death the property under the existing law is deemed to pass and duty will be payable in respect of the property. Where a life tenant disposes of his interest to the remainder, where a small estate merges into a larger estate, and the estate of the life tenant comes to an end, the property is not deemed to pass. That was the situation struck at 30 years ago by the Finance Act, 1900, which provided under exactly what circumstances a life tenant might dispose of his property to the remainder so as to avoid the duty.

I am not now concerned as to the justice of the law, but I am concerned to establish the proposition, which no one will dispute, that whatever the law may be it is not right that any person should be able to escape from the existing law by a mere subterfuge. The existing law is that if a life tenant disposes of his interest to a remainder and three years pass Estate Duty is not payable; but however many years may pass, three years or 30 years, if the life tenant retains any interest whatever in the property in which he had a life interest, then, notwithstanding the passage of years, the property is deemed to pass. The life tenant may dispose of his estate to the remainder, but preserve to himself the right to live in the dower house or the mansion house, and however small and inconsiderable that may be if he does, no matter how many years have passed, on the death of the life tenant the law of 1900, as amended by the Act of 1910, says that the whole property will be deemed to pass. That has been the existing law, subject to a slight alteration in 1910, for the last 30 years, and there have been very obvious attempts at evasion which I and my predecessors have had to consider.

Let me give the Committee an actual illustration, in the same way as I did on Clause 29, omitting the names. This is an actual illustration which my predecessors had to consider and in which they regretfully came to the conclusion that they could do nothing. A company was formed with a capital of £300,000, of which £190,003 was issued, and the shareholdings were as follows. The life tenant held one share and the remainder man 190,000, and the two odd shares were held by the two other people necessary to constitute the company. The consideration for the sale was this. The company agreed to pay the life tenant an annuity of £7,000 and to rent him the mansion house at a rent of £1,350 per annum, the landlord, that is to say the company, paying the rates and doing the repairs. The substance of the transaction was that the former life tenant got exactly what he was getting when he was life tenant, but Estate Duty was payable on one share only. That obviously is the class of case which we have to meet—I think no one can doubt that—and we propose to do it in the way proposed in the Amendment. I trouble the Committee with the analogy of the 1900 Act in order that they may see at what we are driving.

We are trying to reproduce the old principle of the 1900 Act that the life tenant must really cease to have an interest in the property if he is selling or disposing of the property. If his share of the consideration is satisfied otherwise than by shares in the company, or the grant of an annuity, or the right to some other periodical payment he does not come out by virtue of paragraph (a). He may still come out by virtue of paragraph (b) because there is the disjunctive "or" between these paragraphs but we regard the man who receives shares in the company as being a man who has not ceased to have any interest in the property, just as in the old days if he retained any interest, then the property would be deemed to pass, no matter how small that interest was. We think it right that the same principle should apply here, although when we come to deal with the property passing we prevent double taxation by taking off the value of the property, the value of the shares. I think that this Amendment will go some way to meet the wishes of hon. and right hon. Gentlemen opposite who, I know, were worried about the phrase "full consideration." I think we have also met to some extent reasonable wishes expressed by treating debentures as though they were cash, and not precluding the person holding the life interest from taking debentures in the company and at the same time getting the benefit of paragraph (a).

Sir L. WORTHINGTON-EVANS

What do you mean by periodical payments?

The ATTORNEY-GENERAL

The sort of thing that we have in mind is something like an annuity, but dependent upon some event other than the actual life of the recipient.

Sir L. WORTHINGTON-EVANS

Do you mean payment by instalments?

The ATTORNEY-GENERAL

Oh, no. As long as it is cash, even if the cash is payable by instalments, he gets the privilege of the paragraph (a), but, if it is something in the nature of an annuity, that would not come within paragraph (a).

Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.

Question proposed, "That those words be there inserted."

Mr. ATKINSON

The Attorney-General, in explaining the Amendment, referred to what, I think, he described as a similar provision in Clause 29, but if I read that provision aright, this proposal is precisely the opposite to the first exempted transaction under Clause 29. There, if it was a bona fide sale where the consideration for the sale was received or receivable wholly by the deceased for his own use and was satisfied in one of the following manners, that is either by a capital sum of a fixed amount or by shares in or debentures of the company, that is an exempted transaction. The proposal here is precisely the opposite. If the consideration is satisfied by an allotment of shares, it does not come within this exemption. As regards the grant of an annuity, to that extent, I think this proposal is common with the other, but then we come to "the right to some other periodical payment" and in that respect this proposal is directly contrary to the corresponding proposal in Clause 29 because those words surely would cover a sale for cash payable by instalments. Such a sale is surely not protected by this Amendment. The only point I am making is that it is very inconsistent to have one description in Clause 29 (2, a) and a totally different description of protected transaction here. Why, in the first case where the consideration is the allotment of shares it is a protected transaction and why in this case it is not, I do not know. Why payment by instalments is protected in the first case but not in this case, I do not appreciate; but I submit that there should be some conformity between the two Clauses in this respect.

Mr. TURTON

I ask the Attorney-General to reconsider these words, "periodical payment." They occur in the Apportionment Act, 1870, and in that Act they were duly considered and explained in the High Court by Lord Chancellor Selborne, who held that "periodical payment" must be a payment which was purely periodical, that is to say, made at fixed times on some antecedent obligation, and not made at variable times on the discretion of individuals. Applying that definition, it embraces the example which the Attorney-General himself negatived, that of a certain sum down and other moneys by instalments for a certain period of years. There is some doubt in my mind as to whether payment by instalments would not receive the benefit of Sub-section (2, b), but I do not think it would affect the particular illustration which I shall give the Committee. "A" is a tenant for life and "B" the remainder man. "A" disposes of his interest and "B" disposes of his. The terms made by "A" for the transfer of the property to "C"—the company—are that he shall have £20,000 down and £5,000 a year for five years. After three years, "A" dies. He has not received the full capital sum under the terms agreed upon and there will be a debt due to his estate of £5,000 a year for two years. That debt will not be covered by Sub-section (2, b). I think that is a point of some substance, and I hope that these words, "periodical payment," will be altered. If I might suggest words which would more nearly fit my own opinion on the matter, it would be some such words as "contingent payment." I mention the point chiefly because I was so interested in the original Clause that I put in an Amendment, which is now out of order, to add the words "or agreed to be paid."

The ATTORNEY-GENERAL

I am indebted to the hon. Member for Thirsk (Mr. Turton), both for his researches into the earlier law on the subject and for the suggestion which he has made of the possible substitution of "contingent" for "periodical." In expressing my thanks to him, may I say that I will look into the matter between now and the Report stage? My intention clearly is not to deprive a man of the benefit of paragraph (a) merely by reason of the purchase price being paid by instalments.

Sir L. WORTHINGTON-EVANS

Will not the Attorney-General accept the word "contingent" now, and on Report stage, if necessary, put in some other word? As long as he gives us a definite understanding that this word will not appear after the Report stage, I am satisfied.

The ATTORNEY-GENERAL

I would rather not say more than I have said, because I have not had the opportunity of discussing this with those who know more about it than I do, but the intention is to use appropriate words to cover the case of the payment of the purchase price by instalments.

Amendment agreed to.

Further Amendment made: In page 27, line 35, leave out the word "person."—[Mr. P. Snowden.]

Captain BOURNE

I beg to move, in page 27, line 38, after the word "enjoyment," to insert the words: other than as a lessee in the case of land. I move this Amendment in order to ascertain whether the words: possession or enjoyment of any part thereof … whether by contract or otherwise would not include the case where the tenant for life has transferred the whole of his interest to a company and taken his payment in shares or otherwise by a lump sum, but has in point of fact a contract with that company by which he is lessee of the mansion house and park. I am certain that it is not the intention of the Chancellor of the Exchequer to penalise a company in such a case where the lease is genuine. The point was met on Clause 29, but I am not certain whether the words: enjoyment of any part thereof … whether by contract or otherwise would not, in fact, cover the case where the tenant for life has taken a lease and is paying full rent for the lease which he has taken. I want that point cleared up.

Mr. P. SNOWDEN

I am in sympathy with the object that the hon. Member has in view in moving this Amendment, but I cannot accept it in the form in which it stands. I promise, however, to give sympathethic consideration to it, and to see what words are suitable.

Captain BOURNE

With that understanding, I beg to ask leave to withdraw the Amendment. I am very much obliged to the right hon. Gentleman, and I am sure that he can find better words than I can, which I shall be glad to accept on the Report stage.

Amendment, by leave, withdrawn.

Mr. P. SNOWDEN

I beg to move, in page 27, line 44, at the end, to insert the words: otherwise than in respect or on account of debentures or loans or purchase money being a capital sum of a fixed amount. Paragraph (b) provides that if after the transfer the deceased releases his interest in the company, and takes no benefit therefrom and survives three years after the release, the Clause does not operate on his death. It is, however, necessary to limit the provision that he must take no benefit from the company, for clearly he should be allowed to take any cash or debentures to which he is entitled. The words of the Amendment accordingly provide for this.

Sir L. WORTHINGTON-EVANS

Does this include shares which are allotted to a vendor in lieu of cash? It applies to cash, and to debentures given instead of cash; does it apply to shares of the company, and if it does not, will the right hon. Gentleman say why?

The ATTORNEY-GENERAL

The essential difference between a shareholder and a debenture holder is that the shareholder can be treated and regarded as one of the incorporators. The debenture holder is a mere creditor, and following out the 1900 Act principle, we must see that there really is a genuine settlement of interest.

Sir L. WORTHINGTON-EVANS

That may be so, but I do not see why there should be any difference because the shareholder is one of the incorporators. The point is that he has given up the property and in consideration for the property he may take cash or debentures. I do not see why he should not take shares. What does it matter? He has given up the property. The company has got the property, and all he has got is shares in lieu of cash. What difference is there between a preference share with a fixed rate of interest, and a debenture? There is none from this point of view, for the owner is severed from his property, and it might well be that it is advisable, in the interests of the company, that it should not pledge all its assets to the debenture holders, but should be able later on, in development of the estate, to be able to borrow money. If the company has already done so, has pledged those assets to the transferor, it cannot do it a second time, whereas if the transferor has taken shares the Bank can be a secured creditor ahead of the shares, and that may be highly desirable. We have to consider this not merely from the point of view of evasion. I am looking at it from the business point of view. If such a company desires to raise money at a hank or on debentures, and it is clogged up with a lot of prior loans from the previous owner, it cannot possibly develop the estate which, in the public interest, it not only ought to be enabled to do but encouraged to do. The Chancellor of the Exchequer is making the words too narrow. If the right hon. Gentleman says he will consider the point I am ready to leave it. There is no party point in this, it is merely a business point. We want to see that these companies are not tied up so that they cannot even borrow money from their bankers.

Captain BOURNE

I would ask the right hon. Gentleman to consider the words in the new paragraph (a) which the Chancellor has introduced: (a) "the share of the consideration payable to the deceased in respect of the transfer was satisfied otherwise than by an allotment of shares in the company. After all, the shares pass from the estate at death. He has got to pay death duties on the shares in any case. I cannot see how he can evade taxation. He is sufficiently caught in these Clauses. In such a case it is immaterial whether the company has to pay or the estate has to pay. The shares are of value, and there is no possibility of escaping death duty.

Mr. ATKINSON

I would like to repeat a point I put before and a question which was not answered. In Clause 29 the Government have coupled shares and debentures in the phrase a capital sum of a fixed amount or by shares in or debentures of the company. When dealing with the same point here the Government leave out "or by shares," and merely have it debentures or purchase money being the capital sum of a fixed amount. Surely there ought to be some consistency. If a sale for shares is permissible under Clause 29, why is it not permissible under Clause 30?

The ATTORNEY-GENERAL

I am sorry if I omitted to answer the question of the hon. and learned Member. I did my best to answer all the questions. I brought this upon myself by saying that in Clause 29, as in Clause 30, we had struck out the words "for full consideration." But this Clause and Clause 29 are wholly different. The point of this Clause is to reproduce the position enacted by the Act of 1900. The Act of 1900, in its wisdom, said that where there was a transfer from a life tenant to a remainderman the property should be deemed to pass on the life tenant's death unless the life tenant had completely divested himself of all interest in the estate. Attempts were made to get round that provision by means of this subterfuge of a company, and we have to reproduce, so far as we can, the analogy of the 1900 Act. It seems quite plain that we cannot say that a life tenant has got rid of all his interest in the estate if he continues to hold, possibly, 99 per cent. of the company; and for that reason, and to make an analogue to the 1900 Act, we are making it plain that he must have got rid of all his interest, he must not hold shares, which are the equivalent of an interest in the property.

Viscount WOLMER

The Chancellor of the Exchequer has referred to the 1900 Act. We have to settle here whether or not we are doing the just and right thing for the benefit of the industries of this country. The industry which will be principally affected is agriculture, and that is why some of us feel so strongly about this matter. On what possible grounds can you defend this distinction? Under Clause 29 the man who transfers his business to a company is actually encouraged to take part of the purchase price in shares. Under the Clause we are discussing, where a man who has a life interest in an estate pools that interest with the remainderman, you forbid him to take shares. Consequently, you penalise the man who owns a landed estate for trying to put that estate on a business footing under the management of a company.

This is not the evasion of taxation, but it is merely a business proposition which ought to be encouraged by hon. Members opposite. To say that a man who transfers his interest in an estate to a company must not have a vestige of a connection with that company in the form of bolding shares is totally unreasonable, and shows that this is a special class of legislation designed to get at a particular section of the community whom hon. Members opposite believe to be tax-evaders. The situation is aggravated by the fact that if the owner of the life interest, the life tenant of an estate, transfers that interest to his son, I think I am correct in saying that if he does that more than three years before his death, it is a gift inter vivos, and the estate does not pay duty. In this case the three years' limit does not operate.

The ATTORNEY-GENERAL

It only applies under the existing law if the life tenant ceases to have any whatever in the property.

Viscount WOLMER

In the ordinary case, if a man transfers his property to his son three years before his death, then the Death Duties do not apply.

The ATTORNEY-GENERAL

Not in that case, if that is all the interest he has got.

Viscount WOLMER

If that is the case with a man who has only a life interest in the property, what justification is there for treating a life interest on a different basis?

Captain BOURNE

I hope that the Chancellor of the Exchequer will not forget the 1900 Act. None of us desires to help in the evasion of Death Duties, but it seems to me that if a tenant for life takes a definite allotment of shares, and on his death those shares pass as part of his estate, they will be chargeable to Death Duties as part of his estate. I really think that the Chancellor of the Exchequer is obsessed with the 1900 Act, and he is using that for the retention of the small interest of the tenant for life to prevent evasion. In this case, it is something quite different. The payment is in a concrete form, it is taxable to Death Duties, and it seems to me that the 1900 Act hardly applies.

Sir D. HERBERT

I should like to call the attention of the Attorney-General to a point which I think is merely a drafting point. In this Amendment he is proposing to some extent to limit the word "payment," and I suggest that, after the word "payment," a further limitation is needed in order to relate these payments to what has come before. The point is raised in an Amendment which I have put down—in page 27, line 43, after the word "payment," to insert the words "in respect thereof." I would ask the Attorney-General to bear that point in mind.

Amendment agreed to.

Sir L. WORTHINGTON-EVANS

I beg to move, in page 28, to leave out from the word "manner," in line 2, to the end of line 4, and to insert instead thereof the words: and to the same extent as it would have been deemed to pass if the transfer to or for the benefit of the private company had not been made. The object of this Amendment is to ensure that the duty payable shall be the same duty as would have been payable if there had been no transfer for the benefit of a private company, that is to say, that the duty shall be payable in exactly the same way as if there had been no attempt to evade the duty at all, and as if the transaction of transfer to a private company had not taken place. I am not sure that some words of this sort are not necessary to prevent double taxation, but, at any rate, the measure of taxation—as I do not imagine that this is intended to be penal taxation—should be that which would have been payable if the transfer to a private company had not been made. The object is to prevent evasion of duty, not to make the duty a penal one—not to double the duty. This Amendment provides for the duty being chargeable in exactly the same way as if the transfer had not taken place.

The ATTORNEY-GENERAL

Our intention in this Clause is, as I have said, to bring about this situation, that, where in reality you have a transfer from the life tenant to the remainderman, notwithstanding that in form it is a transfer from the life tenant to a company, yet it shall be treated as if it were a transfer to the remainderman, with all the consequences that follow. It does not seem to me that the words which the right hon. Gentleman has selected would achieve that result. We should need some words like these: and to the same extent as it would have been deemed to pass if, instead of the transfer being made to or for the benefit of a private company, the estate so transferred to a private company had been transferred to the remainderman. Even then, I think the words would need a good deal of polishing, because all sorts of consequences would follow from them, but that is the object which we have in mind, and which we think we have attained. I am afraid I could not accept the words of this Amendment, because I think they would have a consequence very different from that which the right hon. Gentleman has foreseen. Our intention is not to exact penal taxation, double taxation, or different taxation from that which would have resulted had the property been transferred directly to the remainderman instead of to a company.

Amendment negatived.

Sir D. HERBERT

I beg to move, in page 28, to leave out the words from the word "time" in line 7, to the word "the" in line 8.

The words "for full consideration in money or money's worth" are not needed at all, and in any case, if they are to stand, there must be some alteration of some kind or other, because the Clause provides not only for a sale, but also for an exchange. An exchange, of course, is not an exchange for money or money's worth. Those are not really words that are applicable to an exchange, and this is a case where they may quite properly be left out. It will make no essential difference and it will make the Clause clearer.

Mr. P. SNOWDEN

The sole object of the insertion of the words is to ensure that the sale or exchange should be a bona fide transaction, and I see no reason for giving them up.

Sir D. HERBERT

The right hon. Gentleman says it is to ensure that it shall be bona fide, but he has that already. My point is that, if the sale or exchange has to be bona fide, you had much better leave it for it to be proved to be a bona fide sale or exchange than complicate the bona fides of the matter by saying it is to be for full consideration in money or money's worth, which might possibly have a somewhat narrower interpretation than the words "bona fide sale or exchange." I think there is something in the suggestion that the words should go out, certainly, if the words "bona fide" remain in, otherwise you get a certain possibility of a difference between the two. "Bona fide" and "for full consideration in money or money's worth" may not necessarily be exactly the same.

Sir B. PETO

May I ask the Chancellor to give a reply to my hon. Friend's last remark? What is the object of the duplication of practically identical phrases? Either these words mean something more than "bona fide," or they limit "bona fide." You cannot possibly want both, and I think the right hon. Gentleman should explain why it is necessary to have both. He did not make that clear in his explanation.

Mr. P. SNOWDEN

Hon. Members opposite admit that at the worst, or at the best, this can only be a duplication of what is implied in "bona fide." [HON. MEMBERS: "NO!"] A sale might be a bona fide sale, but it might not be for full consideration of money or money's worth. Therefore, the insertion of both will cover a sale which might be a bona fide sale, but was not for full consideration of money or money's worth.

Mr. A. M. SAMUEL

How can full consideration be received other than in money or money's worth? What is the meaning of "money's worth"? How can a thing be sold or exchanged for a full consideration unless that consideration is in money or money's worth? It it a confusion of terms. We are not at variance with the object of the right hon. Gentleman.

Mr. SMITHERS

Will the Chancellor of the Exchequer tell us who is the deciding judge, as to whether a sale is bona fide or whether it is for full consideration in money or money's worth?

Mr. P. SNOWDEN

The courts.

Mr. SMITHERS

Who is the person who decides when a claim is made for Estate Duty?

Sir D. HERBERT

May I, with great respect and without waste of time, press this matter upon the right hon. Gentleman? I can imagine these cases going before the Courts in the future and the judges being inclined to make remarks not altogether complimentary about our Finance Acts, saying, perhaps, "What does the legislature mean by putting in here two different expressions both directed to the same end—the words 'bona fide' and the words 'for full consideration in money or money's worth?'" I do not want to press the Amendment too far, but I suggest that the right hon. Gentleman should move out one or other of the phrases. If he does not leave out the words which I propose should be left out, he should leave out the words "bona fide" which have so often been left out.

The ATTORNEY-GENERAL

We have not left out the words "bona fide" in connection with the word "sale." We have retained them. We have left them out with regard to interest and dividends, but on two occasions we have retained them in connection with sale. A very frequent form of transfer of this sort is a transfer from a man to his son which is generally expressed, as the hon. Member knows, out of consideration of natural love and affection. Natural love and affection are not money or money's worth.

Sir D. HERBERT

It is not sale or exchange.

The ATTORNEY-GENERAL

It is not a thing which can be measured in terms of money at all. It may be a perfectly bona fide transaction. [Interruption.] I come to the next proposition. Instead of being in a position to give something to your son, you give something at a very much lower price than its full value. That may be perfectly bona fide, and at the same time may not be full consideration in money or money's worth. The two phrases do mean something different.

Mr. S. BEVAN

The case which the Attorney-General has put of the transfer to a son for an inadequate consideration or for no consideration at all cannot possibly be a bona fide sale or exchange. One of the objects of a bona fide sale or exchange is full consideration in money or money's worth. Why should one of the badges be expressed in the Clause to the exclusion of all others? A bona fide sale involves full consideration in money or money's worth. Is that to be an exclusive badge, or are there to be other badges? In my submission, either the expression "bona fide" or the provision "for full consideration in money or money's worth" is unnecessary. One is involved in the other. It is only introducing words which are unnecessary, which will lead to litigation and the intervention of the lawyers, and to confusion.

Mr. MARJORIBANKS

I can see very little point in the words "bona fide." In this particular instance I would inform the Attorney-General of a very curious instance of the words "bona fide."

The CHAIRMAN

We have passed the words "bona fide." They stand part of the Clause.

Amendment negatived.

Sir A. STEEL-MAITLAND

I beg to move, in page 28, line 13, at the end, to insert the words: except in so far as such proceeds have been spent in the ordinary course of business of the company. This Amendment means that when a certain amount of such property of a company has been sold and the proceeds have been spent in the development of the company, this shall not be reckoned in with the rest in estimating the total value on which Estate Duty shall be paid.

Amendment negatived.

Sir D. HERBERT

I beg to move, in page 28, line 16, at the end, to insert the words: (a) a sum which bears to the total amount of the expenses of, and in connection with, the formation of the company and the transfer of property thereto the same proportion as the value of the property at the date of death bears to the value of all property of the company at that date. This Amendment is one of some substance. The Committee must not forget that in cases where companies are formed in this way there is considerable expense. Taxation is payable to the Treasury as Stamp Duty on the formation of these companies, and as Stamp Duty on the transfer of property to these companies. The effect of my Amendment, quite briefly and shortly, is that in determining the value of any property which is passed over under this Section, there shall be deducted from the principal value thereof, not only those sums which are set out in the Bill, but also a sum which is a proper proportion of the total amount of expense incurred in connection with the formation of a company and the transfer of a property to it. In the hope of saving time, I do not propose to elaborate this, as I think the reasons will be fairly obvious. I hope that it will be accepted by the Chancellor, and if he has any solid objection, I hope he will say just a word in reply.

Mr. P. SNOWDEN

As I understand this Amendment, it is that the costs of the promotion of a company shall be deducted in determining the value of the property that is transferred. It is very difficult to imagine a case where an estate is to be transferred to a company except for the purpose of avoiding Death Duties. Therefore, this Amendment really means that a person forms a company for the purpose of avoiding Death Duties, and then the State is asked to compound the felony by practically paying the cost incurred in the formation of that company.

11.0 p.m.

Sir D. HERBERT

Really, I have discussed these questions of tax avoidance with every Chancellor of the Exchequer who has been in office for the last 12 years, and I have never yet known a Chancellor of the Exchequer do otherwise than admit that, if a man without dishonesty can get out of paying taxation by a legal method, he was entitled to do it. But when it comes to describing it as a felony, I am afraid the right hon. Gentleman is rather giving away the position which he ought to be occupying in a case of this kind. Let it be clearly understood. Every man who owns any substantial amount of property, any kind of real or personal or any other property, is nothing else but a fool if, in making his business arrangements, he does not at least take care not to pay more taxation than is absolutely necessary. [Interruption.] I do not want to waste time, and if hon. Gentlemen will put off their compliments a little longer, they will get to bed earlier. There must be many cases where what are known as estate companies have been formed, and where, no doubt, one result is a certain saving of taxation. Let me put it in that way, for the purpose of my argument. Let me even go further, and agree with the right hon. Gentleman that one result of it is an avoidance of a certain amount of taxation. The learned Attorney-General will know this perfectly well. It is very often one of the considerations which leads a man to form a company, but it is by no means the only one. I venture to say that I am not to be contradicted. If the law allows a man to escape taxation by doing that, he is entitled to do it. But if you get a case where that is only one of the reasons for forming the company—I can assure hon. Members that. I know of absolute cases which have happened where the primary object has not been the avoidance of tax, although a certain saving of taxation has been one of the results—in those circumstances, many of the people who form those companies will be hit by this Clause, to a small extent. They will probably not grumble because they will say, "That was not the main object for which we formed the company," and if they are deprived of some saving of tax it does not really make any difference to their entire plan. They will still wish to keep the company going for the other reasons for which they formed it. I suggest that in those cases it is at least fair that this deduction of the expenses of forming the company should be met. In making that submission I claim that I am entitled to a little more favourable consideration from the point of view of the deliberate tax avoidance by reason of the quite unfair suggestion that the Chancellor of the Exchequer has placed upon the Amendment by referring to it as proposing something in the nature of a penal offence.

Sir B. PETO

I will not emphasise the very serious phrase that the Chancellor of the Exchequer used, but I would like to know what the Amendment means. What do these expenses consist of? In the main they are stamps. Stamps are a form of taxation paid into the Treasury. What the Chancellor of the Exchequer is doing is to say, "I am not only going to make the avoidance of taxation illegal by these methods, whether tax avoidance is the sole purpose in forming the company or not, but if a sum of money has already been paid into the Treasury in what was up to the passing of this Bill a perfectly legal transaction, I am going to say to the taxpayer: 'You shall forfeit all the money you have paid to the Treasury in stamps and I will prevent you from having any benefit whatever, because I shall charge you full Estate Duty, just as if you had not formed the company.'" That seems to be the position. The Chancellor of the Exchequer is taking up the position of the farmer's boy, who on seeing a toad, stamped on it and said: "I'll larn 'ee to be a toad."

Mr. SMITHERS

The Chancellor of the Exchequer has described this Amendment as compounding a felony. The Government seem to have this subject of evasion on their brains at the expense of every other consideration. Speaking from memory, I think that one of our Lord Justices, Lord Moulton, has laid it down that it is the duty of trustees so to place their trust funds that they get the biggest income they can for their beneficiaries, and so place the funds that they are subject to the least possible taxation. It is not simply a case of evasion or of tax dodging but it is their duty so to do

Captain CROOKSHANK

I think the Chancellor of the Exchequer, from his look, made the remark about compounding a felony as a joke. Perhaps he would like to put it on record in the OFFICIAL REPORT that it was said as a joke. People reading the OFFICIAL REPORT will not have seen his face.

Mr. P. SNOWDEN

The hon. Member for Chislehurst (Mr. Smithers) declined to give way, but I was rising for the purpose of saying that the remark was made jocularly.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 142 Noes, 248.

Division No. 405.] AYES. [11.7 p.m.
Acland-Troyte, Lieut.-Colonel Falle, Sir Bertram G. Ramsbotham, H.
Ainsworth, Lieut.-Col. Charles Ferguson, Sir John Reid, David D. (County Down)
Allen, W. E. D. (Belfast, W.) Fielden, E. B. Remer, John R.
Astor, Viscountess Ford, Sir P. J. Rentoul, Sir Gervais S.
Atholl, Duchess of Forestier-Walker, Sir L. Reynolds, Col. Sir James
Atkinson, C. Fremantle, Lieut.-Colonel Francis E. Richardson, Sir P. W. (Sur'y, Ch't'sy)
Baillie-Hamilton, Hon. Charles W. Ganzoni, Sir John Roberts, Sir Samuel (Ecclesall)
Balfour, Captain H. H. (I. of Thanet) Gault, Lieut.-Col. Andrew Hamilton Rodd, Rt. Hon. Sir James Rennell
Balniel, Lora Glyn, Major R. G. C. Ross, Major Ronald D.
Beamish, Bear-Admiral T. P. H. Gower, Sir Robert Ruggles-Brise, Lieut.-Colonel E. A.
Betterton, Sir Henry B. Graham, Fergus (Cumberland, N.) Russell, Alexander West (Tynemouth)
Bevan, S. J. (Holborn) Greene, W. P. Crawford Salmon, Major I.
Bird, Ernest Roy Grenfell, Edward C. (City of London) Samuel, A. M. (Surrey, Farnham)
Bourne, Captain Robert Croft Guinness, Rt. Hon. Walter E. Sandeman, Sir N. Stewart
Bowyer, Captain Sir George E. W. Hacking, Rt. Hon. Douglas H. Sassoon, Rt. Hon. Sir Philip A. G. D.
Bracken, B. Hall, Lieut.-Col. Sir F. (Dulwich) Savery, S. S.
Braithwaite, Major A. N. Hammersley, S. S. Smith, Louis W. (Sheffield, Hallam)
Brown, Col. D. C. (N'th'l'd., Hexham) Harvey, Major S. E. (Devon, Totnes) Smith, R. W. (Aberd'n & Kinc'dine, C.)
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Haslam, Henry C. Smithers, Waldron
Buchan, John Henderson, Capt. R. R. (Oxf'd, Henley) Somerville, A. A. (Windsor)
Bullock, Captain Malcolm Heneage, Lieut.-Colonel Arthur P. Somerville, D. G. (Willesden, East)
Butler, R. A. Herbert, Sir Dennis (Hertford) Southby, Commander A. R. J.
Cayzer, Sir C. (Chester, City) Hills, Major Rt. Hon. John Waller Spender-Clay, Colonel H.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) Iveagh, Countess of Stanley, Lord (Fylde)
Chadwick, Capt. Sir Robert Burton King, Commodore Rt. Hon. Henry D. Steel-Maitland, Rt. Hon. Sir Arthur
Christie, J. A. Lamb, Sir J. Q. Stuart, Hon. J. (Moray and Nairn)
Churchill, Rt. Hon. Winston Spencer Lane Fox, Col. Rt. Hon. George R. Thomas, Major L. B. (King's Norton)
Colfox, Major William Philip Leighton, Major B. E. P. Thomson, Sir F.
Colman, N. C. D. Llewellin, Major J. J. Titchfield, Major the Marquess of
Colville, Major D. J. Locker-Lampson, Com. O. (Handsw'th) Train, J.
Courthope, Colonel Sir G. L. Long, Major Eric Tryon, Rt. Hon. George Clement
Cranborne, Viscount McConnell, Sir Joseph Turton, Robert Hugh
Crichton-Stuart, Lord C. Maitland, A. (Kent, Faversham) Wallace, Capt. D. E. (Hornsey)
Croft, Brigadier-General Sir H. Makins, Brigadier-General E. Ward, Lieut.-Col. Sir A. Lambert
Crookshank, Capt. H. C. Marjoribanks, E. C. Warrender, Sir Victor
Croom-Johnson, R. P. Merriman, Sir F. Boyd Waterhouse, Captain Charles
Culverwell, C. T. (Bristol, West) Mitchell-Thomson, Rt. Hon. Sir W. Wayland, Sir William A.
Cunliffe-Lister, Rt. Hon. Sir Philip Mond, Hon. Henry Wells, Sydney R.
Dalkeith, Earl of Monsell, Eyres, Com. Rt. Hon. Sir B. Wilson, G. H. A. (Cambridge U.)
Dalrymple-White, Lt.-Col. Sir Godfrey Morrison, W. S. (Glos., Cirencester) Windsor-Clive, Lieut.-Colonel George
Davies, Dr. Vernon Muirhead, A. J. Wolmer, Rt. Hon. Viscount
Davies, Maj. Geo. F. (Somerset, Yeovil) Newton, Sir D. G. C. (Cambridge) Womersley, W. J.
Dixon, Captain Rt. Hon. Herbert Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld) Wood, Rt. Hon. Sir Kingsley
Duckworth, G. A. V. O'Connor, T. J. Worthington-Evans, Rt. Hon. Sir L.
Eden, Captain Anthony O'Neill, Sir H.
Edmondson, Major A. J. Ormsby-Gore, Rt. Hon. William TELLERS FOR THE AYES.—
Elliot, Major Walter E. Peake, Capt. Osbert Major Sir George Hennessy and
Erskine, Lord (Somerset, Weston-s. M.) Percy, Lord Eustace (Hastings) Sir George Penny.
Everard, W. Lindsay Peto, Sir Basil E. (Devon, Barnstaple)
NOES.
Adamson, Rt. Hon. W. (Fife, West) Barr, James Brothers, M.
Adamson, W. M. (Staff., Cannock) Batey, Joseph Brown, C. W. E. (Notts, Mansfield)
Addison, Rt. Hon. Dr. Christopher Bellamy, Albert Brown, Ernest (Leith)
Aitchison, Rt. Hon. Craigie M. Benn, Rt. Hon. Wedgwood Brown, Rt. Hon. J. (South Ayrshire)
Alexander, Rt Hon. A. V. (Hillsbro') Bennett, Capt. Sir E. N. (Cardiff C.) Buchanan, G.
Alpass, J. H. Bennett, William (Battersea, South) Burgin, Dr. E. L.
Ammon, Charles George Benson, G. Caine, Derwent Hall-
Arnott, John Bentham, Dr. Ethel Cameron, A. G.
Aske, Sir Robert Bevan, Aneurin (Ebbw Vale) Cape, Thomas
Attlee, Clement Richard Bowen, J. W. Charleton, H. C.
Baker, John (Wolverhampton, Bilston) Bowerman, Rt. Hon. Charles W. Chater, Daniel
Baldwin, Oliver (Dudley) Brockway, A. Fenner Church, Major A. G.
Barnes, Alfred John Brooke, W. Clarke, J. S.
Cluse, W. S. Kenworthy, Lt.-Com. Hon. Joseph M. Richards, R.
Clynes, Rt. Hon. John R. Kinley, J. Richardson, R. (Houghton-le-Spring)
Cocks, Frederick Seymour Kirkwood, D. Riley, Ben (Dewsbury)
Compton, Joseph Lang, Gordon Ritson, J.
Daggar, George Lathan, G. Romeril, H. G.
Dallas, George Law, Albert (Bolton) Rosbotham, D. S. T.
Dalton, Hugh Lawrence, Susan Rowson, Guy
Davies, E. C. (Montgomery) Lawrie, Hugh Hartley (Straiybridge) Russell, Richard John (Eddlsbury)
Day, Harry Lawson, John James Samuel, H. Walter (Swansea, West)
Dickson, T. Lawther, W. (Barnard Castle) Sanders, W. S.
Dudgeon, Major C. R. Leach, W. Sandham, E.
Dukes, C. Lee, Frank (Derby, N. E.) Sawyer, G. F.
Duncan, Charles Lee, Jennie (Lanark, Northern) Scurr, John
Ede, James Chuter Lees, J. Sexton, James
Edmunds, J. E. Lewis, T. (Southampton) Shaw, Rt. Hon. Thomas (Preston)
Edwards, E. (Morpeth) Lindley, Fred W. Shepherd, Arthur Lewis
Egan, W. H. Logan, David Gilbert Shield, George William
Elmley, Viscount Longbottom, A. W. Shiels, Dr. Drummond
Foot, Isaac Longden, F. Shillaker, J. F.
Freeman, Peter Lunn, William Short, Alfred (Wednesbury)
Gardner, B. W. (West Ham, Upton) Macdonald, Gordon (Ince) Simmons, C. J.
Gardner, J. P. (Hammersmith, N.) MacDonald, Rt. Hon. J. R. (Seaham) Sinclair, Sir A. (Caithness)
Gibbins, Joseph MacDonald, Malcolm (Bassetlaw) Sinkinson, George
Gibson, H. M. (Lancs, Mossley) McElwee, A. Sitch, Charles H.
Gill, T. H. McEntee, V. L. Smith, Ben (Bermondsey, Rotherhithe)
Gillett, George M. McGovern, J. (Glasgow, Shettleston) Smith, Frank (Nuneaton)
Glassey, A. E. McKinlay, A. Smith, Rennie (Penistone)
Gossling, A. G. Maclean, Sir Donald (Cornwall, N.) Smith, Tom (Pontefract)
Gould, F. Maclean, Neil (Glasgow, Govan) Smith, W. R. (Norwich)
Graham, D. M. (Lanark, Hamilton) McShane, John James Snowden, Rt. Hon. Philip
Graham, Rt. Hon. Wm. (Edin., Cent.) Malone, C. L'Estrange (N'thampton) Snowden, Thomas (Accrington)
Granville, E. Mander, Geoffrey le M. Sorensen, R.
Gray, Milner Mansfield, W. Stamford, Thomas W.
Grenfell, D. R. (Glamorgan) Marcus, M. Stephen, Campbell
Griffith, F. Kingsley (Middlesbro' W.) Markham, S. F. Stewart, J. (St. Rollox)
Griffiths, T. (Monmouth, Pontypool) Marley, J. Sullivan, J.
Groves, Thomas E. Marshall, Fred Sutton, J. E.
Grundy, Thomas W. Mathers, George Taylor, R. A. (Lincoln)
Hall, F. (York, W. R., Normanton) Maxton, James Thurtle, Ernest
Hall, G. H. (Merthyr Tydvil) Messer, Fred Tinker, John Joseph
Hall, Capt. W. P. (Portsmouth, C.) Middleton, G. Tout, W. J.
Hamilton, Mary Agnes (Blackburn) Millar, J. D. Townend, A. E.
Hardie, George D. Milner, Major J. Trevelyan, Rt. Hon. Sir Charles
Harris, Percy A. Morgan, Dr. H. B. Vaughan, D. J.
Hartshorn, Rt. Hon. Vernon Morley, Ralph Viant, S. P.
Hastings, Dr. Somerville Morris, Rhys Hopkins Walkden, A. G.
Haycock, A. W. Morrison, Herbert (Hackney, South) Walker, J.
Hayes, John Henry Morrison, Robert C. (Tottenham, N.)
Henderson, Arthur, Junr. (Cardiff, S.) Mort, D. L. Wallace, H. W.
Henderson, Thomas (Glasgow) Moses, J. J. H. Watkins, F. C.
Henderson, W. W. (Middx., Enfield) Mosley, Lady C. (Stoke-on-Trent) Watson, W. M. (Dunfermline)
Herriotts, J. Mosley, Sir Oswald (Smethwick) Watts-Morgan, Lt.-Col. D. (Rhondda)
Hirst, G. H. (York W. R. Wentworth) Muff, G. Wellock, Wilfred
Hirst, W, (Bradford, South) Muggeridge, H. T. Welsh, James (Paisley)
Hoffman, P. C. Murnin, Hugh Welsh, James C. (Coatbridge)
Hore-Beilsha, Leslie Nathan, Major H. L. Westwood, Joseph
Horrabin, J. F. Naylor, T. E. White, H. G.
Hudson, James H. (Huddersfield) Newman, Sir R. H. S. D. L. (Exeter) Whilteley, Wilfrid (Birm., Ladywood)
Hunter, Dr. Joseph Noel Baker, P. J. Whiteley, William (Blaydon)
Hutchison, Maj.-Gen. Sir R. Oliver, P. M. (Man., Blackley) Williams, David (Swansea, East)
Isaacs, George Palin, John Henry Williams, Dr. J. H. (Llanelly)
Jenkins, W. (Glamorgan, Neath) Palmer, E. T. Wilson, C. H. (Sheffield, Attercliffe)
John, William (Rhondda, West) Parkinson, John Allen (Wigan) Wilson, J. (Oldham)
Johnston, Thomas Perry, S. F. Wilson, R. J. (Jarrow)
Jones, F. Llewellyn- (Flint) Pethick-Lawrence, F. W. Wise, E. F.
Jones, Rt. Hon. Leif (Camborne) Phillips, Dr. Marion Wood, Major McKenzie (Banff)
Jones, Morgan (Caerphilly) Potts, John S. Wright, W. (Rutherglen)
Jowett, Rt. Hon. F. W. Price, M. P. Young, R. S. (Islington, North)
Jowitt, Rt. Hon. Sir W. A. Quibell, D. J. K.
Kelly, W. T. Ramsay, T. B. Wilson TELLERS FOR THE NOES.—
Kennedy, Thomas Raynes, W. R. Mr. Charles Edwards and Mr. Paling.
Dr. BURGIN

I beg to move, in page 28, line 17, to leave out from the beginning to the word "applied" in line 18, and to insert instead thereof the words "any sum."

This Sub-section seeks to set out the deductions that can be made in calculating the value for the purposes of this Clause, and it is provided that one deduction can be made in respect of a borrowing by the company to the extent to which that borrowing has not been repaid. It seems to me that a company which spends money on improvements of the property may find that money in various ways and that we are not concerned with the origin but with the application of the money.

My Amendment is purely a question of drafting. Why should you make any difference in money spent on improvements to property if that money is taken from the company itself, has been borrowed and has been repaid, or has been borrowed and only partially repaid? Under the Clause as it stands, although money from all these three sources might have been expended on improvements, it is only the third type which is allowed as a deduction. I submit that there is some confusion of thought and that the point is that if the money has been expended on improvements, that should be allowed as a deduction, and that it does not matter from what source the money has been procured.

The ATTORNEY-GENERAL

The hon. Member said there was some confusion of thought here. I was sorry to hear him say so, and I am not going to be guilty of a tu quoque, but I would ask him to remember that when you are considering the taxation of capital sums, it is idle to bring in considerations referring to Income Tax. What you are dealing with for the purposes of Estate Duty is the value of the property at the time of death. To that there is this exception: It is well understood in our law that where you are valuing a property for the purpose of Estate Duty, you are entitled to deduct any outstanding charges upon the property. If you have borrowed money by way of mortgage and have not paid that mortgage back, you are entitled to deduct from the value of the property the value of that outstanding charge. The hon. Member will see at once that there is not a, charge outstanding if the charge has been paid off. Therefore he will appreciate that there is, in the nature of things, a distinction between money which you borrow, that is, money which is the subject-matter of the charge, and money that you do not raise in that way but money which you spend out of your current income which gives rise to no charge at all. It is the legal principle in every single case of Estate Duty, whichever Statute you are considering, that you have to value all the property as you find it. If it has been repaired out of income, so much the better, and so much the worse for the other taxpayers; the only thing you can consider is the outstanding charge. That is why we have put in these qualifications, and if this Amendment were accepted, it would make a breach in the whole principle of Estate Duty law.

Sir D. HERBERT

We are dealing with a remarkable new condition of affairs. This is not a case of taxing property passing at death. It does not pass on the death, and the Chancellor and the Attorney-General are trying to find some other means of levying a different sort of tax. This is a tax which is levied on a remarkable and entirely novel method of computation of all sorts and kinds of different values. It is altogether an artificial form of Estate Duty. Under these circumstances I suggest that it is not a case where it ought to be pressed too far. It is a case of levying an Estate Duty and making it payable in cases where, under the law as it stands at the present time, it is not payable. It is a case of making that Estate Duty payable by persons who have done certain things which are not criminal offences. I suggest that in these circumstances what we have to look at is what is fair, and if after this property has been parted with by the owner to a company, money is spent upon it, that money ought not to come into consideration for the purpose of paying Estate Duty on property when the person you are really trying to get at is not the company at all. It is possible the company may be in different ownership. The person you regard as the offender is the person who parted with the property, and it is the value of the property at that time that should be considered rather than the property as improved by the company after it has been parted with by the man in question. I suggest flat the confusion of thought, at any rate, does not lay with the hon. Gentleman who moved the Amendment; he has solid reason for it, and it deserves to be met with the most careful thought, and some better argument than has been directed against it.

Lieut.-Colonel HENEAGE

As the Clause reads it is going to encourage companies to borrow money for the purpose of improving the property, that is to say, instead of paying with ready money they are going to use borrowed money for this one particular item in order to escape this taxation. I suggest that, while the words mentioned by my hon. Friend may not be quite correct, something ought to be done in order to make it not worth the while of the company to borrow the money.

Amendment negatived.

Mr. PETHICK-LAWRENCE

I beg to move in page 28, line 21, to leave out paragraph (b), and to insert instead thereof the words: (b) a sum equal to the capital sum of money paid to the deceased as part of the consideration for the transfer; and where estate duty is payable in connection with the death on any shares of or debentures in the company, a sum equal to the principal value of such of those shares or debentures as were transferred or allotted to the deceased in consideration of the transfer of the property. I think that these new words are not only more comprehensive and more just than the words in the existing paragraph (b), but they are also more intelligible. It is suggested in the Amendment that relief be given to the taxpayer by deducting from the value of the property the consideration obtained for the transfer. Where that consideration is paid in cash, the amount of the cash is deducted. It has, of course, gone to swell the general value of the estate. Where the consideration took the form of shares or debentures, the amount that will be deducted will be the value of those shares or debentures as they will be at the time of death. I think it is a reasonable Amendment and that it is comprehensive in the relief that it gives.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Sir L. WORTHINGTON-EVANS

I am very anxious to get on with Clause 31 and leave until to-morrow Clauses 32 and 33, upon which some really important questions arise. This Clause bears very little resemblance to the Clause which appeared in the Bill when it was introduced, and although it contains some improvements, it is still a Clause which is entirely ineffective for the purposes for which it was introduced. In one of his jesting moods the Chancellor of the Exchequer betrayed what was really in his mind when he spoke about the estate owner who transfers his property to a private company as a man guilty of a felonious act. We are told that that was a jest, but many a true word is spoken in jest. What is the attitude of the right hon. Gentleman towards these perfectly innocent transactions? I have already called attention to the case where an estate owner transferred to a private company for cash or debentures was exempted under certain circumstances from this charge, but the Chancellor of the Exchequer has not extended that to shares in a company. I still press that that case should be re-considered. The Clause as it stands does not prevent an estate owner with cash investing that cash in the shares of the company. The right hon. Gentleman might as well deal with that point at once.

Viscount WOLMER

We ought to make a very distinct protest against the way the Government have treated agriculture. The effect of this Clause is to single out those who try to put their estates on a business footing. Under this Bill the owner of any private business, except a landed estate, may transfer it to a private company and retain part of the purchase price in the form of shares; but if it is the case of a life tenant of a landed estate, he cannot merge his life interest in a private company without being subjected to the penal taxation imposed by the Chancellor of the Exchequer. The immediate effect of these proposals is to deprive estates of capital which is badly needed for the development of agricultural estates, and it is a blow which will affect the tenants of every settled estate in the country. This policy will affect the agricultural labourers. The Government have not done anything to help agriculture, and Clauses 29 and 30 will do a great deal to make the position of agriculture a great deal worse.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 224; Noes, 140.

Division No. 406.] AYES. [11.36 p.m.
Adamson, Rt. Hon. W. (Fife, West) Hartshorn, Rt. Hon. Vernon Newman, Sir R. H. S. D. L. (Exeter)
Adamson, W. M. (Staff., Cannock) Hastings, Dr. Somerville Noel Baker, P. J.
Addison, Rt. Hon. Dr. Christopher Haycock, A. W. Oliver, P. M. (Man., Blackley)
Aitchison, Rt. Hon. Craigie M. Hayes, John Harvey Palin, John Henry
Alexander, Rt. Hon. A. V. (Hillsbro') Henderson, Arthur, Junr. (Cardiff, S.) Paling, Wilfrid
Alpass, J. H. Henderson, W. W. (Middx., Enfield) Parkinson, John Allen (Wigan)
Ammon, Charles George Herriotts, J. Perry, S. F.
Arnott, John Hirst, G. H. (York W. R. Wentworth) Pethick-Lawrence, F. W.
Aske, Sir Robert Hirst, W. (Bradford, South) Phillips, Dr. Marion
Attlee, Clement Richard Hollins, A. Potts, John S.
Baldwin, Oliver (Dudley) Hoffman, P. C. Price, M. P.
Barnes, Alfred John Hudson, James H. (Huddersfield) Quibell, D. J. K.
Barr, James Hunter, Dr. Joseph Ramsay, T. B. Wilson
Batey, Joseph Hutchison, Maj.-Gen. Sir R. Raynes, W. R.
Bellamy, Albert Isaacs, George Richards, R.
Benn, Rt. Hon. Wedgwood Jenkins, W. (Glamorgan, Neath) Richardson, R. (Houghton-le-Spring)
Bennett, William (Battersea, South) John, William (Rhondda, West) Riley, Ben (Dewsbury)
Benson, G. Johnston, Thomas Ritson, J.
Bentham, Dr. Ethel Jones, F. Llewellyn- (Flint) Romeril, H. G.
Bevan, Aneurin (Ebbw Vale) Jones, Rt. Hon Leif (Camborne) Rosbotham, D. S. T.
Bowen, J. W. Jones, Morgan (Caerphilly) Rowson, Guy
Brockway, A. Fenner Jowett, Rt Hon. F. W. Samuel, H. Walter (Swansea, West)
Brooke, W. Jowitt, Rt. Hon. Sir W. A. Sanders, W. S.
Brothers, M. Kelly, W. T. Sandham, E.
Brown, C. W. E. (Notts, Mansfield) Kennedy, Thomas Sawyer, G. F.
Brown, Ernest (Leith) Kenworthy, Lt.-Com. Hon. Joseph M. Scurr, John
Brown, Rt. Hon. J. (South Ayrshire) Kinley, J. Shaw, Rt. Hon. Thomas (Preston)
Buchanan, G. Kirkwood, D. Shepherd, Arthur Lewis
Caine, Derwent Hall- Lang, Gordon Shield, George William
Cameron, A. G. Lansbury, Rt. Hon. George Shiels, Dr. Drummond
Cape, Thomas Lathan, G. Shillaker, J. F.
Charleton, H. C. Law, Albert (Bolton) Simmons, C. J.
Chater, Daniel Lawrence, Susan Sinkinson, George
Church, Major A. G. Lawson, John James Sitch, Charles H.
Clarke, J. S. Lawther, W. (Barnard Castle) Smith, Ben (Bermondsey, Rotherhithe)
Cluse, W. S. Leach, W. Smith, Frank (Nuneaton)
Cocks, Frederick Seymour Lee, Frank (Derby, N. E.) Smith, Rennie (Penistone)
Compton, Joseph Lee, Jennie (Lanark, Northern) Smith, Tom (Pontefract)
Daggar, George Lees, J. Smith, W. R. (Norwich)
Dallas, George Lewis, T. (Southampton) Snowden, Rt. Hon. Philip
Davies, E. C. (Montgomery) Lindley, Fred W. Snowden, Thomas (Accrington)
Day, Harry Lloyd, C. Ellis Sorensen, R.
Dickson, T. Logan, David Gilbert Stamford, Thomas W.
Dudgeon, Major C. R. Longbottom, A. W. Stephen, Campbell
Dukes, C. Longden, F. Sullivan, J.
Duncan, Charles Lunn, William Sutton, J. E.
Ede, James Chuter Macdonald, Gordon (Ince) Taylor, R. A. (Lincoln)
Edmunds, J. E. MacDonald, Rt. Hon. J. R. (Seaham) Thurtle, Ernest
Edwards, C. (Monmouth, Bedwellty) MacDonald, Malcolm (Bassetlaw) Tinker, John Joseph
Edwards, E. (Morpeth) McElwee, A. Tout, W. J.
Egan, W. H. McEntee, V. L. Townend, A. E.
Elmley, Viscount McGovern, J. (Glasgow, Shettleston) Vaughan, D. J.
Foot, Isaac McKinlay, A. Viant, S. P.
Freeman, Peter McShane, John James Walkden, A. G.
Gardner, B. W. (West Ham, Upton) Malone, C. L'Estrange (N'thampton) Walker, J.
Gardner, J. P. (Hammersmith, N.) Mansfield, W. Wallace, H. W.
Gibbins, Joseph Marcus, M. Watson, W. M. (Dunfermline)
Gibson, H. M. (Lancs, Mossley) Markham, S. F. Watts-Morgan, Lt.-Col. D. (Rhondda)
Gill, T. H. Marley, J. Wellock, Wilfred
Gillett, George M. Marshall, Fred Welsh, James (Paisley)
Glassey, A. E. Mathers, George Welsh, James C. (Coatbridge)
Gossling, A. G. Maxton, James West, F. R.
Gould, F. Messer, Fred Westwood Joseph
Graham, D. M. (Lanark, Hamilton) Middleton, G. White, H. G.
Graham, Rt. Hon. Wm. (Edin., Cent.) Millar, J. D. Whiteley, Wilfrid (Birm., Ladywood)
Granville, E. Milner, Major J. Williams, David (Swansea, East)
Grenfell, D. R. (Glamorgan) Morgan, Dr. H. B. Williams, Dr. J. H. (Llanelly)
Griffith, F. Kingsley (Middlesbro' W.) Money, Ralph Wilson, C. H. (Sheffield, Attercliffe)
Groves, Thomas E. Morrison, Herbert (Hackney, South) Wilson, J. (Oldham)
Grundy, Thomas W. Mort, D. L. Wilson, R. J. (Jarrow)
Hall, F. (York, W. R., Normanton) Moses, J. J. H. Wise, E. F.
Hall, G. H. (Merthyr Tydvil) Mosley, Lady C. (Stoke-on-Trent) Wood, Major McKenzie (Banff)
Hall, Capt. W. P. (Portsmouth, C.) Mosley, Sir Oswald (Smethwick) Young, R. S. (Islington, North)
Hamilton, Mary Agnes (Blackburn) Muff, G.
Hardie, George D. Murnin, Hugh TELLERS FOR THE AYES.—
Harris, Percy A. Nathan, Major H. L. Mr. Thomas Henderson and Mr. William Whiteley.
NOES.
Acland-Troyte, Lieut.-Colonel Allen, W. E. D. (Belfast, W.) Atholl, Duchess of
Ainsworth, Lieut.-Col. Charles Amery, Rt. Hon, Leopold C. M. S. Atkinson, C.
Albery, Irving James Astor, Viscountess Baillie-Hamilton, Hon. Charles W.
Balfour, George (Hampstead) Ford, Sir P. J. Ramsbotham, H.
Balfour, Captain H. H. (I. of Thanet) Forestier-Walker, Sir L. Remer, John R.
Balniel, Lord Fremantle, Lieut.-Colonel Francis E. Rentoul, Sir Gervais S.
Beamish, Rear-Admiral T. P. H. Ganzoni, Sir John Reynolds, Col. Sir James
Betterton, Sir Henry B. Gauit, Lieut.-Col. Andrew Hamilton Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Bevan, S. J. (Holborn) Gower, Sir Robert Roberts, Sir Samuel (Ecclesall)
Bird, Erneat Roy Graham, Fergus (Cumberland, N.) Rodd, Rt. Hon. Sir James Rennell
Bourne, Captain Robert Croft Greene, W. P. Crawford Ross, Major Ronald D.
Bowyer, Captain Sir George E. W. Grenfell, Edward C. (City of London) Ruggles-Brise, Lieut.-Colonel E. A.
Bracken, B. Guinness, Rt. Hon. Walter E. Russell, Alexander West (Tynemouth)
Braithwaite, Major A. N. Hacking, Rt. Hon. Douglas H. Samuel, A. M. (Surrey, Farnham)
Brown, Col. D. C. (N'th'l'd., Hexham) Hall, Lieut.-Col. Sir F. (Dulwich) Samuel, Samuel (W'dsworth, Putney)
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Hanbury, C. Sandeman, Sir N. Stewart
Buchan, John Hartington, Marquess of Sassoon, Rt. Hon. Sir Philip A. G. D.
Bullock, Captain Malcolm Harvey, Major S. E. (Devon, Totnes) Savery, S. S.
Burgin, Dr. E. L. Haslam, Henry C. Smith, Louis W. (Sheffield, Hallam)
Butler, R. A. Henderson, Capt. R. R. (Oxf'd, Henley) Smith, R. W. (Aberd'n & Kinc'dine, C.)
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) Heneage, Lieut.-Colonel Arthur P. Smithers, Waldron
Chadwick, Capt. Sir Robert Burton Herbert, Sir Dennis (Hertford) Somerville, A. A. (Windsor)
Christie, J. A. Hills, Major Rt. Hon. John Walter Somerville, D. G. (Willesdan, East)
Churchill, Rt. Hon. Winston Spencer Iveagh, Countess of Southby, Commander A. R. J.
Colfox, Major William Philip Lamb, Sir J. Q. Stanley, Lord (Fylde)
Colman, N. C. D. Lane Fox, Col. Rt. Hon. George R. Steel-Maitland, Rt. Hon. Sir Arthur
Colville, Major D. J. Leighton, Major B. E. P. Stuart, Hon. J. (Moray and Nairn)
Courthope, Colonel Sir G. L. Llewellin, Major J. J. Thomas, Major L. B. (King's Norton)
Crichton-Stuart, Lord C. Locker-Lampson, Com. O. (Handsw'th) Thomson, Sir F.
Croft, Brigadier-General Sir H. Long, Major Eric Train, J.
Crookshank, Capt. H. C. McConnell, Sir Joseph Tryon, Rt. Hon. George Clement.
Croom-Johnson, R. P. Macdonald, Capt. P. D. (I. of W.) Turton, Robert Hugh
Culverwell, C. T. (Bristol, West) Maitland, A. (Kent, Favorsham) Vaughan-Morgan, Sir Kenyon
Cunliffe-Lister, Rt. Hon. Sir Philip Marjoribanks, E. C. Wallace, Capt. D. E. (Hornsey)
Dalkeith, Earl of Merriman, Sir F. Boyd Ward, Lieut-Col. Sir A. Lambert
Davidson, Rt. Hon. J. (Hertford) Mitchell-Thomson, Rt. Hon. Sir W. Warrender, Sir Victor
Davies, Dr. Vernon Mond, Hon. Henry Waterhouse, Captain Charles
Davies, Maj. Geo. F. (Somerset, Yeovil) Monsell, Eyres, Com. Rt. Hon. Sir B. Wayland, Sir William A.
Dixon, Captain Rt. Hon. Herbert Morrison, W. S. (Glos., Clrencester) Wells, Sydney R.
Duckworth, G. A. V. Muirhead, A. J. Wilson, G. H. A. (Cambridge U.)
Dugdale, Capt. T. L. Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld) Windsor-Clive, Lieut.-Colonel George
Eden, Captain Anthony O'Connor, T. J. Wolmer, Rt. Hon. Viscount
Edmondson, Major A. J. O'Neill, Sir H. Womersley, W. J.
Elliot, Major Walter E. Ormsby-Gore, Rt. Hon. William Worthington-Evans, Rt. Hon. Sir L.
Everard, W. Lindsay Peake, Capt. Osbert
Falle, Sir Bertram G. Penny, Sir George TELLERS FOR THE NOES.—
Ferguson, Sir John Percy, Lord Eustace (Hastings) Major Sir George Hennessy and
Fielden, E. B. Peto, Sir Basil E. (Devon, Barnstaple) Major the Marquess of Titchfield.