CUSTOMS AND INLAND REVENUE BILL.— [BILL 202.] (Hansard, 30 April 1888)

§ MR. SYDNEY GEDGE (Stockport)
said, he trusted that hon. Members would give him their attention for a few moments, while he introduced a series of new clauses which were of a highly technical character. The first clause he had put upon the Paper was possibly the most important, and he did not hesitate to say that if the Committee would accept the first clause, they would do more to promote that which they all professed to have at heart, a cheap and simple transference of land, than had been done by Parliament for a good many years. As there was occasion to point out last week, there was a wide difference between the laws affecting real and personal property in regard to Government duties. In the particular instance before them, the law operated hardly and harshly, not so much upon real property as upon the purchaser of real property. Suppose anyone died leaving an enormous quantity of personal estate, millions of stock, and hundreds and thousands of railway shares, his executors, after proving the will, could go into the market, sell the stock off, sell the shares, sell the bonds, and the purchaser in each case got an absolute title, free from all claims on the part of the Government, while the executors or the trustees who had sold the stocks and received the money could bolt the next day and the Government could not follow them. By reason of an old distinction inherited from the feudal times, it was not so with real property; when a man purchased real property he had to take care that the Succession Duty had been paid. That was no great hardship, if the purchaser was buying shortly after the demise of the testator; but, unfortunately, another old rule came in—namely, nullum tempus occurrit regi. No doubt, there was in most cases the 60 years' limit; but with regard to the claim for Succession Duty there was no limit at all. The claim of the Government went on for ever, and cases were cited two years ago in the House by Mr. Gregory, the Gentleman who took charge of these clauses, in 951 which, after the lapse of 30, 40, and even more years, the unhappy owner of land had been come down upon for the payment of Legacy or Succession Duty with compound interest from the time it was payable. He (Mr. Sydney Gedge) did not hesitate to say that it was quite impossible for anyone to buy an acre of land or a freehold cottage and be sure he was free from the claim of the Government to Succession Duty unless his solicitor investigated the title up to 1853. No one who had bought land since the Act of 1853 was passed could be sure, at the present moment, but that at some day or the other the Inland Revenue Authorities would not come down upon him for Succession Duty which was payable some 30 years ago, with compound interest at 4 per cent, and it would be the duty of the authorities to do that if they found that the duty was owing. He proposed, in the first place, to get rid of that by introducing a Statute of Limitations. The clause, as it stood, set that limit at six years; but he proposed to meet objections which might be raised by altering the limit to 12 years, so that they might have the same rule with regard to Succession Duty as they had in regard to the ordinary charges on land. In March, 1886, Mr. Gregory moved an Amendment to the Motion that the Speaker should leave the Chair, to the effect that there should be a limitation in point of time to the liability to duty. The hon. Gentleman was supported by the hon. Gentleman the Member for Stockton (Mr. Dodds), and by the hon. Gentleman the Member for East Donegal (Mr. Arthur O'Connor), by the hon. Gentleman the Member for South-East Warwick (Mr. Cobb), and he was supported, and strongly supported, by the hon. and learned Gentleman the Attorney General (Sir Richard Webster) who at that time was not Attorney General, and was, therefore, free to act in accordance with his convictions with regard to real property and its burdens. He (Mr. Sydney Gedge) was sure his hon. and learned Friend would, if he could, meet him to-night, and he hoped he would obtain a promise from the hon. and learned Gentleman, or from the Chancellor of the Exchequer, that the matter should receive immediate and favourable attention. The right hon. Gentlemen the Member for Mid Lothian (Mr. W. E. 952 Gladstone), in 1886, asked Mr. Gregory to put his ideas into shape, and not to press his Resolution as an Amendment to the Motion that Mr. Speaker should leave the Chair. Accordingly, the Amendment was withdrawn, and, just two months later, in Committee upon the Customs and Inland Revenue Bill then before the House, although there was no Succession Duty in that Bill at all, and the proposal of Mr. Gregory was, therefore, not germane to the question before the House, Mr. Gregory moved the identical clause which he (Mr. Sydney Gedge) had now the honour of submitting to the Committee. This clause had been drafted by one of the conveyancing counsel of the Court of Chancery. All hon. Members had expressed a desire to see a cheapening of land transfer, and he thought it was the duty of every Member who had pledged himself to his constituents upon this subject to give effect to his convictions, and to go, in case of need, into the Lobby with him. What had the right hon. Gentleman the Member for East Wolverhampton (Mr. Henry H. Fowler) said? The right hon. Gentleman was a solicitor of very large experience, and knew the evil effects, especially to the poor purchaser, of the present state of the law, and he said,—"We are not prepared to accept the Amendment, because it is not relevant to the Bill," and he asked Mr. Gregory to move some clause giving effect to his wishes in connection with an omnibus Bill to be brought in later on. The Amendment was not germane to the Customs and Inland Revenue Bill in 1886, because the Bill did not deal with Succession Duties, but it was germane to this Bill, because it did deal with Succession Duties. In this Bill, they were increasing the burden of the Succession Duty, they were making it heavier than before, and, therefore, these clauses were germane. The Government of the day (1886) being beaten on the Irish Bill, the promised omnibus Bill was not brought in, and, therefore, these clauses were not brought forward. The right hon. Gentleman the Member for East Wolverhampton (Mr. Henry H. Fowler) said that if this matter should pass into other hands than Mr. Gregory's—because Mr. Gregory had announced his intention of not standing for Parliament again—he hoped the object that Gentleman had in view 953 would be carried out, and he (Mr. Henry H. Fowler) would do all in his power to bring about that result. He (Mr. Sydney Gedge) was sorry the right hon. Gentleman was not present that day to do all in his power to carry the object that these clauses had, and he hoped the right hon. Gentleman would return in time to take part in the debate. Now, it was right he should explain shortly the effect of the clauses. The 1st clause,— Purchasers and mortgagees exempted from liability to Succession Duty after a specified period"— was divided into three sections. The first stated that the claim to Succession Duty— Shall not, as against a purchaser for valuable consideration, or a mortgagee, remain charged with or liable to payment of any sum for Succession Duty after the expiration of 12 years from the date of the death, upon the happening of which the duty may (whether before or after the passing of this Act) have become payable. The clause was made retrospective; but in order that the Authorities of the Inland Revenue might have ample time to look into all existing cases where duties were payable, it was provided— Or if such period of 12 years expires within two years from the date of the passing of this Act, then after the expiration of two years from the last mentioned date. The Committee would see, by the second section of the clause, how much care was taken to prevent the Government or the State from losing the Succession Duty, for it was provided that— The duty (if any) unpaid at the expiration of such period of 12 years or two years, as the case may be, shall be payable and paid by the successor personally, and shall become charged substitutively upon any other estate or interest liable to the same duty and remaining vested in the successor, and in the case of a mortgagee upon the equity of redemption. Therefore, it was not absolutely a bar against the claim of the Crown to Succession Duty; but it was simply a fixing of a time beyond which an innocent purchaser or mortgagee should no longer be liable. He appealed to the Committee whether that was not a fair and just proposition? Could they stand up and reject it, bearing in mind that the object that all had was as far as possible to assimilate the law and taxation upon real and personal property. Then the third sub-section said— 954 This section is not to lessen or affect any liability of any successor to payment of duty, whether out of money received on any sale or mortgage, or otherwise, but a purchaser or mortgagee shall not, for the purpose of obtaining the exemption conferred by this section, be bound to see that the duty is discharged out of the money or other consideration paid or given as the consideration for the sale or mortgage. Then the second clause which he bad the honour to propose gave great assistance indeed to the Authorities of the Inland Revenue in obtaining the payment of this Succession Duty. He could imagine that the answer which would be given by his hon. and learned Friend the Attorney General (Sir Richard Webster) to his contention that the claim of the Crown might fairly be, as he suggested, no worse off than the claim of a private subject, would be that the private subject was awake and would be able to ascertain through the relatives or friends when a certain sum of money was payable to him in the case of a death, but there was no way by which the Crown could tell that somebody had died upon whose death Succession Duty was to be paid. Supposing the testator left £5,000 to his daughter, which at her death was to go to A.B., A.B. know all about it from the first, and when the daughter died, he claimed the money. The State had not the same opportunity of obtaining information as to its rights, but when it did know them its authorities kept a good look out and enforced them. The State did know all about the matter with regard to Probate, but they had no information in regard to the Succession Duty unless it was furnished to them. Now, in the second clause— Power to deposit with Inland Revenue copies of documents not admitted to probate, and thereupon liability for duty after specified period to cease,"— it was provided that— Any person may cause an attested copy, which shall be exempted from stamp duty, of any document which creates a liability for payment of any duty, other than a testamentary document admitted to probate, to be deposited with the Commissioners of Inland Revenue at their principal office in London, Edinburgh, and Dublin, as the case may require, and such copy shall be received at that office. The other day, when he was speaking on the subject of the Succession Duties, and having this clause in mind, he suggested that it would be an admirable 955 thing if, as regards all settlements and wills, copies were sent to Somerset House. This clause, though it was not imperative, enabled trustees to do this, and it would have the same effect practically as if it were imperative. The result would be that the numerous evasions of the Succession Duty of which he spoke last week would not occur again, because the authorities at Somerset House would have the same means of ascertaining what money was payable by way of Succession Duty as they had with regard to the money payable by way of Probate Duty. In order to encourage trustees to send in these copies, it was proposed by this clause that— After a receipt has been given by an officer of Inland Revenue for a copy deposited as authorized by this section, of a document, no person shall, in the character of trustee, executor, or administrator, be liable for payment of any duty under such document after the expiration of six years next following the date of the deposit, or the date of the death by which the duty becomes payable, whichever date last happens. A trustee would, for his own protection, do all in his power to give information to the authorites as to the person on whose death duties would be payable, and, having done so, he was to be exonerated at the end of six years after that person had died from all claim. He thought his hon. and learned Friend the Attorney General would see that that clause gave ample security to the authorities; it certainly gave them far better security than they had at present. He believed that for every £1 they might lose under this arrangement they would gain £20 by avoiding the evasions which at present took place, because there was now no means of bringing to the knowledge of the authorities when Death Duties became payable. It was proposed also that— After a receipt has been given by an officer of Inland Revenue for a copy, deposited as authorized by this section, of any document, no person shall be liable for payment of any duty thereunder after the expiration of twelve years next following the date of the deposit, or the date of the death by which the duty becomes payable, whichever date last happens. The 3rd clause carried on the same idea; it related to wills. The 2nd clause they would see related to documents which were not wills, not testamentary documents. The 3rd clause provided, among other things, that— 956 No person shall, under a testamentary document admitted to probate, or under letters of administration, be liable for payment of any duty after the expiration of twelve years from the date of the duty first becoming payable. Then came a clause which was further designed to assist the Inland Revenue authorities; it enabled an officer of the Inland Revenue to apply to any trustee of any document which had been deposited, for information as to whether any of the persons were dead upon whose decease duties were payable, and if the trustee did not give the information within two calandar months, then the burden of proof was to be thrown upon him that the person or persons were still living, otherwise the duty was payable. They could scarcely invent any machinery which would be better calculated to insure the State against loss, but that was not all that this clause did for the benefit of the authorities. The 5th clause— Statutory advertisements for creditors made applicable to claims for duty in like manner as to other debts of a deceased person— provided that— A claim against the estate of a testator or intestate for payment of any duty accrued due from such testator or intestate in his lifetime, or otherwise than under a testamentary disposition made by him, or otherwise than under his intestacy, as the case may be, shall be deemed a claim within the meaning of the twenty-ninth section of the Act twenty-second and twenty-third years of Her Majesty, chapter twenty-eight, and accordingly an executor or administrator shall not be liable to the Crown for payment of any such duty further or otherwise than he would be liable in case the same were a debt due to any other creditor. And the 6th and last clause— Advertisements for information may be issued by Inland Revenue, provided that Inland Revenue authorities themselves might, if they thought fit, advertise at the expense of the estate for the information that they had been unable to acquire. He put it to his hon. Friends, whether they could really show any good cause for resisting these clauses? There might be some verbal alterations which it was desirable to make; but the effect of those clauses was an effect which they all professed to be anxious to secure, and which he did not think there was a single person who had not pledged himself to his constituents to endeavour, if he could, to secure. In the first place, these clauses enabled the transfer of real 957 estate to be made without the present hardship entailed upon purchasers of being obliged to investigate the title to as far back as 1853. In the next place, they enabled trustees and executors, who had done their duty in the way appointed, to escape personal liability after a certain time; and, in the third place, they secured to the authorities that information with regard to the settlement of personal property which they had not at present, and without which they were every year losing large sums of money. He begged to move the first clause which stood on the Paper.
New Clause— (Purchasers and mortgagees exempted from liability to Succession Duty after a specified period.)

(i.) "Notwithstanding the forty-second section of 'The Succession Duty Act, 1853,' or any other provision contained in that Act, real property, or any estate or interest therein, shall not, as against a purchaser for valuable consideration, or a mortgagee, remain charged with or liable to payment of any sum for Succession Duty after the expiration of 12 years from the date of the death, upon the happening of which the duty may (whether before or after the passing of this Act) have become payable; or if such period of 12 years expires within two years from the date of the passing of this Act, then after the expiration of two years from the last-mentioned date.

(ii.) "The duty (if any) unpaid at the expiration of such period of 12 years or two years, as the case may be, shall be payable and paid by the successor personally, and shall become charged substitutively upon any other estate or interest liable to the same duty and remaining vested in the successor, and in case of a mortgage upon the equity of redemption.

(iii.) "This section is not to lessen or affect any liability of any successor to payment of duty, whether out of money received on any sale or mortgage, or otherwise, but a purchaser or mortgagee shall not, for the purpose of obtaining the exemption conferred by this section, be bound to see that the duty is discharged out of the money or other consideration paid or given as the consideration for the sale or mortgage,"—(Mr. Sydney Gedge,)

—brought up, and read a first time.
Motion made, and Question proposed, "That the Clause be read a second time."

§ THE ATTORNEY GENERAL (Sir RICHARD WEBSTER) (Isle of Wight)
hoped his hon. Friend the Member for Stockport (Mr. Sydney Gedge) would not think it was out of any disrespect to him, if he did not follow him through all the details of his argument as re- 958 gards the subsidiary clauses. He did not deny that the clauses were framed with care, though he thought it was probable they would require further consideration when they came to be regarded from a detailed point of view. He assured his hon. Friend that he had no intention of going back from anything he had said on the last occasion when he addressed the House on this subject. Further consideration, however, had led him to the conclusion that, although his hon. Friend was perfectly right and justified in bringing the subject forward, it was impossible for the Government to assent to these clauses being inserted in the present Bill; but he was sure he could say, on behalf of the Chancellor of the Exchequer, that the matter would receive full consideration. The hon. Gentleman the Member for Stockport would remember that in "another place" a Bill had been introduced with regard to land transfer. He would also remember that that Bill, and other proposals of the same kind, proposed to deal with the charges on land. It did seem to him (Sir Richard Webster) that the matter was one which required very careful consideration; he was not at all sure that the mere limit of 12 years, or any actual number of years, would be a sufficient safeguard. He admitted, to a certain extent, that the limit would be sufficient to insure a proper amount of duty being paid to the Revenue. His hon. Friend had referred, with force and fairness, to the question of the investigation of title. He (Sir Richard Webster) admitted that it might be well worthy of consideration whether or not some steps should be taken to relieve parties other than those beneficially interested from responsibility in the matter. The hon. Gentleman said that this was the proper place for introducing these clauses. In one sense it was, because the Bill did deal with the Succession Duties; but the hon. Gentleman would pardon him (Sir Richard Webster) if he pointed out that the Bill only dealt with the quantity of Succession Duty; it did not deal with the incidence of the duty—it did not say how far it was to be charged on land, how far it was to affect succeeding interests, and, in fact, did not deal with any of the difficulties which his hon. Friend had justly pointed out surrounded this subject. Therefore, while he (Sir Richard 959 Webster) did not suggest that they had no wish to consider the question fairly, it was impossible for him, and he thought it was impossible for the Chancellor of the Exchequer, to accept these clauses at the present stage, nor could they give them the amount of discussion they were entitled to when they were brought up, as they had been, as new clauses to this Bill. He was sure his hon. Friend would not think he made any complaint against him for having brought up these clauses as new clauses. If it were necessary to go into greater detail, he thought he could make good some minor objections to the framing of the clause; but probably it would be more waste of time to do so. He would only say, in conclusion, that he recognized there was a grievance requiring to be dealt with; whether it was to be met in this particular way was a matter in which he must exercise his own judgment. The Government had every intention to look into the matter, and to deal with it; and, therefore, he asked the hon. Member, unless he thought he had not been sufficiently fairly met, not to press these clauses to a Division.

§ MR. GEDGE (Stockport)
said, his hon. and learned Friend the Attorney General had met him very kindly and fairly; but, after all, he had only promised, on the part of the Chancellor of the Exchequer, to give the matter full consideration. Of course, the Chancellor of the Exchequer and the Government gave full consideration to anything a Member brought forward; but he wanted something more than full consideration—he wanted favourable consideration. He would like to know whether the Chancellor of the Exchequer agreed with him in the object he had in view? [Mr. GOSCHEN: Hear, hear!] He was glad to receive that approving cheer from the right hon. Gentleman; and if he felt sure that the Government would endeavour to carry out the object of these clauses when the Land Transfer Bill was brought in, and would not put the matter off again, he would not think of dividing the House.

§ THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)
said, he had the greatest pleasure in giving his hon. Friend not only the assurance that full consideration, but that most favourable 960 consideration would be given to this subject. Indeed, he should be glad to be a competitor with the hon. Gentleman not only in this matter, but in every matter which tended to cheapen the transfer of land to the utmost, and to cut down the charges.
Clause, by leave, withdrawn.
On the Motion of Mr. CHANCELLOR of the EXCHEQUER, the following Amendments made:—In Schedule 1, page 16, leave out— Mortgage of any stock or marketable security—

£ s. d.

For every £5,000, and, also, for any fractional part of £5,000, of the amount secured 0 10 0;"

After line 27, insert—"Equitable mortgage.—Agreement or memorandum under hand only relating to the deposit of any title deeds or instruments, constituting or being evidence of the title to any property whatever (other than stock or marketable security), or creating a charge on such property—

For every £100, and any fractional part of £100, of the amount secured 0 1 0;"

Schedule 2, leave out page 17 and down to line 21 in page 18, inclusive (29 and 30 Vic. c. 64, s. 13); page 18, after line 21, insert— 34 and 35 Vic. c. 4. An Act to amend "The Stamp Act, 1870," in relation to Foreign securities, mortgages of stock, and proxy papers. In part, namely, section five.

	£ s. d.
For every £5,000, and, also, for any fractional part of £5,000, of the amount secured	0 10 0;"
After line 27, insert—"Equitable mortgage.—Agreement or memorandum under hand only relating to the deposit of any title deeds or instruments, constituting or being evidence of the title to any property whatever (other than stock or marketable security), or creating a charge on such property—
For every £100, and any fractional part of £100, of the amount secured	0 1 0;"