§ MR. GREGORY (Sussex, East Grinstead), in calling attention to the position of trustees, executors, and others liable to the payment of duties to the Crown, said, that the existing law was based upon the old principle, that "Nullum tempus occurrit regi;" but that principle had already been departed from, particularly with reference to the claims of the Crown to real property, which, by statute, were now limited to a period of 60 years. No exception to it, however, had been made in the case of Succession, Probate, or Legacy Duties, which were, consequently, the subject of claims by Revenue authorities for an indefinite period of time. Nor was that all. The Crown could claim interest at 4 per cent on unpaid duties, and the right to such interest accrued from the moment when the duties were legally due. It was obvious that this must be the cause of great hardship—he might say of injustice—to many persons; and he had in his hand numerous instances of this, with the whole of which he did not propose to trouble the House; but he would give one or two illustrations. Isabella Campbell died in October, 1807. She directed her real estate to be sold on the death of Isabella Gilmore. The Legacy and Probate Duties were duly paid on the personalty. The real estate was sold in 1840, and the duty was demanded in 1880 upon it. Thomas Ledwell died in 1803, bequeathing the interest of £1,710 Reduced to an illegitimate daughter for life. Trustees of the will were appointed by the Court of Chancery in 1805. In 1829 fresh trustees were appointed, and the present trustees in December, 1852. The daughter died in May, 1885, and duty was claimed on the dividends paid to her from 1803. The claim was compromised by the payment of the duty from 1852. A. and B. settled £14,000 in 1833 upon trust to pay the income to a sister C., and on her death for her children D. and E. D. married in 1849, when her share of the fund 1376 was settled. E. married in 1852, when her share was settled. C. died in October, 1853, when the funds were transferred. The Succession Duty Act came into operation in May, 1853; the duty was claimed in 1885. Lord Pomfret died in 1833. A claim on jointure was made in 1865 under his will, executed in accordance with a power in his brother's will. Accounts of both estates passed, and the estate of Lord Pomfret was administered in the Court of Chancery. Duty was claimed at 10 per cent. and the claim was settled for £1,024. Those, he thought, were sufficient to support his view of the harsh operation of the present law; but there was another and very important aspect in which it had to be regarded—namely, the title to real property. As the law stood, it was necessary for a purchaser of any property to ascertain whether and how it had become liable to Succession Duty at any time since the passing of the Act of 1853; and whether all such duties had been paid. If he did not do so, he might be liable at any time to have a claim for such duty sprung upon him; and any solicitor passing a title liable to it would be personally responsible to his client for having done so. It was evident, therefore, that all their efforts to limit or shorten the title to real property would be in vain whilst the claims to Succession Duty remained in their present position. He hoped that he had shown enough of the operation of the law as regarded individuals, personal property, and real estate, to justify his calling the attention of the House to the subject. He would conclude by moving "that a limitation in point of time should be applicable to liabilities for duties to the Crown."
§ MR. DODDS (Stockton), in rising to second the Motion, said, that the fact that it emanated from his hon. Friend opposite (Mr. Gregory) was sufficient to commend it to the House, for he never made a proposition in the House that was not worthy of consideration, and generally of adoption. He was quite sure that if hon. Members would look into the facts with reference to this matter they would be satisfied that this Motion ought to be adopted. The time within which the Crown should prosecute its claim ought to bear some reference to the time to which individuals were limited for taking action. He had 1377 no hesitation in saying that in agreeing to this Motion hon. Members would be taking a step towards the cheapening of the transfer of land. He was very glad it fell to the lot of the hon. Gentleman the Secretary to the Treasury (Mr. H. H. Fowler) to reply to the hon. and learned Member opposite, as from his extended experience in these matters he would understand the value of the Motion. If the hon. Gentleman was not prepared to accept the Motion absolutely, he trusted that he would be able, in conjunction with the Chancellor of the Exchequer, to introduce into the Budget the suggestion he had made in 1879 that there should be but one duty payable on the death of the testator. He commended the Motion heartily to the consideration of Her Majesty's Government.
§
Amendment proposed,
To leave out from the word "That" to the end of the Question, in order to add the words "a limitation in point of time should be applicable to liabilities for duties to the Crown,"—(Mr. Gregory,)
—instead thereof.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. ARTHUR O'CONNOR (Donegal, E.), in supporting the Motion, said, he did so with special pleasure, having regard to the fact that he was acquainted with a case in the county he represented (Donegal) which raised the point at issue. A man named M'Donnell bequeathed his property, a small one, to the Most Rev. Dr. Murray, then Bishop of the diocese, for charitable purposes, giving, however, a life interest to his widow. The latter outlived Dr. Murray, and the property came to his successor, Cardinal Cullen, who, yielding to the representations of the then Bishop of Raphoe, handed over the property to his Lordship to be used strictly in charity, but always having regard to the claims of an old priest, Father Brady, a relative of the testator. For a very long time the Inland Revenue officers appeared to have taken no steps whatever, though they had had full information. After the lapse of a considerable period of time, however, they suddenly unearthed this old priest and came on him for a large amount of Succession Duty. They not only charged the Succession Duty, but also a largo amount of in- 1378 terest in respect of the years during which they had neglected to collect the duty. As he, however, was not in any way legally the owner of the property and not liable, they then unearthed the Most Rev. Dr. Logue, the present Bishop of Raphoe, and compelled him to pay £168 Succession Duty — the nominal value of the property was about £100 a-year—but inconsequence of the necessary reduction of rents the actual amount was only £60. His Lordship had, by the exercise of very great economy, put together enough money to build a much-needed school-house for the tenants. The ground for this was marked off and the materials got ready for the schools, when down came the Inland Revenue, and not only demanded £168 Succession Duty, but interest for the many years in which they had been lying idle to the amount of £51 in addition. The consequence was, that the Bishop was obliged to communicate with the priests of the parish that all his economy had gone for nothing, had been in vain, and that the school so badly needed could not be built, as he had not one farthing loft, having to surrender all he had to pay the Inland Revenue claim. He believed, however, that the Revenue authorities had a legal claim to the money; but, whether that was so or not, their conduct in the matter was harsh in the extreme. Considering the lapse of time that had taken place, this was really most inequitable; and he believed that the proposition of the hon. Member for Sussex would prevent the recurrence of such injustice. Such cases as these showed that the law was not in a satisfactory state, and he was of opinion that the Motion ought to be accepted.
§ MR. COBB (Warwick, S.E., Rugby), in supporting the Resolution, said, the risks to which trustees were exposed were often at the hands of those whom they sought to benefit; and he thought that, though what was asked was a small instalment, it was worth giving. He hoped his hon. Friend (Mr. H. H. Fowler) would speak on this subject as a member of the Profession, and not merely as Secretary to the Treasury.
§ THE SECRETARY TO THE TREASURY (Mr. HENRY H. FOWLER) (Wolverhampton, E.)said, that the high authority of his hon. Friend (Mr. Gregory), and the uniformly fair way in which he always stated his case, invested 1379 his opinions with a weight which attached to few hon. Members of the House, and made it difficult to answer him. His hon. Friend had laid before the House the case of the executors and trustees, but did not state the case of the Government. No one knew better than his hon. Friend that hard cases made bad law. And it would be impossible to administer any law which did not entail some hardship of which the taxpayer might properly complain. He would explain how the question stood, and show that it would be unwise to agree to such a limit as his hon. Friend would propose. The Duties to which his hon. Friend referred were Death Duties, and to these he would confine his observations. There were four descriptions of duties levied under that head—namely, Probate Duty, Account Duty, Succession Duty, and Legacy Duty. As to the first, the Probate Duty, there was no difficulty about its collection. It was bound to be paid within six months of the testator's death. The Account Duty, which was not generally known to the public, but which had been introduced within the last few years, was practically a sort of subsidiary Probate Duty, and was intended to touch property made the subject of voluntary settlement or given in anticipation of death to evade the payment of Probate Duty. In that case, also, the executors were bound to pay the duty within the proper time. Coming, then, to the Legacy and Succession Duties, when was the Legacy Duty payable? His hon. Friend the Member for Stockton (Mr. Dodds) would have one uniform rate levied totally irrespective of the devolution of the property, and no Legacy or Succession Duty should be afterwards charged. It was not for him to anticipate the statement of the Chancellor of the Exchequer; but he was bound to admit that there was a great deal to be said in favour of that view, and if such a tax could be imposed so as not to create a loss to the Exchequer it might recommend itself to the House and the country. In 1881 the Prime Minister (Mr. Gladstone) made a change approved by the country generally, in which he substituted an uniform Probate Duty of 3 per cent. and where the property descended to the children or lineal descendants no further duty was imposed. But at present they had to deal with a most complicated system 1380 under which legacies were bequeathed. The Legacy Duty was not payable until the legacy itself was payable. It might possibly be in 12 months after the testator's death; it might possibly be not for years afterwards. Suppose a man left property to his widow, then to his married daughter, and then to her children. No Legacy Duty accrued until after the death of the widow. It would be impossible to ascertain what the duty was until the time of its payment had arrived; but how could they fix a date of that kind? His hon. Friend said 30 years might be fixed. But in a recent case the tenant for life survived the testator 60 years, a sum of £100,000 had to be divided, and 99 estates to be grappled with. The whole of his argument rested upon this—that the duty ought to be paid before the legacy was paid, or before the property was divided, that the only person who had control of the property was the executor or trustee as the case might be, and if the executor or trustee did not pay, but divided the property, the executor or trustee ought to be liable to pay the duty which the Crown had lost. If the Legislature was prepared to extend the legislation of 1881 and say that the whole might be commuted by an additional ½ per cent. a settlement might be made, and perhaps the country might be a gainer. The Inland Revenue had between 80,000 and 100,000 cases waiting the death of various persons upon whose death the duty would accrue, and the 1 per cent payable by the children or their descendants was estimated at not less than £2,000,000 payable to the Crown. He did not mean £2,000,000 on which the duty had to be paid, but £2,000,000 of duty. A great point had been made with reference to the Succession Duties; and he thought that the hon. Gentleman who moved the Amendment must have forgotten that the Commissioners were bound to certify that the duty was paid, and that, therefore, there was no difficulty in showing that it had been paid. Whether it was real or personal property, if the trustee did his duty and paid the tax there would be no question or difficulty. But they were asked to say that they would give the executor a certain number of years in which he might or might not pay the tax, and if he did not pay the tax then he was to go scot-free, and the Crown was to have 1381 no opportunity of following him. There was another serious question in which the Revenue was concerned. If a Statute of Limitations were passed the effect would be that the duties would not be paid until the period had run out, and then the Crown would find that the parties had gone. The broad principle upon which the law rested was this—all property under settlement under intestacy was in the legal hands of trustees, or executors, or administrators, as the case might be. It was their duty before they parted with property to see that the taxation which the Legislature had imposed upon it was paid. If they discharged that duty they were subject to no further liability or risk; if they did not they ran a risk. Then it was said that the period within which the payment should be made ought to be limited. He contended that a statutory limitation of this description would be an incentive to fraud, a premium on carelessness, and would seriously affect the whole working of the duties and injure the Revenue. On these grounds he asked the House to negative the Amendment.
§ SIR RICHARD WEBSTER (Isle of Wight)said, that he could not help thinking that the hon. Member the Secretary to the Treasury (Mr. H. H. Fowler) had really lost sight of the case put forward by his hon. Friend the Member for Sussex (Mr. Gregory). He did not understand that his hon. Friend had any objection to proper provisions being made to protect the Revenue. What he did understand him to say was that the Crown should not have an unlimited period during which they might come down on innocent parties for sums of money for which they were not liable morally and scarcely legally. A number of cases had been put by the hon. Gentleman as to the length of time during which executors had been administering estates; but his hon. Friend did not suggest that the time of limitation should run for any period before the day on which the duty became payable. His point was, however, that, assuming the duties had become payable, there should be some time, he did not say what time—a long time if they liked—but some period of limitation as against the Crown. The Secretary to the Treasury had referred to a life interest lasting over 60 years, at the termina- 1382 tion of which period the duty became payable. As he understood the hon. Member for Sussex, he suggested that when the duty became payable at the end of the 60 years, or at any other period, there should be a time within which the duty could be recovered. He desired to say that he would not willingly be a party to any scheme which would open a door to fraud; and his hon. Friend would agree that in any scheme such as that which he had put forward proper provisions should be inserted to protect the Government in case of fraud. He could not but think that it was for the protection of the Government that there should be a period within which claims could be recovered. The hon. Gentleman opposite (Mr. H. H. Fowler) had said that the result of adopting such a proposal as that suggested by his hon. Friend would be that the duties would not be paid until after the day fixed by Statute had elapsed. That meant that the law would be evaded; but, as a matter of fact, the Department did find people out who had not paid the duties; and in cases which had come under his notice proceedings had been taken and money recovered. He submitted that some limitation should be fixed, under proper safeguards, within which the duties should be paid to the Revenue.
§ THE FIRST LORD OF THE TREASURY (Mr. W. E. GLADSTONE) (Edinburgh, Mid Lothian)said, that the hon. and learned Gentleman who had just sat down (Sir Richard Webster) had stated that his hon. Friend the Secretary to the Treasury (Mr. H. H. Fowler) had not met the question as put by the hon. Member for Sussex (Mr. Gregory). He (Mr. Gladstone) was rather tempted to retaliate, and to say that the hon. and learned Gentleman had not met the point of his hon. Friend's speech. The Government could not accede to a Resolution of this nature on the Motion that the Speaker do leave the Chair. They could not give a promise to deal with a subject of this kind until they saw the manner and form in which it was proposed to be dealt with, and until they were themselves prepared with a satisfactory form. They had not yet reached that stage. He would suggest this to the hon. Member for Sussex—that if he raised a substantive Motion—and he did not say it was at all im- 1383 possible—he could promise him that it would be received by the Government entirely in a practical spirit. It was impossible to take exception to the general doctrine of the hon. and learned Gentleman (Sir Richard Webster) who had just sat down, or to that of the Mover of the Amendment. Primâ facie, there was something plausible and equitable in the application for limitation of the Crown rights in this case. He (Mr. Gladstone) hoped the day would come when his hon. Friend behind him (Mr. Dodds) might well see effect given to his views. They had done a little in that respect, and he trusted that the time would come when all these lifelong claims would be got rid of by a great change in the Law of Death Duties. Any proposal such as the one now before them was, only at best, a modification of an extremely complicated and very objectionable system. He understood the hon. and learned Gentleman to say that they should not punish innocent parties who had never been bound to perform any legal act and never would be bound to perform any legal act in this respect. But the Government case was this—The duties passed through the medium of executors who had no beneficial interest in the matter. They could hardly expect them to be very zealous and to give the necessary notice to the Revenue Department. It was exceedingly difficult for the Department of Inland. Revenue to obtain precise knowledge as to when the claims of the Crown accrued and the legacy became payable. And if the unlimited right of the Crown should be subjected to limitation it would cripple exceedingly the representatives of the public—the heads of the Department— in the performance of their important duty, because they had no distinct means of ascertaining when the legacy became payable, and the only way of obtaining the duty in many cases was to enforce the claims when they discovered them. Of course, it was obvious that they were not likely to postpone the matter unduly. They did not keep these things hanging over the heads of persons liable to pay through any default of their own; and although it might be perfectly true that the person upon whom they came down might be an innocent person, and might not himself have been guilty of the fault, the 1384 persons through whom his interests had been transferred—namely, the executors—were the persons that had been guilty of default. The House might not be able to lay very heavy blame upon them. One could not say that they had committed any grave legal or moral offence. The wonder rather was how people in this country were induced to perform without remuneration so indomitably as they did the enormous mass of duties—difficult and irksome duties—that were incumbent upon trustees and executors. That being the state of the case, the Government did not give a pledge prematurely upon the subject; but if the hon. Member (Mr. Gregory) thought he could frame a proposition, he could assure him it should have from the Government a fair and candid consideration, with no indisposition to give fair scope to the general views which he had urged upon the House.
§ SIR MICHAEL HICKS-BEACH (Bristol, W.)If I rise to say a few words on this matter, Sir, it is not with any wish to criticize anything that has fallen from the right hon. Gentleman who has just sat down (Mr. Gladstone) in regard to a very complicated question, which perhaps can only be fully understood by those who have practical experience of the work of collecting the duty. After the discussion which has taken place on the Motion of my hon. Friend (Mr. Gregory), on which I do not now desire to express any opinion, it will be seen that there is very great difficulty in dealing with this question. We remember cases of hardship suffered by trustees and executors as well as by persons themselves having an interest in the property on which the duty has to be paid; but we must be careful that in our desire to protect individuals from hardship we do not do anything to damage the Revenue. I think that the introduction of a limitation in all cases would give an opening for fraud, and I will suggest in support of this argument one point in connection with the payment of the Succession Duty. If I am wrong the right hon. Gentleman opposite (Mr. Gladstone) will correct me; but I think that when the Succession Duty was first imposed it was given as a boon to real property, that the duty on timber should not be paid when the inheritance accrued, but only when the timber was 1385 sold in after years. Therefore, there might be the risk that if a limitation were introduced it would tempt persons to delay making returns which the law requires them to make, and so evade the duty altogether. I hope that my hon. Friend (Mr. Gregory) will be content with the assurance he has received from the Prime Minister, that if he undertakes to bring in a Bill on the subject—and there is no one better qualified for the task than the hon. Member—that Bill will have the favourable consideration of the Government; and I hope that, while it may afford relief to individuals, it will at the same time prove a measure which will secure the Revenues of the country from fraud.
§ MR. WARMINGTON (Monmouth, W.)said, that already executors burdened with a trust had the power, under the Act 43 Vict., to go to the Inland Revenue Department and ask the duty to be assessed once for all, and, that being done, the Inland Revenue could give a full discharge to the executors. Therefore, if any executors had any difficulty they had only to avail themselves of that Act of Parliament, so that no hardship could accrue to them. If some similar provision were inserted in regard to Succession Duty no hardship would be felt at all. He hoped, therefore, the House would not think that trustees were liable to such hardships as had been represented.
§ MR. LIONEL COHEN (Paddington, N.)complained of the hardship inflicted in consequence of the Inland Revenue Department requiring payment from individuals not only of the principal sum due as duty, but also of compound interest, which, in one case he knew of, had been exacted for a period of 23 years. He would suggest that the Prime Minister should use his influence with the Department until there was some relaxation of the law to induce them to act somewhat less stringently than they did in enforcing payments of interest such as had been complained of.
§ MR. GREGORYsaid, that the offer of the Government was very flattering and very difficult. After, however, the satisfactory statement of the Prime Minister, he would accept it, and would, therefore, ask leave to withdraw his Motion.
§ Amendment, by leave, withdrawn.