FINANCE BILL.—(No. 190.)

HC Deb 12 June 1894 vol 25 cc928-90

COMMITTEE. [Progress, 11th June.

[ELEVENTH NIGHT.]

Bill considered in Committee.

(In the Committee.)

Clause 5.

MR. GRANT LAWSON (York, N.R., Thirsk)

said, he wished to move the Amendment standing in the name of the hon. Member for the Waltham stow Divi- sion of Essex. The object of the Amendment was to secure that the executor should get probate within a reasonable time, and thus be enabled to commence dealing with the property of the deceased. How long it would take him to complete his dealing with the property was another matter altogether; but, at any rate, there should be no delay in handing to him the document which empowered him to commence the performance of his duties. The provision of the clause on this point was— (2) The executor of the deceased shall pay the Estate Duty in respect of all personal property (wheresoever situate) of which the deceased was competent to dispose at his death, on delivering the Inland Revenue affidavit, and may pay in like manner the Estate Duty on any other property passing on such death. But there was no direction as to how and where he was to get probate or letters of administration, which alone would entitle him to commence the duties of his office. He noticed, however, that the hon. and learned Solicitor General had put down an Amendment which to a certain extent dealt with this point, but it involved considerations as to the value of real property which, from their point of view, somewhat detracted from its value. All they desired was that probate should be procurable within a reasonable time, and the Amendment which he had to propose would secure that the executor should have an immediate prospect of getting control of the estate in order to obtain funds out of which he could pay the duties chargeable upon it.

Amendment proposed, in page 3, line 23, after the word "affidavit," to insert the words or at such later time as the Commissioners may allow, and upon such payment he shall be entitled to have probate or letters of administration forthwith granted to him."—(Mr. Grant Lawson.)

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

THE SOLICITOR GENERAL (Mr. R. T. REID,&c.) Dumfries,

said, the Amendment raised two points, one of which was to enable the Commissioners to allow time for payment. That power they already possessed under the Act of George III. relating to Succession Duty, and he took it, therefore, that that was not the main object of the hon. Gentle- man opposite. The second, and presumably the material, point was that letters of administration should be forthwith granted to the executor. This would, as a matter of fact, happen whether the words were inserted or not. On presenting the Inland Revenue affidavit the executor could get his authority to proceed, and therefore the words were really superfluous. He could not, under the circumstances, accept the Amendment.

*SIR M. HICKS-BEACH (Bristol, W.)

said, this was one of the points to which on a previous occasion he ventured to call attention, when he pointed out the delay which would inevitably occur owing to the difficulty of dealing with estates for which different persons were accountable. He was informed on high authority that probate was not granted on the Inland Revenue affidavit until it had been stamped, and that stamping was not allowed until the executor had accounted for all the various classes of property, although he himself had no legal control over it. He proposed on the 7th clause to move an Amendment, the object of which would be to secure that the delivery of the certificate should not be delayed by reason of property other than personal property in the United Kingdom not being included in the account. He hoped the Government would give careful consideration to this question, as serious delay would ensue unless some such alteration as that suggested in the Amendment under discussion was made.

MR. R. T. REID

said, his information, coming from authentic sources, was exactly contrary to that indicated by the right hon. Gentleman, but he would inquire further into the matter, and the point could be dealt with on Clause 7.

SIR M. HICKS-BEACH

The point is, to have the estate vested in the executor as quickly as possible.

MR. J. LOWTHER (Kent, Thanet)

said, he hoped the Government would not lose sight of the difficulties with which executors would have to cope. He had had some personal experience in this matter, and knew that sometimes arrangements had to be made to enable them to surmount the preliminary obstacle—i.e., the payment of the Probate Duty. An executor, in order to perform his duties, had to make himself master of a vast number of intricate details of process which involved the expenditure of much time and money, and this Bill, ho feared, would only increase their difficulties. He expected that as a result large numbers of executors would refuse to act, and they would decline to make themselves responsible in an affidavit under heavy penalties for statements respecting matters as to which they were not really responsible. He hoped that the Government would be prepared with some solution of this difficulty.

*MR. HENEAGE (Great Grimsby)

said, he, too, had had experience as an executor, and as a result of his study of the Bill he had come to the conclusion that executors would renounce, and that the administration of wills and estates would fall more and more into the hands of solicitors, with a consequent great increase of expense and time. It was almost a question whether the Government ought not to bring in a Bill for the appointment of an official trustee. In the case of large estates it would be almost impossible for executors to do their work without an immense amount of legal advice; and for all practical purposes the solicitor would become the executor. This was one of the most difficult questions in the whole Bill, and he hoped the Government would consider it before they reached Clause 7.

MR. GIBSON BOWLES

said, one point had been lost sight of in the course of that debate, and that was that it was proposed for the first time to make an executor liable to pay Estate Duty on property abroad which he could not touch and in respect of which an executor abroad might be appointed. There might be £1,000 worth of property here and £1,000,000 worth in Victoria, and the executor here would have to pay duty on that £1,000,000. Surely that was never intended; if it were it was a most nefarious proposal. No executor ought to be held liable for more property than passed into his hands. He had proposed to insert words to provide that the duty should be payable only on such property as was capable of being received or recovered by such executor by virtue of his office. He submitted that this was a most reasonable limitation, and he trusted that the Government would accept it when the time came for him to propose it.

MR. GRANT LAWSON

said, lie would not put his out-of-date legal experience against the knowledge of the Solicitor General, and as the hon. and learned Gentleman had expressed his belief that the object of the Amendment was covered by Clause 7 he would not press his Motion.

Amendment, by leave, withdrawn.

SIR R. TEMPLE

said, he wished to propose the Amendment standing in the name of the hon. Member for Preston (Mr. Hanbury), to omit after "affidavit" all the words to the end of the subsection, i.e., and may pay in like manner the Estate Duty on any other property passing on such death. He said, the Committee would observe that the earlier part of the sub-section related to personal property, and, therefore, it was to be presumed that "other property" meant real estate. Their contention was, that if the words were allowed to stand they would enable the executor to dispose of property with or without the knowledge of beneficiaries or other persons concerned. Such a power would at the best be of questionable advantage, and under certain circumstances it might prove absolutely dangerous. Their reasons for so thinking rested on the words of Sub-section 5, Clause 9— namely— A person who pays the Estate Duty on any property shall have power, whether the property is or is not vested in him, to raise such duty, by the sale or mortgage of that property, or any part thereof. The words which he now proposed to ask the Committee to omit from Clause 5 would enable the executor to dispose of property without the knowledge of the beneficiare; and it might place him in a false position, as he thought the Solicitor General would admit. The omission of the words would involve, of course, a further alteration, but it could be dealt with in the Amendment of the Solicitor General, which came next on the Paper.

Amendment proposed, in page 3, line 23, after the word "affidavit," to leave out to end of Sub-section (2.)—(Sir R. Temple.)

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

MR. R. T. REID

pointed out that the Amendment would deprive an executor of power which in certain circumstances it might be convenient to exercise. The sub-section was merely permissive, the word used being "may" and not "shall." Supposing, for example, personal and real estate both passed to the same person, it would be convenient for the executor to pay duty on both at the same time, and therefore it was desirable the words should stand. Any limitation that was required was provided by the next Amendment on the Paper in his name, and if carried it would read thus— The executor may pay in like manner the Estate Duty on any other property passing on such death, which by virtue of any testamentary disposition of the deceased is under the control of the executor, or which, if not under his control, the person accountable for the duty thereon consents to such payment. The insertion of these words would, he thought, meet the objections of the hon. Baronet, who need not, therefore, press his Amendment.

SIR R. TEMPLE

said, that under the circumstances he would withdraw the Amendment, the understanding being that the words quoted by the Solicitor General be added to the sub-section.

*SIR M. HICKS-BEACH

said, he did not quite understand where the executor was to get the money from with which to pay the duty. Was it to be from the estate which passed to him or from an estate belonging to other persons who were to consent to his making payment? He did not think it desirable that the executor should interfere in that way with estates with which he had nothing to do.

*MR. H. MATTHEWS (Birmingham, E.)

said, he hoped the Solicitor General would throw a little further light on this matter. Already there were serious difficulties in the way of the payment of Probate Duty; they could not touch estates without probate, and they could not get probate until the duty was paid, and he had known cases in which the executor had had to pay the money out of his own pocket or pay it on his own responsibility. Let him take a simple case. A man left property worth a million. The executor would have to find £80,000 before ho could get probate. How was he to do it?

MR. GOSCHEN (St. George's, Hanover Square)

said, the Committee were at some disadvantage in this matter, for while the hon. and learned Solicitor General dealt ably and lucidly with all the legal points, he was not unnaturally silent when financial questions were raised. He thought it would be desirable that there should be some financial gentleman on the Treasury Bench to assist the Solicitor General. It was not reasonable to expect the Chancellor of the Exchequer to be constantly in attendance, but some financial Member of the Government should be present. Here was a difficult case put by the right hon. Gentleman the Member for East Birmingham. No one was present on behalf of the Government to say how the obstacle could be overcome; the Government seemed to be content to allow it to be met as best it could without explanation. If the difficulty was great at present it would be considerably enhanced by the increase of the duties, and it was the duty of the Government to find a remedy.

MR. R. T. REID

said, he was most grateful for assistance, financial or otherwise, but he really did not think the point raised by this Amendment was a difficult one. The question was whether an executor should be allowed, if he liked, to make certain payments. If he had not the money he would in all probability prefer not to pay; but if he had it and felt disposed to pay, no obstacle should be placed in his way. Although he did not pretend to be an authority on financial matters, he would submit that it required no financial skill to settle this point.

MR. GOSCHEN

said, it was germane to the point to see how the money was to be raised. He trusted that the Government would give attention to this subject.

*MR. T. H. BOLTON (St, Pancras, N.)

inquired if the consent of the person for whose benefit the money was to be paid was sufficient, what about the person from whose property the money was to be taken? In an ordinary executorship, with property also under a settlement, it might be desirable that the duties on both classes of property should be paid at the same moment; but the question was, whether the owner of the unsettled property passing under the will would allow his money to be taken to pay the duty on the settled property? Should not the consent be required not only of the persons for whom the duty was paid, but of the persons interested in the general estate from which the money with which to pay the duty was taken?

THE CHAIRMAN

That point arises on the next Amendment.

MR. J. LOWTHER

said, that as the Solicitor General had courteously undertaken to give his attention to the point raised by his right hon. Friend, he would not dwell upon it; but he would like to ask the hon. and learned Gentleman on what ground he came to the conclusion that the difficulty was one very easy to overcome?

Amendment, by leave, withdrawn.

Amendment proposed, in page 3, line 24, after the word "death," to insert the words which by virtue of any testamentary disposition of the deceased is under the control of the executor, or, in the case of property not under his control, if the persons accountable for the duty thereon request him to make such payment."—(Mr. R. T. Reid.)

MR. BYRNE (Essex, Walthamstow)

asked the Solicitor General if he had considered the desirability of extending this provision to the case of administrators in intestacies?

MR. R. T. REID

replied, that he thought there was no necessity for such extension. The administrator would have the power.

MR. BYRNE

said, he differed from the view of the hon, and learned Gentleman. He held that the administrator of an intestate's estate should have the same power as an executor to pay the duties with the consent of the persons interested.

MR. R. T. REID

said, that if the hon. Member would look at the Interpretation Clause, he would find that the word "executor" included "administrator."

MR. BYRNE

said, that might be so; but he submitted that it ought to be clearly set out on this clause.

*SIR J. LUBBOCK

said, as he understood the matter, the Amendment of the Solicitor General met the first point, but the second point still remained open. Where an executor, on his application for the grant of probate, limited his application to certain property, he ought not to have to pay the Estate Duty except in respect of that property. The words of the Amendment he had put down were— An executor whose application for the grant of probate shall be expressly limited to the assets of the deceased in the United Kingdom shall not be liable to pay the Estate Duty in respect of property situate elsewhere. He thought, however, that the same object would perhaps be obtained if his hon. and learned Friend would consent to leave out the words by virtue of any testamentary disposition of the deceased. It was important that an executor should not be bound to assume a responsibility which he could not fulfil. He begged to move, as an Amendment to the Solicitor General's Amendment, to leave out the words by virtue of any testamentary disposition of the deceased.

Amendment proposed to the proposed Amendment, to leave out the words by virtue of any testamentary disposition of the deceased."—(Sir J. Lubbock.)

MR. R. T. REID

said, he did not think the right hon. Gentleman would effect the purpose at which he aimed by the omission of the words mentioned. He would venture to suggest that it would be better to go upon the words of the old Amendment. There could be no objection to insert, after the word "which," "in an intestacy, or."

SIR J. LUBBOCK

said, he would withdraw his Amendment to the Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

Amendment proposed to the said proposed Amendment, after the word "which," to insert the words "under an intestacy, or."—(Mr. R. T. Reid.)

MR. GIBSON BOWLES (Lynn Regis)

said, it was difficult to follow this Amendment, but he should suggest that there were other words which would have met both cases—for instance, "and which is recoverable or receivable by the executor in virtue of his office."

*MR. T. H. BOLTON (St. Pancras, N.)

said, he could understand that it might be convenient in certain cases, where the executor had a considerable sum of money in hand, that he should pay the duty out of that money. That, of course, would be very well where the cash belonged to the people who were in- terested in the property; but where the money in hand belonged to one person and the property to another the duty ought not to be paid in this way. If the consent of the persons accountable for the duty was to be obtained, the consent of the persons out of whose money the payment was to be made should also be obtained.

*MR. MATTHEWS (Birmingham, E.)

said, he should like to ask the hon. and learned Gentleman what the first words of the Amendment implied? The subsection required the executor to pay the duty in respect of all personal property in respect of which the deceased was competent to make disposition on death, and then there was another sub-section which enabled the executor to pay duty in respect of property which was not vested in him by virtue of his office.

MR. T. H. BOLTON

said, that to compel an executor to pay duty upon an estate with which he, as an executor, had nothing to do would be an improper abrogation of executorship duties, and nothing short of a breach of trust. The proposal would give the executor power to part with moneys without consulting the beneficiaries—that was, to pay duty on settled estate with which the persons entitled to the executorial money might have nothing to do. The question of convenience was another matter; but, at all events, it was as well that the Committee should have in their minds what it was that they were sanctioning.

MR. GIBSON BOWLES

said, this raised a serious question in the case of a man dying intestate but who had a certain amount of real property which passed to his heir-at-law. The administrator of the estate might be an entirely different person, but he had the power to take personal property which passed through him as administrator without reference to those to whom it belonged, and to pay the duty on real estate, and then under a subsequent clause to sell it or mortgage it. That, of course, was a very important matter. Taking the case of a person who came into the enjoyment of a large sum of money, where there was a real estate also and where there were settlements under trustees, although the executor might be at law with the other parties, he was entitled to take the money due to the residuary legatee and to employ it for payment of the duty on the real estate, against the will, as it might be, of the residuary legatee and of the successors to the real estate and of the trustees under settlements; and having done that, he was able to come down upon the real estate and sell it or mortgage it in order to repay himself. The executor ought to be liable only for payment of duty in respect to the whole of the property that came to him in virtue of his office. They should follow out the old plan in that respect; but in respect of money which did not so come to the executor, they ought to follow the beneficiaries and make them pay.

MR. COURTNEY

said, he thought the words proposed ought to be allowed to drop.

MR. R. T. REID

said, that some time since he had expressed the opinion that the insertion of these words was unnecessary, but it was put to him that they could not do any harm, and so he accepted them. He did not want the words himself. All that he intended to do was to meet the desire of the hon. and learned Gentleman.

MR. BYRNE

said, he entirely agreed in the course which had been taken. He proposed the introduction of these words in order to protect the executor from payment of duty not only upon property mentioned in the Bill, but upon all other property.

Amendment to the proposed Amendment, by leave, withdrawn.

MR. J. LOWTHER (Kent, Thanet)

said, that before the Amendment of the Solicitor General was further proceeded with it was desirable that the Committee should have some idea as to what it was that the Government proposed. The duties of an executor were at present extremely onerous, but they were, at all events, confined to dealing with properties of which he had for the moment the legal control. As he understood it, under the proposed Amendment to this clause the executor would not, as he had hitherto been, be confined to dealing with moneys of which he had immediate control, but would have to render an account of moneys that were not his at all, and to make himself responsible for them before he could obtain probate.

MR. R. T. REID

said, that he had already pointed out that under the existing law credit for probate would be given.

MR. J. LOWTHER

said, that even supposing that the executor could obtain credit for probate, he had to make himself responsible either by a ready-money payment or otherwise for property over which he had no control. It had been pointed out that the executor would have power to divert money which he received from a certain source to the payment of the Estate Duty; but there was something to be said, perhaps, for an anomaly of that kind, having regard to the wide duties now thrown upon him. Very great delay might arise before the executor could obtain probate unless he had this power. In the case of a landed estate, especially of an estate in settlement, a mortgage would undoubtedly have to be negotiated before the Estate Duty could be provided. In certain cases, where the executor found himself in possession of a considerable sum of personalty, he could make the payment of duty both in respect of personalty which was under his control and of real property which was not under his control, and might exercise powers of recovery of duty paid upon such real estate. But he understood that the executor must make himself responsible for an account of the property for which he was not responsible. In the great majority of cases an executor would be very both to commit himself, to any undertaking of a personal character or to involve himself in any way as to property which was without the discharge of his own personal duties. To adopt this proposal would be to force the executor into a position widely different to that which he had ever before been called upon to occupy, and not only to enlarge his responsibilities, but to actually invite him to commit what had hitherto been regarded as a breach of trust. As the hon. Gentleman for North St. Pancras had suggested, any executor who took such a course would find himself in a very unpleasant position. He hoped some provision would be introduced which would make it clearer what the duties of the executors were to be.

MR. CARSON (Dublin University)

said, he should like to have some assurance from the Solicitor General in respect of this clause. He had an Amendment down to which he hoped the Solicitor General would turn his favourable attention, and that was to strike out alto gether the words referring to the executor. The Government were attempting to introduce into the law a new principle in the administration of estates by executors. He could not conceive how an executor was to administer a personal estate if he was to be allowed to pay Estate Duty with respect to property over the administration of which he had no control whatever. Supposing in Ireland an executor were to pay Estate Duty in respect of real estate, how long did the Solicitor General think it would be before he could administer the personal estate which it was his duty to administer within a year? During the last 12 or 13 years he (Mr. Carson) believed there had not been a single landed estate sold in Ireland except under the Land Purchase Acts. He wished to know whether the administration of an Irish estate was to be tied up for perhaps 13 years and then for another 18 years as far as the purchase money retained by the Commissioners was concerned. For what reason and on what principle was an executor who had nothing whatever to do either with the settled estates or the real estates of the deceased to be allowed to apply money put into his hands for a different purpose in payment of the debts of another man—for it really came to that—and to the detriment of his own cestui que trust? He could see no possible reason why there should be so complete a change in the law as was-suggested. If this new burden was to be thrown upon executors, there certainly ought to be some means provided of recouping the estate advanced. He should like to know what would be the personal position of the executor in the event of his paying more than he really ought to pay under this provision? Would he under such circumstances be personally liable? If so, all he (Mr. Carson) could say was that it would be found much more difficult in the future, to get executors than it was at present. If the executor was not to be personally liable, were his cestui que trusts to lose through what had occurred, not through the fault of the executor, but through unforeseen circumstances in relation to property in which they had no interest whatever? It appeared to him that if the provision of the Bill were passed it would be impossible in future to administer personal estates.

*MR. LEES KNOWLES (Salford, W.)

said that, if he rightly gathered the meaning of the Government in regard to this clause, his view of the provision differed from that of his hon. and learned Friend who had just spoken. He took it that the devisee of real estate would be empowered to go to the executor, instead of to a money-lender, and to say, "I wish to raise money on my realty in order that I may pay my Estate Duty." Clause 9 (5) provided for a loan from the executor to the devisee, and the duty borrowed under that clause might be made a first charge upon the land, or the land might be sold so that the money could be recovered.

MR. W. AMBROSE (Middlesex, Harrow)

thought the explanation of the sub-section pretty obvious. It seemed to him that the Government were very anxious to make special provision for getting the Estate Duty in case there was any difficulty in getting it under the ordinary law. There were some properties that were absolutely unsaleable. It sometimes happened in Lancashire that a millowner had a mill which he could not sell at any price, and which was, therefore, a white elephant upon his hands. If such a man died, and the mill were left to a particular devisee, while the personal estate which was comparatively small was left to other persons, it would be difficult under the ordinary law for the Government to get the Estate Duty upon the mill. The present provision, however, would enable the executor to use the personal property left to other persons to pay the duty on the mill. The persons to whom the personal property was left would, no doubt, be able to follow the duty, and should be relegated to the position of mortgagees of the mill. This was the first time within his recollection in which an Act of Parliament, even in the interest of the Revenue, had sanctioned a course which would place the executor in a position to commit a breach of trust. A breach of trust it would certainly be, and one which would do a great deal of injury. He would propose that the Amendment should be amended by inserting "and the beneficiaries entitled to the money" after the words "the duty thereon."

Amendment proposed to the said proposed Amendment, after the word "thereon," to insert the words "and the beneficiaries entitled to the money."—(Mr. W. Ambrose.)

Question proposed, "That those words be inserted in the said proposed Amendment."

MR. R. T. REID

I regret that I have had so often to address the Committee on this Amendment, but I. am obliged to do so owing to the successive questions that are put to me. I do think that the substance of the Amendment is sufficiently before the Committee to enable it to come to a conclusion upon it. The point is that it may be for the convenience of the estate and of the successors to the property of the deceased that one payment shall be made for all, having regard to the fact that there is aggregation, and that you have to pay upon the rate at which the property is aggregated. That being so, the hon. Gentleman opposite proposes that the discretion of the executor shall be fettered by requiring the presence of all the beneficiaries. The executor is a responsible person, and I am not aware that it has ever been attempted before to fetter his discretion in dealing lawfully with matters under his control. To do so would be to reduce the Amendment to an absurdity. It would mean that the executor would have to get the consent of every legatee, for such sums even as £20, to take a course which he thinks it convenient to take. We propose to enable him from no interest of his own, but simply from administrative convenience, to make the payment. Under these circumstances, I am afraid the clause would be useless if we were to require the consent of all the beneficiaries. I would suggest to the Committee that we might take a decision upon this question now, as there has certainly been a free exchange of views upon it, and I really think that Members know their own minds respecting it.

MR. W. AMBROSE

said, it was his intention that the Amendment should be made utterly ineffective, because he thought that if it were effective it would sanction fraud.

MR. COURTNEY (Cornwall, Bodmin)

said, there was a substantial point in the case of his hon. and learned Friend. If they adopted the Amendment of the hon. and learned Member opposite the whole power of the executor would go. To obtain the assent of every legatee and beneficiary would he a bar to the exercise of discretion on the part of the executor, and it might be convenient that he should have the power of settling the questions contemplated in the clause with the Inland Revenue at once. The question might arise whether giving this power to the executor to do this thing would not exonerate him from civil liability if he found that he could not recover over. The liability of the executor, therefore, should be strictly guarded. If he used this power he should not do so at the risk of the persons entitled to the estate; therefore, it was necessary to put in words safeguarding the liability of the executor in that respect. The proposal of the hon. Member for Harrow went too far— stopping the action of the executor altogether.

*SIR M. HICKS-BEACH

said, he would venture to ask the Solicitor General whether, if and so far as these words made no alteration in the law with reference to the power or liability of the executor to pay duties on property with which he had nothing to do, it was worth while to insist on the change? It appeared that the hon. and learned Gentleman had departed from the scheme of the clause as originally framed. As it originally stood the choice rested with the executor. He might pay duty on every property for which he was not accountable, and raise that duty by sale or mortgage of any part of the property on which he had paid it. Now he could do nothing except at the request of persons accountable for the payment of the duty on the property. It had been suggested that they, whether as trustees or otherwise, might not always represent the wishes of the beneficiaries, and an Amendment had been moved to insert beneficiaries also. Seeing that the executor could not act in respect of this matter except under such conditions as certainly were a departure from the original scheme of the clause, he (Sir M. Hicks-Beach) would ask the hon. and learned Gentleman the Solicitor General whether it was worth while to adhere to his proposal, and whether it would not be well to leave the law as it at present stood?

MR. R. T. REID

said, that those who were familiar with the practice thought the Amendment a desirable one for administrative convenience. As to the question the right hon. Gentleman opposite asked, the condition of the executor would remain as at present with regard to liability. He would have to give an account not only of what he had received, but of what with proper and fair care he ought to have received. Therefore, there was substantial liability on him at Common Law with regard to his action as executor. He (Mr. R. T. Reid) did not think they could further define the graduating shades of responsibility.

*MR. MATTHEWS

said, he did not think the Committee could rest content with the hon. and learned Gentleman's answer. The hon. and learned Gentleman would allow the executor in his discretion, and acting in good faith, to use money belonging to the owners of real estate to pay debts that those who had the personal estate might owe. He (Mr. Matthews) thought the real estate owners were entitled to some better protection than they would have under the clause as the hon. and learned Gentleman would draft it.

Question put.

The Committee divided: —Ayes 178; Noes 235.—(Division List, No. 90.)

Words inserted.

MR. BOUSFIELD (Hackney, N.)

said, he had an Amendment which would come in at the end of the last Amendment.

*SIR J. LUBBOCK

On a point of Order, said he had an Amendment on the Paper which ought to come in at this point.

THE CHAIRMAN

I understand there is a prior Amendment which contains a proviso, and would properly come in here.

MR. BOUSFIELD

Mine also is a proviso.

MR. R. T. REID

On the point of Order, may I ask whether my words would not come in exactly at this point, as they are part of the same words that were dealt with by the last Amendment?

THE CHAIRMAN

If so, they would have priority?

MR. BOUSFIELD

said, that his Amendment was a proviso, and had reference to the portion that had just been passed by the Committee. His Amendment related to the question that was raised by the late Home Secretary and by the right hon. Gentleman the Member for St. George's (Mr. Goschen) respecting the position of the executor under the sub-section—namely, the necessity of paying the Estate Duty in respect of the whole estate. It was pointed out by those two right hon. Gentlemen, and it had been before pointed out, that the executor would be in great difficulty in many cases in having to produce so large a sum of money as might be required upon tendering his affidavit. In the past this difficulty had been found to be very great, as there were a great many large estates where the available ready money was exceedingly small, and consequently there were no funds upon which the executor could lay his hands for the purpose of paying the duty. An executor would have great difficulty in getting an advance which should enable him to pay the duty, because before probate was granted he had no power of charging the estate or dealing with Consols. This difficulty, which had been felt to be very great in the past, would be greatly increased in the future, on account of the large additions that were to be made before probate was granted. Therefore, what he proposed was to put in, at the end of the words last passed by the Committee, these words— Provided that where the executor cannot obtain sufficient funds to enable him to pay the duty lie may state that fact in the Inland Revenue affidavit. He proposed to stop there in the Amendment he made, but the words he proposed were only preliminary to others prescribing the exact method in which the relief he suggested should be given. He wished to leave the method to the choice of the Government. They might like to give the Inland Revenue Commissioners power to sanction an arrangement proposed by the executor; or they might give power for granting a provisional probate to enable the duty to be raised from the estate.

Amendment proposed, in page 3, after the last Amendment, to insert— Provided that where the executor cannot obtain sufficient funds to enable him to pay the duty he may state that fact in the Inland Revenue affidavit."—(Mr. Bousfield.)

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

MR. R. T. REID

thought the hon. and learned Gentleman would be one of the first to admit that if he (Mr. R. T. Reid) accepted the words proposed they would be entirely inoperative, for the Amendment did nothing in the way of suggesting a remedy.

MR. BOUSFIELD

said, he thought he had explained that he had only gone so far because he did not wish to hamper the discussion by putting forward any suggestion of his own, but that if the words were accepted it would then be necessary to add other words.

MR. R. T. REID

said, it was in the nature of a fishing Amendment: the hon. Gentleman gave the Amendment and expected the Government to find solid substance for the form of his Amendment, by stating what was to be done where the executor was not in a position to pay the duty. The arrangements that had worked, satisfactorily in past times would probably be sufficient in the future, and under them the Commissioners had had the power in certain cases to give credit to executors in respect of the payment of the Probate and Succession Duties. He thought that the words proposed by the hon. and learned Gentleman would be inoperative, and therefore he was unable to accept them.

*MR. T. H. BOLTON (St. Pancras, N.)

thought the hon. and learned Gentleman had pointed out a matter that was a source of very considerable inconvenience. Executors had wills handed to them and were not able to get, at once, possession of the money required to pay Probate Duty, and the result was they had to make arrangements to obtain it; that was to say, they had to go to the bankers of the deceased, or to borrow from their lawyers, or make some other arrangement that involved expense and delay. It would be a great convenience if some provision were made by which the duty could be postponed for a short period until the executor could make use of the testator's property to get the necessary money. Some executors had had a good deal of delay and trouble and bother before they could get probate simply because they were not persons of means themselves. If some arrangement could be made by which a provisional grant of probate could be obtained, especially as they were increasing the duty, it would be no loss to the Revenue, and would be most convenient to executors and all concerned.

MR. GRANT LAWSON (York, N. R., Thirsk)

said, the first Amendment of the Solicitor General referred to an old Act of Parliament under which the Commissioners might do certain things. He assumed the learned Solicitor General referred to 55 of George III., Section 45. Credit might be given under that, but he should like the Committee to notice the conditions under which credit was to be given. The section provided that in all such cases of credit security should be first given by the executors or administrators, together with two or more sureties to be approved, by bond for the payment of the duty within six calendar months, or pay interest at the rate of 10 per cent, for any delay. That was the section that gave the Commissioners under the present law power to allow credit. He would ask the hon. and learned Gentleman if that was the full power?

MR. R. T. REID

Yes.

MR. BARTLEY (Islington, N.)

said, before they went further they ought to know whether the Government intended to meet this question. He himself had an Amendment down later by which he proposed that the Commissioners should be empowered to take possession part of the property for the payment of the duty. Unless the Government agreed to some such proposal there must be difficulty where there was not cash in hand to meet the duty.

SIR W. HARCOURT

said, the Government were very ready to consider any proposal that would facilitate the discharge of their duties by executors. He agreed that the present system under which executors were given credit in respect of Death Duties imposed onerous obligations upon them, and that that system ought to have a more modern practice substituted for it. The matter was now under the consideration of the Government, and he hoped, therefore, that the Committee would be satisfied with the discussion, and that the hon. and learned Gentleman would withdraw his Amendment.

MR. BOUSFIELD

said, that after the statement of the right hon. Gentleman he should, of course, withdraw the Amendment; but he might say that he had been approached in the matter by solicitors who had considerable experience in the administration of estates, who had come to him and brought this matter up as a point of great importance, as a point which had given them great trouble in the past, and which would give them, with increased duties, more trouble in the future.

Amendment, by leave, withdrawn.

*SIR J. LUBBOCK

said, the Amendment he now proposed was one of considerable importance. It was a very frequent practice now to have two executors, one to deal with the property in this country and the other to deal with the property in foreign countries or the colonies, and the Amendment proposed to enable the executor to deal with the property in this country, and to disassociate himself from any interference with the property on the other side of the world. This was of considerable importance to a great many estates, and he therefore hoped the Government would give it favourable consideration.

Amendment proposed, at the end of the last Amendment, to add the words— Provided that an executor whose appointment is expressly limited to the assets of the deceased in the United Kingdom, or an executor whose application for the grant of probate shall be expressly limited to the assets of the deceased in the United Kingdom, shall not be liable to pay the Estate Duty in respect of property situate elsewhere."— (Sir J. Lubbock.)

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

SIR W. HARCOURT

said, the Amendment raised very great questions, and applied to all property abroad. The question relating to property situated in the colonies was now under the consideration of the Government, and he hoped that the portion of the Amendment relating to that subject would not be pressed. But as regarded property situated abroad generally the result of the Amendment would be to enable a man by investing his money abroad to avoid payment of the Estate Duty in respect of that part of his property. He had never been able to understand the extreme anxiety of gentlemen to protect foreign investments from fair contribution to the State. In the case of a man who left investments of £50,000 here and of the same amount in investments abroad, the effect of the Amendment would be to tax the property here and to allow the foreign property to escape. In the case of the estate of a person having £50,000, who had invested half of it in Consols and the other half in foreign securities, under this Amendment the former would pay duty while the other half would escape altogether. As the right lion. Gentleman had stated, it was the usual practice to appoint an executor abroad of foreign property. Why should not the Exchequer get at it for the purposes of duty? He could not understand this extreme anxiety to protect foreign investments from fair contribution to the State. Whatever difficulty there might be in collection in the case of foreign property it was reasonable and desirable that it should contribute, and the Government could not agree to the Amendment.

MR. FORWOOD (Lancashire, Ormskirk)

sympathised with the desire of the Chancellor of the Exchequer that whatever duties were imposed property, whether abroad or in the United Kingdom, should be subject to the tax.

SIR W. HARCOURT

Personal property.

MR. FORWOOD

said, he also sympathised with another point raised by the Amendment, and that was as regarded the position in which an executor might be placed. Beyond doubt the duties of executors became more onerous every year, and increasing responsibilities were placed upon them, and if these proposals were carried out great difficulty would be found in getting private persons to undertake such duties. In the United States it had become customary for great Corporations to act as trustees and executors, and that custom would be accelerated in this country. The Chancellor of the Exchequer was no doubt perfectly aware that in the United States powerful Companies were formed whose sole business it was to act as stakeholders of money awaiting decisions of the Courts, or as trustees and executors. Those large Companies were managed by leading men. An attempt was made in this country a few years ago to imitate them, but those Companies went outside the lines of the American Companies and got into trouble. The Chancellor of the Exchequer was proposing to make executors liable for the duty on foreign investments, and it was quite possible this state of things might arise: people might begin to consider how far they could place their property beyond the reach of the Chancellor of the Exchequer for the purpose of duty. He had made inquiries at one of the leading American Trust Companies in New York who undertook to act as executors, administrators, trustees, guardians, receivers, and in all fiduciary capacities, among their Directors being a man worth £10,000,000 sterling. The question was put to the Company— Will you receive, as custodians, a transfer of his property, register it in your name, pay over to the transferor during his lifetime the dividends arising on the Stock, follow his directions as to its disposition during his life, and on his death distribute it among such persons as he may indicate without the production of a will or probate? The reply was— The style of business which you mention has been and is done by us. We cannot touch real estate, especially in the United Kingdom, as it cannot be transferred to us like personalty. Our way of doing business is to draw the deed which constitutes us custodians or trustees of the property. This document confers the right of transfer, to purchase or sell the securities as may be thought proper; it also secures to the transferor payment of the dividends during his life; and on proof of his death, the transfer of the property to the named beneficiaries without production of a will or proof of probate having been obtained in England. It was quite conceivable that an executor to a will in this country might obtain knowledge that property belonging to the testator was lodged in a foreign trust, and that he could not get particulars, for these Trust Companies could not give them. Therefore he would be fixed with notice of that property, the amount of which he might not be able to ascertain; yet by this Bill if he proved the will he would become personally liable for the duty upon that property when its amount should ultimately transpire. These Company custodians of property at a comparatively small cost would on the death of the testator simply send a cheque to A, B, C, or D for the proportion of the property in their hands without any further explanation; and thus the executors in this country would come under an unknown liability without being able to obtain any information unless some of the beneficiaries, pricked by conscience for evading the Act, might, by sending "conscience money" to the Chancellor of the Exchequer, raise the whole question, when the parties concerned might be placed in a very awkward position. This would illustrate the way in which people whose property would be heavily taxed upon their death would place it beyond the reach of the Chancellor of the Exchequer for the purpose, and prevent him from exacting the duties he would be entitled to under this Bill.

*MR. RATHBONE (Carnarvonshire, Arfon)

hoped the lawyers would be able to prevent such evasions of a just and right claim. Taking his own case, he had had the benefit of the costly Navy, Army, Diplomatic Service, Constabulary, and Government of this country in acquiring his means, and having provided moderately for his children, he could live without labour on the income. It seemed a most extraordinary proposal that he should be relieved, if he invest abroad, from paying the Death Duty on property thus acquired, and that he should actually be penalised for investing it in this country. He would escape by at least one-half by investing in foreign countries. That seemed very unjust, and he could not understand the line of argument which had been adopted throughout the discussion on this Bill, that it was right for people to evade their fair proportion of the taxation of the country. It did not seem just to evade paying one's proper share of taxes to the Exchequer (which to a large extent, it should be remembered, had to call upon a very poor population), in fraud of the Exchequer and taxpayers of the country.

*SIR J. LUBBOCK

said, the remarks of the Chancellor of the Exchequer and of the hon. Gentleman who had just spoken had considerably widened the discussion. The Chancellor of the Exchequer could not understand why people who had property in the colonies should escape taxation. That was not the object of the Amendment. It was not a question of evading taxation, but it was not fair that people should be compelled to pay the tax two or three times over. Supposing a man possessed £100,000 and his property was in several countries, each of which might raise 10 per cent, upon it; he might have to pay 50 or 60 per cent, upon it. Some International arrangement should be made that the same property should not pay in more than one place. That seemed a natural thing to propose. Another point was that for every £1 levied by the Chancellor of the Exchequer foreign countries might levy £1,000. To impose this taxation would, therefore, be a very shortsighted policy on our part. The questions referred to were not raised by this Amendment, though he would be quite ready to argue them when they were reached. The point raised in the present Amendment was the extraordinary difficulties which executors would have to face under this proposal. Unless this Amendment were adopted those difficulties would be increased. Surely in cases where a testator possessed property in different parts of the world it was unreasonable to compel an executor to take out probate for property in another country which he could not properly administer. If that were the case no man would be willing to undertake the duties of an executor, not knowing the risks he might run.

SIR W. HARCOURT

said, the hon. Member had referred to the point taken by the Solicitor General, and he would only urge, in reply, that there were methods by which it would be possible to evade payment of the duty. Methods of evasion were adopted at present, and he did not think it was the highest development of civil virtue to devise a method by which duty might be evaded. The right hon. Gentleman said that the duty should not be levied twice over in both countries, and that some International arrangement ought to be arrived at whereby the duty would be levied in one country only. But the effect of that arrangement would be to cause the duty to be levied in the country where the property could be laid hold of. Property, for example, in Australia contributed, first of all, 10 per cent, to Colonial taxation when left to a stranger, and it would be an unwise course for the House of Commons to adopt of excluding foreign property from contribution towards the Imperial Exchequer. The effect of the Amendment would be to allow all foreign property to escape taxation, and he trusted that the Committee would not adopt it, as there was no reason whatever why property abroad, left by a deceased person, should not contribute to the English Revenue as at present.

SIR J. LUBBOCK

said, it would do so under his Amendment.

SIR W. HARCOURT

said, where an executor was appointed he would be liable to contribute in respect of the estate left in his charge. He hoped the Committee would not accept the Amendment.

*MR. MATTHEWS

said, he was unable to see that the result of adopting the Amendment would be such an exemption of foreign property as that spoken of by the right hon. Gentleman. What the Chancellor of the Exchequer was attempting to do was to oblige an English executor to pay out of English assets the Estate Duty on foreign property—in other words, to pay out of English assets, belonging in all probability to one set of beneficiaries, an Estate Duty on foreign property belonging to a different set of beneficiaries. That was far from being a convenient arrangement, and would be an extremely harsh and unjust way of dealing with those beneficiaries. The Amendment applied to cases where the executor would only be able to pay out of English assets. The right hon. Gentleman said that this Amendment would relieve foreign estates which would not pay the duty. That was not the case. Somebody must take out administration of the foreign estate, and the foreign executor would be the person liable to pay the Estate Duty. He did not see why the English executor was to pay, and the English beneficiaries were to lose their money in order to pay the duty on the foreign estates in which they took no share or interest. Any person domiciled in England entitled to an English estate who wanted to claim a foreign estate must do so through some duly accredited representative of the deceased, who would have the administration of the foreign estate, and who would be liable to pay the duty. The whole point of the Amendment was that it was not fair, practically, to make the English legatees and beneficiaries pay Estate Duty on an estate they never got, and which did not belong to them at all, which was what the Chancellor of the Exchequer was seeking.

MR. R. T. REID

was confident if hon. Gentlemen had really thought out what the meaning of this Amendment was they would not press it. The proposal of the Bill was to tax the estate left by the deceased. Take the case given by the Member for Carnarvon, who said he had made his fortune under the British flag, and that half was in England and half abroad. He thought hon. Gentlemen would think it was desirable that an Englishman domiciled here ought not to be able to escape paying his Estate Duty by diverting from this country into foreign investments any portion of his fortune. That was a principle they would all agree to. What was the method of carrying that out. The Member for Liverpool gave an illustration early in the course of this Debate. He said there were Trust Companies existing in New York who were prepared to invest the money and keep it in investments during the lifetime of the Englishman in England, and afterwards distribute it without reference to any probate or testamentary instrument in this country, and would defy the English Estate Duty and foreign probate, and the hon. Member for Liverpool said that was a practical evasion of the duty. How was that going to be met? It could be met only in one way, and that was by saying this estate was one entire estate, and that entire estate had first of all to have taken out of it the portion belonging to the British Government before it was distributed to anybody. And how could that be done? Only by dealing with the executor in this country whom they caused by the Bill, in Clause 5, Sub-section 2, to pay the Estate Duty in respect of all personal property of which the deceased was competent to dispose, at his death, where so ever situated. That was the only method by which they could get it.

MR. GIBSON BOWLES

That part of the estate abroad may be worth paying for; that which is here may not be.

MR. R. T. REID

said, it was obvious that a man was not liable to pay on more than he got. An executor was not liable to pay out of his own goods any debt due to the State, but out of the goods of the testator and to the extent of the goods in his hands he paid such Estate Duty. If he had not got any assets he was not liable to pay. What was proposed to be done by the Amendment was this. It was proposed that the executor in the case where his appointment was expressly limited in the United Kingdom was not to pay on the other estate at all. In other words, the Amendment provided the most potent method devisable of evading the duty. But that was exactly what they all desired to avoid. Take, again, the ease of the Member for Liverpool, who spoke of Trust Companies who were ready to take the investments of a British subject and hold them out in New York. This Amendment would make it impossible for anybody to get those assets. If this Amendment were not passed then the executor here would be bound to pay duty on all the personal estate of the deceased to the extent of the means. Inasmuch as none of them could desire to put this vast premium upon foreign as against English investments, or to enable the most facile methods of evasion to be resorted to with the greatest possible ease and simplicity, he could not think that hon. Members would press this Amendment.

SIR W. MACFARLANE (Argyll)

desired to put a case where evasion could take place, he believed, under the Bill. Suppose a man owned an estate in England of £100,000 and disposed of that estate by will, in England appointing English executors for that purpose; and that he owned an estate in France worth £100,000, which he left by will in France, appointing French executors to deal with it. It might not be officially in the knowledge of the English executor what the French estate was, and how would duty be got upon it, the English executor having no means of knowing its value? He was not speaking in support of the Amendment, but pointing out a difficulty and a possibility of evasion which already existed, and which he should like to know how the Government proposed to deal with.

MR. R. T. REID

said, it was impossible for them to prevent every evasion. If the executor did not know of the property, then, of course, they could not help it. What they were trying to prevent was mere evasion.

MR. GIBSON BOWLES

said, that undoubtedly the Committee would desire to prevent such an abuse as the diversion of English investments abroad, and they would desire if this Estate Duty was to be levied upon property in England that it should also be levied upon property abroad—in which he did not include the colonies, because the Chancellor of the Exchequer had drawn a distinction, although there was no distinction in the Bill. This difficulty of levying duty on property situated abroad, and where a foreign executor was appointed, existed in the Bill as it stood just as much as it would in the Amendment. He was glad to see that the Chancellor of the Exchequer was beginning to understand his own Bill. He (Mr. Gibson Bowles) raised this important point on the Resolution on which the Bill was founded, and he asked how were they going to levy the duty on personal property abroad when a foreign executor had been appointed? What was the reply of the Chancellor of the Exchequer? "We can do so if the House gives us the power." The right hon. Gentleman had now found out that he could not levy it even if the House gave him the power, because he had avowed that afternoon that this very difficulty was a real one, and he had now discovered that in the case of property situated abroad with a foreign executor he must give up all hope whatever of securing that duty. This much the right hon. Gentleman had learned in the course of the Bill, and he had much more to learn. This matter of foreign property seemed to have been imported into the Bill in one of the later stages. Not a word of it was said by the Chancellor of the Exchequer in introducing the Budget, and not a word as to it was to be found in the Resolution upon which the Bill was founded, or in the explanatory Memorandum of the Budget. That was surely a most remarkable feature of a remarkable Bill which for the first time assumed to throw the net of English taxation over all foreign property whatever. He did not know how foreign property had got in, but he thought he could guess. A consistent, coherent scheme of Death Duties having been presented to the Chancellor of the Exchequer he grafted upon it this entirely new—he would not say absurd, although he thought so—principle of aggregation, and therefore it was that he had to bring in the foreign property, because in the not unusual case of a man who had a small property in this country and a large one abroad, if they merely taxed the small property in this country and left the large property abroad untaxed, they had made a very clear and insufficient kind of aggregation. Therefore it was that the foreign property was introduced. He did not know whether the hon. Member for Carnarvon thoroughly realised what this increase of charge on foreign property meant. The hon. Member had told them that half his invested property was abroad, and that might be taken as £500,000. Had the hon. Gentleman realised that under this Bill his widow, who otherwise would not pay one farthing on that property, would now have to pay £35,000 in consequence of this new taxation imposed upon foreign property? He said that, Amendment or no Amendment, they would be in a terrible difficulty—a difficulty which would practically entirely prevent their aggregation of property for the purpose of duty. They would always be in the difficulty he had before pointed out, that when there was foreign property with a foreign executor they would never be able to get a farthing of their Estate Duty. But suppose they gave up the taxation of foreign property. They were immediately in the position the Chancellor of the Exchequer described—that having imposed a new and very heavy tax upon investments in this country if they let off investments in foreign countries they would necessarily drive English investments abroad. The Chancellor of the Exchequer had adumbrated his determination to let off the colonies. He was glad to understand it, but he submitted to the right hon. Gentleman that he would get into another series of difficulties, because he would be forcing English capitalists to invest in the colonies. Of course that was better than investing in France or Russia, but they would be driving English capital out of England into the colonies, and giving up, as regarded colonial property, the whole scheme of their aggregation. He had again and again pointed out that aggregation was nonsense when they brought it into practice. It might be all right as a pious opinion, or enter-tainable as a scheme of taxation in a future life, but it would not do here. The true gospel of taxation was that if they wanted to get taxes they must go where the property was they meant to tax. As they could not go abroad they must give up all notions of taxing property abroad. Here where they had property they could tax it, but this scheme of throwing the English net of taxation over the whole of the habitable world was a wild and impracticable one, and nevertheless, unless they carried it out, they were forced to give up—as they must give up sooner or later—this nonsensical principle of aggregation.

MR. HENEAGE (Great Grimsby)

said, the Chancellor of the Exchequer had tried to misrepresent the Amendment which was brought forward, not with a view of excluding from taxation property abroad, but with the view of facilitating the administration of property in this country, and to prevent the long delay that must necessarily ensue if an executor of property in this country had to go all over the world looking after such property as was possessed by the hon. Member for Carnarvon. The Amendment was also designed to prevent the executor in this country, who might have a very small property to administer, having the responsibility of administering the property in other countries. The executor in England, though he might have no knowledge of the property abroad or be able to administer it, might have a general knowledge of the property abroad, and it would be therefore impossible for him to go to the Inland Revenue and get a certificate from them that he had done all he could with regard to the estate he had to administer. That was the great difficulty of the Bill, and one which arose, no doubt, owing to the aggregation clauses. In order to get everything into the pot, the Chancellor of the Exchequer brought all this difficulty about; but it appeared to him another result might arise under the clause now. An executor might find in the end that he had no property to administer at all, because if every other country was to follow the lines the Chancellor of the Exchequer now proposed to take in this Budget, and property was to be heavily taxed in different countries, the whole of it might disappear under the burden of such taxation.

*MR. LEES KNOWLES

supported the Amendment, on the ground that it was not designed with a view to evading the duty, but to give relief to devisees.

MR. A. J. BALFOUR

said, they were all agreed, in the first place, that it was undesirable to put a premium on English investments abroad, or to do anything that would make people try to evade the Death Duties by means of false declarations or any kind of fraud. But no Treasury had ever asked the subjects of the Crown not to distribute their property or arrange their consumption of taxable goods so as to incur the least possible amount of taxation. That was a liberty of the subject which had always been accorded by the Treasury. If a man, without doing anything dishonourable or wrong, thought he could pay less duty by adopting a particular course of action, he would take that line of action which would save him from additional taxation. The Government, in defence of the clause, had not only dealt in these generalities but had made an appeal to them (the Opposition) to get them out of the difficulty in which the whole scheme of their Bill was involved. He entirely granted that the Government were in a difficulty over this Bill. They had determined to raise a new and very heavy duty upon foreign property. The Chancellor of the Exchequer said that duty was already raised upon foreign property in the case of the Legacy Duty, so that they were only doing what had been done before. Do not let the Committee be under any delusion. The Government were doing what had never been done before or been thought of, and which he did not believe they would be able to do now. They were attempting to do an entirely new thing; they were attempting for the first time to collect Probate Duty from foreign property. At this moment they were not collecting Probate Duty from foreign property, therefore under their existing taxation there was that very premium upon investing money abroad of which the Government justly expressed themselves to be afraid, and the reason that premium was safely placed on English property abroad was that the premium was a small one and not sufficient to induce a person to change the whole course of his investments. Now they were changing the whole duty, and for the first time the Death Duty was being made so heavy that it would compel or induce them to do what they would not otherwise have done, and that was invest their money abroad. Therefore, let the Committee understand they were doing something quite new in, for the first time, levying Probate Duty upon English property situated abroad, and the reason the Government were driven to adopt that novel course was that they had made their duty so heavy that unless they tried to raise it upon English property invested abroad there would be so great an inducement to Englishmen to invest it abroad that Englishmen with money invested at home would suffer. That was one of the consequences of the Government proposals. The second novelty proposed by the Government followed as a direct logical consequence of the first novelty. The first novelty being the imposition of this very heavy duty upon property abroad, the second was the peculiar machinery by which that duty was to be collected. There was no machinery by which the Government could collect it, and they took hold of the unfortunate executor, and imposed upon him a duty which they knew he could not perform, and which they had not pretended that he could. Was not that an absurd and ridiculous position for them to have placed themselves in? Because they could not collect this money abroad, they went to a private individual, who gratuitously took upon his shoulders the very ungrateful task of acting as executor, and threw upon his shoulders the additional duty of finding out what a man's property was abroad. They did not give him one single bit of assistance, but left him at large to make what discoveries he could, to indulge in what conjectures he pleased, and they relied upon him alone to bring into the coffers of the Government the money they desired to levy upon this foreign property. He could not conceive how anybody under these circumstances would ever undertake the duty of executor. They were making a position which was not a pleasant one at any time, one of enormous responsibility, and one which would become perfectly intolerable. Possibly this novelty might be a necessary part of the Government plan, but if so that plan stood convicted of being in itself impracticable, of being so essentially intertwined with difficulties of detail that no ingenuity that either the Government or the Opposition could bring to the consideration of this Bill would relieve it of all these collateral absurdities. He did not argue now whether it be just or unjust to levy this tax upon the corpus of a deceased person's property, or levy it rather upon the property that came to the legatees. But he said that just as successive financiers had, in attempting to establish a graduated Income Tax, found practical difficulties which were insuperable, so when they were now brought face to face with the practical details of this Bill they found in almost every sentence of every clause practical difficulties which did not touch the equities of the case, but which, nevertheless, would have to be surmounted when they tried to work their Bill, and which, by themselves, apart from broad considerations, to which they had drawn attention before and should do again on other stages of the Bill, were sufficient to wreck the measure.

MR. H H. FOWLER

said, that the difficulties of which so much had been made would not arise in the actual working of the Bill. English people who held property abroad were far more numerous than the natives of any other country who held property outside that country. The scheme of the Government was that the estate of all subjects of the Queen dying in this country should, on their death, pay a tax to the State. It made no difference to the value, the distribution, or the taxation of the property that it was invested partly in England and partly in foreign countries. An ordinary will did not make any distinction between English and foreign investments. It seemed to be assumed that property abroad was left to people abroad, but seven-twelfths of the property passed from parents to children, both being domiciled in this country. If they accepted the principle laid down by the Leader of the Opposition that it was right and fair that the property of subjects of the Queen should pay its fair share towards taxation, there was no ground for the Amendment. There might be practical difficulties in the way of taxing property abroad. The Solicitor General had not denied that, but there were also difficulties in getting hold of English property. Let them not put a premium on the evasion of the Estate Duty, for that was what the Amendment would do. Do not let it be proclaimed that the Estate Duty might be evaded by investing money abroad, and that the way to escape it was to invest in the French funds instead of the English funds. In the great bulk of cases, foreign property was administered by the same executors as English property, and it was divided amongst the same class of legatees; and there was no more difficulty in finding out the value of that property and paying duty upon it than there was in arriving at the value of English investments.

SIR J. LUBBOCK

said, that he should protest against the wrong interpretation placed on his Amendment by the Secretary for India. The right hon. Gentleman had said that the Amendment declared that if money were invested in colonial funds it would not have to pay duty, while it would have to pay duty if invested in English funds. Surely the right hon. Gentleman must know that investments in colonial funds must pay the colonial Death Duties. The object of the Amendment was simply to facilitate the administration of estates. The Chancellor of the Exchequer said he could not understand why anyone should wish property abroad or in the colonies to escape taxation. Of course, it would be pleasant to raise taxes in the colonies and in foreign countries, provided they did not retaliate. Already, however, the colonies were up in arms. Moreover, if other countries followed the example of this Bill, those who had investments in several countries might have to pay over and over again. In fact, their whole property might be absorbed by taxation. He merely indicated these objections, but did not think it would be convenient to discuss this important question at the present moment. It was really not raised by this Amendment, which he hardly thought the Chancellor of the Exchequer could have considered. Unless the Amendment were accepted, the delay and difficulty of winding up estates, which were partly in this country and partly out of it, would be very great.

Question put.

The Committee divided:—Ayes 104; Noes 154.—(Division List, No. 91.)

Amendment proposed, in page 3, line 24, after Sub-section (2), to insert— (3) Where the executor does not know the amount or value of any property which has passed on the death, he may state in the Inland Revenue affidavit that such property exists but he does not know the amount or value thereof, and that he undertakes as soon as the amount and value are ascertained to bring in an account thereof, and to pay both the duty thereon and any further duty payable by reason thereof on the other property mentioned in the affidavit."—(Mr. H. T. Reid.)

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

*SIR R. WEBSTER

said, it appeared to him that this Amendment would place responsibility on the executor in regard to property that did not vest in him. The fact that there was some other property with regard to which the executor had not full knowledge was not to delay the administration of the estate; but the executor was to give an undertaking that as soon as the value of that other property was brought in he would furnish a return of it and pay the duty. He thought words should be introduced into the Amendment making it clear that the obligation to pay would be only in respect to property vested in the executor, and that the executor should not be held liable for an unascertained amount of property altogether outside his control.

*MR. T. H. BOLTON (St. Pancras, N.)

said, he would like to know how the executor was to deal with property which was within his knowledge, and on which he proposed to pay duty with the prospect of other property, not within his knowledge, coming in afterwards; for the property of which the executor was not fully informed, but came in afterwards, would, of course, under the graduation scheme of the Government increase the duty on the property in respect to which he was fully informed. Was the administration of the estate to be postponed until the executor became fully informed of the property about which he had insufficient knowledge, and if he parted with the property of which he had knowledge, how was he to recoup himself for the additional duty consequent on the property which might come in subsequently? He thought there should be some provision in the Bill which would enable the executor in such a case to complete the administration of the property with regard to which he had knowledge, so that such property should not be held in suspense until some uncertain time in the future when the executor would obtain knowledge of the other property. Possibly the Revenue would lose a little under such an arrangement; but the Revenue ought to run some risk in the circumstances.

MR. GIBSON BOWLES

said, one thing was quite clear, and that was that the Bill would abolish the executor in the future, and absolutely extinguish every executor now in existence. If the Amendment were carried it would place the executor in a strange position. It provided that when an executor did not know the full amount of the property he had to administer he was to undertake, when he got to know of it, to furnish a full account of it, but meantime that he was to pay duty upon it. Why should the executor undertake to pay duty on property about which he knew nothing? The clause added to the horrors of trusteeship, which were sufficiently great already, and it was perfectly certain that if the Bill passed it would be absolutely impossible for a man to get an executor to his will. It should be remembered that the chain of responsibility was complete from executor to executor, and, therefore, if through some cause or another an estate was not fully accounted for in the lifetime of the executor, the executor of the executor would be liable-for the arrears of Estate Duty, and so on ad infinitum.

MR. R. T. REID

said, he was in the unfortunate position that when he attempted to provide machinery to lessen the miseries of the executor he was treated to a repetition of the grievances of the-executor by hon. Members of the Opposition. In answer to his hon. and learned Friend the Member for the Isle of Wight, he had to say that the executor of the deceased was expected to pay Estate Duty in respect of all personal property which the deceased was competent to dispose of at his death—that was to say, more than would be recoverable under probate at present, and the Amendment enabled the executor to lay hold of property situated abroad, without which he could not get it at all. But the Government could not accept any words that would appear to limit the responsibility of the executor in any property vested in him in trust, which was, indeed, a point that the Committee had already decided. With regard to the question of the hon. Member for St. Pancras, if the hon. Gentleman would look at Clause 10 he would find a provision which would, on the one hand, secure that the Exchequer got what was due to it; and, on the other hand, prevent any vexatious tying up of property in the hands of the executor. When they got to that clause, if there was any difficulty found in the way, the Government would endeavour to set it right. In reply to the hon. Member for Lynn Regis, he had to say that an executor was liable only for the amount of property entrusted to him.

MR. BUTCHER

said, he would like to hear from the hon. and learned Gentleman whether the clause was intended to put an additional liability on the executor or not; or, in other words, was the executor by the clause to undertake to pay duty that he was not otherwise liable to pay?

MR. R. T. REID

said, the executor was liable to pay duty on all personal property of which the deceased was competent to dispose.

MR. BUTCHER

asked if the sub-clause was intended to impose an additional liability? The effect of the clause was to impose a duty which the executor was not otherwise liable to pay. He would not know the details of all the property, and would have to pay duty on everything which was settled, though it had never come to him at all, and he was not accountable for it—for all property passing on the death of deceased on which duty was payable. To avoid such result, he proposed to omit "thereon," in line 5, in order to insert "for which he is liable."

Amendment proposed to the said proposed Amendment, in line 5, to leave out the word "thereon," and insert the words "for which he is liable."—(Mr. Butcher.)

Question proposed, "That the word 'thereon' stand part of the proposed Amendment."

MR. DODD

said, the executor had to pay the duty, which was enough. If it were found between this and the Report that the words as they stood were not sufficient the Amendment suggested could be accepted.

*SIR R. WEBSTER

said, the words as they stood were doubtful, as they would include any amount of the property ascertained. The obligation of the executor was clearly pointed to. Take the case of an executor not knowing the value of the realty—for the duty on which he was liable—which would come in to increase the total amount, when it became known to him, on which total amount, consequently, he was unable to pay the duty he was required to pay. The Amendment would relieve the executor under such circumstances.

MR. DODD

asked whether the insertion of the words "payable by him" after the word "duty" made the thing dear?

MR. R. T. REID

said, he thought it might be well to adopt the words "for which he is, or may be, liable."

Question put, and negatived.

Question, "That the words 'for which he is, or may be, liable' be there inserted, put, and agreed to.

Amendment, as amended, agreed to.

MR. GRANT LAWSON

said, he desired to move an Amendment standing in the name of the hon. Gentleman the Member for Lynn Regis, to leave out "six months" and insert "twelve months" in that part of the section which provided that the accounts should be presented within six months of the death of the person from whom the estate passed. He said that the words "six months" were printed in italics, which implied that they were not the actual words intended, but were put forward as a suggestion. He was glad that at last a point had been reached at which the Government might listen to Amendments. It could not be said—seeing that the words in italic were to be considered as a blank—that in moving words to be there inserted hon. Members were reflecting on the draftsmen of the Bill, whom they knew from the Chancellor of the Exchequer were immaculate and infallible. In Clause 7, Sub-section 3, they found the definition of the people who were to be accountable. The sub-section said— Every person to whom any property passes on the death of the deceased for any interest in possession, and also, to the extent of the property actually received or disposed of by him, every executor of the deceased, trustee, guardian, committee, or other person in whom any interest in the property so passing or the management thereof is at any time vested, and every person in whom the same is vested in possession by alienation or other derivative tithe shall be accountable for the Estate Duty on the property, and shall, within the time required by this Act or such later time as the Commissioners allow, deliver to the Commissioners and verify an account of the property. These were the persons who had to bring in the account within six months, and, as a matter of practice, Somerset House utterly declined to give any notice to the persons accountable for the duty. There would be no inducement for people to become accountable under the Act; indeed, people would avoid it, and before it could be settled who had to bring in the accounts the Law Courts would have to determine who were the persons referred to in Sub-section 3 of Clause 7. The sub-section they were now engaged in was not consistent with that sub-section. They were enacting that the account would be brought in within six months, but Sub-section 3 said within the time required by this Act or Bach later time as the Commissioners allow, so that as the Government went on with the Bill they began to realise that six months was too short a period. People had an awkward habit of dying at a time inconvenient to the Chancellor of the Exchequer and to the trustees and the beneficiaries. If the trustees happened to be abroad at the time of the death of deceased they would have to get home and understand the Act and bring in the account in six months. They had provided that the executor had to pay duty on all personal property of which the deceased was competent to dispose at the time of his death. Here was another opening for the consumption of time—all out of the six months. Supposing the account was not brought in within six months. Sub-section 5 of Clause 7 said— A person who fails to comply with any of the foregoing provisions of this section shall be liable to pay one hundred pounds, or if Estate Duty is payable, a sum equal to treble the amount of the Estate Duty for which he is accountable, according as the Commissioners elect. Under this enormous penalty people had to bring in their accounts within six months. He had another objection to this period of six months being in the clause instead of 12 months. Twelve months was the period allowed by the present practice in the case of Succession Duty. Clause 15 mentioned the period of 12 months after the date on which the succession occurred as being the period during which, in accordance with present practice, Succession Duty was to-be accounted for. That was perfectly plain from Clause 7. They might take it, then, that 12 months were given as the period for accounting at present for the duty, at any rate on real property. Why should they cut down that year of grace in a Bill which placed so many fresh obligations on executors? It would be very difficult in so short a time as six months to find out who was accountable for the duty; and tremendous penalties were imposed for non-performance of the obligation to present the accounts.

Amendment proposed, in page 3, line 27, to leave out the words "six months," and insert the words "twelve months."—(Mr. Grant. Lawson.)

Question proposed, "That the words 'six months'stand part of the Clause."

MR. R. T. REID

said, he was sorry he could not accept the Amendment. He was told by those who knew the administrative arrangements of Somerset House that the period of six months was ample, and that to extend it to 12 months would simply mean the encouragement of dilatory habits. He believed that six months were quite enough time in which to accomplish anything.

SIR R. WEBSTER

said, he often wished he possessed the energy and vigour of his hon, and learned Friend the Solicitor General, for then he would be able to do things more quickly. He could assure his hon. and learned Friend that the Amendment had not been moved with the object of encouraging dilatory habits on the part of the executor. Having had some experience in the winding up of estates, he said there was always great difficulty in carrying out the work in six months, and in some instances it was quite impossible. The executor would have to institute inquiries about the estate, not only at home but abroad, and in the case of the colonies those inquiries would take at least two months. It was a very serious thing that an executor should be held liable to a penalty of £200 if he did not perform within six months the very onerous and complicated duties which would be imposed on him by this Bill.

*MR. T. H. BOLTON

said, that speaking with some practical knowledge of the question, he should urge the extension of time to 12 mouths, because there were many circumstances which frequently prevented the executor from proving the will for some considerable time; and in dealing with some complicated estates especially, it would be utterly impossible for him to furnish the return within six months. If the clause were passed unamended what would happen was that an incomplete return would be sent in within the six months, and that return would have to be amended subsequently at an additional expense to the estate. That was a practice that ought not to be encouraged.

MR. BARTLEY

said, there was no doubt that a great many of the smaller accounts could be dealt with in six months; but the error of the clause was that it provided that all estates, large and small, must be dealt with in that period. In the case of a large estate it took a month before the papers were got properly together; and if the executor had to communicate with the colonies or with foreign countries in respect to portions of the estate situated abroad, it would mean at least two months more before an answer could be obtained. It was absurd to suppose that an executor would do all that by telegraph. It could not be done by telegraph, and if it could it would be too expensive. Then, again, when an answer was obtained from abroad, it might require a further communication to clear up. The result would be that a sort of half-and-half account, not pretended to be correct, would be sent in at the end of the six months merely to satisfy the provisions of the Act and prevent persons being charged with those heavy penalties. There could be no doubt whatever that in the case of a complicated estate 12 months would elapse before a proper and correct account could be rendered. Of course, the Commissioners of Inland Revenue said it was possible to do it within six months. But all that those gentlemen were interested in was to get in the money, and they knew nothing of and cared nothing about the difficulties in the way. All they wanted was to grab as much as they could and to get it as soon as they could. But anyone with any experience in the matter knew perfectly well that it was absolutely impossible to treat the large estates within a period of six months.

MR. R. T. REID

said, the question was whether the Government were to accept the judgment of the authorities of the great public Departments, who assured them that six months were ample for the purpose, or the opinion of hon. Gentlemen opposite who entertained strong views with regard to those duties. It was obvious that the Government must under the circumstances accept the views of the public Departments. But he had a proposition to make which he hoped would satisfy hon. Gentlemen opposite. That was that instead of assenting to the period of 12 months, they should allow the term of six months to stand, and add "or such further time as the Commissioners may allow."

SIR R. WEBSTER

said, he would advise his hon. Friend to be satisfied with the words suggested by the Solicitor General; but, at the same time, they were justified in relying on their own judgment, and in submitting it to the House, rather than on the judgment of the public authorities. He had had many years of close contact with the authorities of Somerset House, and he had every respect for the ability of those gentlemen, but he believed they themselves would be the first to admit that the first consideration with them was to get the money in, and that they did not regard or consider the trouble imposed on the persons who would have to perform the duty.

MR. GRANT LAWSON

said, the words suggested by the Solicitor General were already in the Bill in Clause 7, Sub-section 3; and as the Commissioners of Inland Revenue already considered that six months were ample time, that would be the period they would think sufficient, and they would not allow any further time. However, he would be sorry to act contrary to the advice of his hon. and learned Friend the Member for the Isle of Wight, and he would withdraw his Amendment.

Amendment, by leave, withdrawn.

Amendment proposed, in line 28, after the word "duty," to insert the words "or within such further time as the Commissioners may allow."—(Mr. R. T. Reid.)

Question, "That those words be there inserted," put, and agreed to.

SIR R. WEBSTER

moved, in page 3, line 29, to leave out the words "every estate," and insert the words— Property liable to Estate Duty of which the deceased was, at the time of his death, competent to dispose. The Committee would observe that Subsection 4 of the clause began with the words— Every estate shall include all income received or accrued from or upon the property included therein between the death of the deceased and the date of the delivery of the Inland Revenue affidavit or account. He submitted that, having regard to the intention of the Government as expressed in the Bill, many difficulties would arise if those words were retained. The words "every estate" would include settled property, and that surely was not the intention of the Government. The intention of the Government—as the clause suggested—was to bring in the income arising or accruing from the property between the death of the deceased and the date of the delivery of the account, and that could only apply to unsettled property.

Amendment proposed, in page 3, line 29, to leave out the words "every estate," in order to insert the words— Property liable to Estate Duty of which the deceased was, at the time of his death, competent to dispose."—(Sir It. Webster.)

Question proposed, "That the words 'every estate' stand part of the Clause."

MR. R. T. REID

said, he was not quite sure that he really comprehended the proposition; but if he did really comprehend it, it was this—that the income from the property between the death of the deceased and the delivery of the account should only be exacted in cases of property of which the deceased was, at the time of his death, competent to dispose—

SIR R. WEBSTER

Or property liable to Estate Duty.

MR. R. T. REID

said, that property which the deceased was not competent to dispose of was liable to Estate Duty. The deceased's death was the epoch at which the duty would be payable. Bringing in the income instead of charging interest was only a convenient way of doing the same thing. If the hon. and learned Member opposite would prefer that interest should be payable instead of the income, he (Mr. R. T. Reid) would inquire from those who were skilled in the administration of the Department whether such a proposal could be carried out, and, if it could be, he would, of course, endeavour to meet the hon. and learned Gentleman.

SIR A. ACLAND-HOOD (Somerset, Wellington)

said, he wished to draw attention to the position of the yeoman farmer under this clause. He would have great difficulty in getting his estate wound up, and he would be unable to get a bank to advance him money to pay the Death Duties and at the same time to lend him enough to carry on his business. The other day he (Sir A. Acland-Hood) asked a gentleman connected with a bank how much he would advance to a yeoman under such circumstances, and the banker replied, in comic but not quite Parliamentary language, "Not a bob." The yeoman who inherited a farm would therefore be left between heaven and earth, unable to move hand or foot.

THE CHAIRMAN

I do not think that this is relevant to the Amendment.

SIR A. ACLAND-HOOD

said, he had hoped that at all events the Government would consider the question with reference to the stock sold by the yeoman farmer before the affidavit was handed in, as the price received would go to swell the estate.

MR. T. H. BOLTON

said, he could not find any definition of the word "estate," which did not occur anywhere else in the clause.

MR. R. T. REID

referred the lion. Member to Clause 3, page 2, line 33.

SIR R. WEBSTER

remarked that the reference did not apply. The point which hon. Members were striving to bring out was that the deceased had no right to the income after the date of the death.

* MR. T. H. BOLTON

said, strictly speaking, the deceased was not entitled to any of the income of property passing within the meaning of the clause. He was not at all sure that the first sentence of the sub-section was really necessary, as the custom was either to charge interest or to ask for an account of the receipts between the date of the death and that of the rendering of the account; and that custom was to be continued under Clause 7. Was it intended to carry the custom further than it was carried at present?

MR. R. T. REID

I am not aware that it is. Of course, I cannot carry in my mind all the practice, but I am not aware that it is intended to do so.

MR. T. H. BOLTON

observed that, under those circumstances, he did not see why it was necessary to insert the provision in this portion of the Bill. Probably the Solicitor General would consider the point before the Report stage.

MR. BYRNE

said, he was in considerable doubt as to what the true meaning of the Solicitor General's Amendment was. By giving a concrete case he would be able to explain his difficulty. He would suppose that there was an estate of which part consisted of personalty, amounting, with interest, to £1,100 and part consisted of a separate property worth £95,000andproducing£ 4,000ayear. The executor passed his accounts of the personal estate within six months of the death of the deceased, but the duty on the realty was not paid for 18 months. In that case the amount on which duty would be payable would be £1,100, plus £95,000, plus £6,000 for 18 months' income of the real estate, or a total of £102,100. The Estate Duty would therefore be 6 per cent. Suppose, however, that the real estate account were passed within six months, the amount on which duty would be payable would be £1,100, plus £95,000, plus £2,000, or a total of £98,100, and the Estate Duty would be only 5½ per cent. What he wanted to know was why the £1,100 was to bear a heavier Estate Duty if the duty on real estate was not paid for 18 months? That, as far as he could see, was the obvious and clear result of the Government proposal, but he did not think it was a result that was really intended.

MR. R. T. REID

said, that when hon. Gentlemen suddenly came forward with masses of figures and with combinations or various contingencies on one of the most difficult and complicated Bills that had been before Parliament for a long time, he could hardly be expected, although he had every desire to satisfy their legitimate curiosity, to reply to them on every detail. The Amendment now before the Committee had really nothing to do with the increase of duty by right of aggregation.

MR. BYRNE

said, he had taken a concrete instance which, he thought, was a simple and clear illustration of the way in which the clause would work, and he thought he had been clearly understood by those around him. He would put the same proposition in a very simple way—

MR. DODD

asked if the hon. Member was in Order in putting all these various illustrations?

THE CHAIRMAN

said, the hon. and learned Member was perfectly in Order.

MR. BYRNE

said, he was not putting this point for the sake of asking conundrums. He believed that the result of leaving the clause unamended would be that one portion of the estate would have to pay a higher rate of duty in many instances in the event of the payment of the Estate Duty on the other part being postponed. He should be glad if the Solicitor General would answer that question, as if it were not so he would at once admit that his contention was groundless.

MR. HENEAGE

said, he would like to put the case of a man who, in order to meet this new duty, insured his life for the amount—which, in the case they were considering, would exceed £6,000—and wished to know whether that sum would be treated as property that passed to the estate between the death of the deceased and the date of payment of the duty, and would be taken into consideration in fixing under the graduated scale the tax that would be payable. It was not right that an estate should be taxed on a higher scale because the deceased had been prudent enough to insure against the heavy loss, which would otherwise fall on those who followed after him.

MR. COHEN

said, he would press the Solicitor General for a reply to the concrete case which had been put so succinctly and forcibly by his lion, and learned Friend (Mr. Byrne). No doubt, had the Chancellor of the Exchequer and the Solicitor General foreseen many of the difficulties that had been pointed out as likely to arise under the Bill during the Debate they would have taken care to provide against them. When instances were pointed out where injustice would be done the Committee were entitled to an assurance that those evils would be rectified. Under those circumstances, he did not think it was too much to expect that when an Amendment was rejected the grounds for that rejection should be clearly stated by some Member of the Government.

MR. HENEAGE

Can I have an answer to my question?

MR. R. T. REID

said, that in the case put forward he believed that no Estate Duty would be payable on the money received from the insurance offices.

*MR. T. H. BOLTON

said, he should like to know why that class of property was excepted from the payment of duty? What was the difference between a life insurance to pay Government duty and an insurance to provide money for any other object?

MR. R. T. REID

said, the question was outside the point referred to. He had answered out of courtesy. Because he answered one question he was immediately asked to explain another legal problem.

MR. BARTLEY

said, it was not a legal point at all; it was purely one of finance. [Cries of "Divide!"] He undertook to say that not one gentleman who cried "Divide !" knew anything about the subject. The hon. and learned Gentleman had not answered the question as to whether the personalty in the case put forward would have to pay a higher rate of duty in the event of the payment on the realty being postponed for a year and a-half.

[No reply was given.]

MR. BARTLEY

Will you answer? I suppose you cannot do it.

MR. R. T. REID

said, it was most unfair for the hon. Member to say that. He had risen at least ten times to answer questions put him on that Amendment alone. The answer he would make to the hon. Member was that the question he put forward was entirely beside the mark. In computing the aggregate value of an estate no property would be included that accrued to the estate after the death of the deceased.

Question put.

The Committee divided:—Ayes 130; Noes 80.—(Division List, No. 92.)

MR. BARTLEY

said, the next Amendment he proposed to move was to leave out those words on which they had already had some discussion—namely, the words from the word "therein," in line 30, and up to the word "and" in line 32—that was to say, the words— Between the death of the deceased and the date of the delivery of the Inland Revenue affidavit or account. and to insert these words, "until the date of the death of the deceased." This Amendment would raise the point whether the aggregate estate should include any part of the income from the estate after the death of the deceased, and if agreed to would prevent many of the difficulties and complications that would otherwise arise. Everything up to the time of the death of the deceased should be included; and surely that ought to be the limit. The Amendment would do away with the extreme hardship that would otherwise fall upon small traders—namely, hampering them by taking away the money that was coming in in order to add to the corpus of the estate. He did not profess to be a lawyer; but this was not a legal question in any sense; it was a matter of common honesty. For himself, he could not see any equity or fairness in the proposal of the Government, and, what was more, he could not see any facility in it for working. He would emphasise the point of his hon. and learned Friend, that if this clause passed as it stood it was certain that the absolute income derived from the estate after the death of the man might raise the estate above these limits and margins where the Estate Duty rose, so that a higher duty might have to be paid than the property ought to have borne at the date of the death. To him that appeared to be absolutely unjust. If a man died on a certain day his property was worth a certain amount, and if they charged interest upon it after the death until the duty was paid it would be a near thing to do, but it would be something definite, and everyone would know what it was for, and it would come to infinitely less than the proposal of the Government. But whether it was more or less it would be a fair, though a near, thing to do. He thought it would be more simple and fair if, after death, interest were charged on the amount rather than to adopt the system proposed by the clause. His Amendment would provide that up to the death of the deceased the estate should be reckoned with, but not beyond that. He therefore begged to move the Amendment standing in his name.

Amendment proposed, in page 3, line 30, to leave out from the word "therein," to the word "and," in line 32, and insert the words "until the date of the death of the deceased."—(Mr. Bartley.)

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

SIR R. WEBSTER

said that, inasmuch as this was a matter of substance and not a merely technical point, he trusted he might be permitted to put before the Members of the Committee who were now present, but who did not hear the last discussion, exactly what they were debating about. The learned Solicitor General proposed, for purposes of calculating the Estate Duty, income should be included up to the passing of the account, be it six months or be it longer, on both settled and unsettled property. The consequence of that would be that the result of the aggregation of the income during the period after death might take the total estate to a different class and cause a much larger duty to be paid. He understood the learned Solicitor General, in reply to the last Amendment, expressed the opinion that that was not so, but he was at a total loss to understand under what words in the Bill any such conclusion could be come to. The object of the last Amendment, to leave out the word "estate," and insert the words "property of which the deceased is competent to dispose," was to limit it to what the deceased had at the time of his death. The hon. and learned Gentleman declined to accept that Amendment, however, and they thought the result was that income to which the deceased was not entitled was to be brought in for the purpose of swelling the total amount, and one of the consequences of that would be to take into the account a sum that would render a larger duty payable. The other point was still stronger, and he asserted again, with very great respect, with regard to settled property the dead man's estate had no right to the income at all. It had been a rule that, with regard to free personalty which would be dealt with under the executor's account, income up to the date of passing the accounts was paid in, and it might be said when fixing or levying the Estate Duty they were to adopt that old principle; but with regard to income it stopped at the death of the deceased; the income then belonged to those in possession, and by what law or equity were they to suggest that they were to take some hundreds a year and add it to the dead man's estate? He submitted his hon. Friend had raised this question at the proper time, and that the Government might well consider what the position was, and both in equity and justice draw the dividing line at death. He submitted they wanted to do this the more, because they were bringing in fresh Estate Duties. The artificial rule with regard to free personalty, of including everything up to the passage of the accounts, would work a monstrous injustice if applied to settled property. If the Amendment were not accepted the executor would never know, until the accounts were passed, what was the total amount on which duty was payable.

MR. R. T. REID

said, that in point of fact he adhered to the opinions he had already expressed, and he could not agree with the hon. and learned Gentleman. The fact was, that this Amendment would confine the estate, so far as income was concerned, entirely to the income preceding the death. These words would be quite unnecessary, because that might be done by the operation of the general law. But the hon. and learned Member for the Isle of Wight (Sir R. Webster) proceeded further. It was quite true that there were characteristics of this new Estate Duty which differed from some of the characteristics of the Probate Duty. One of these was that the new duty was to extend to realty or settled personalty. But the rule as to the Probate Duty was that interest was taken from the death till the date of the payment of the duty which was deemed to be due on the death. The question was whether the old practice of charging interest, or the equivalent of interest, from the date of the death was to prevail in regard to the new duty or not. The Government maintained that it should, their contention being that up to six months after the death the income arising from the property was to be brought into account, and after that that interest was to be payable. If, however, hon. Gentlemen opposite desired that instead of income interest should be brought in, the Government would do their best to consult the wishes of hon. Gentlemen on that subject. The principle was, however, the same. The proposal of the Government excited the indignation of the hon. and learned Member for the Isle of Wight. It was said that it might have an injurious operation by reason of the aggregation introduced into this tax. That was, however, a point upon which he had the misfortune to differ from hon. Gentlemen opposite. But, as he did not want to leave the matter in doubt, he would accept an Amendment standing in the name of the hon. Member for St. Pancras (Mr. T. H. Bolton) that— Such income shall not be included in calculating the aggregate of the estate for the purpose of determining the rate of duty. He was prepared to accept that, and under those circumstances it seemed to him they had really tried to meet hon. Gentlemen on this question.

MR. A. J. BALFOUR

said, that having got rid of the one only obvious injustice, it might be followed by another concession. He understood that, whatever might be said about the interest accruing upon the estate between the date of the death of the deceased and the time of passing the accounts, at all events the accruing interest would not be added to the capital sum of the property so as to bring it under a new scale of graduation. So far so good. The question, though one of substance, was one of less importance than the one upon which the Solicitor General had made a concession. The whole plan of the Government appeared to be that they might tax a man while he was alive, and in addition when he was dead he was to be scotched. The fact that when a man died he ceased to have any concern with material mundane wealth might be admitted even by the Government as covering their dealings with the Death Duties. He had always thought the theory of taxing the dead was an absurd theory, but this was an appendix to the theory; that the dead might invest their money in excellent securities, and get large interest for it, seemed to him to be even more grotesque. If any gentleman, being dead, had the misfortune to have an executor who was very slow in making up his accounts, the estate would be more heavily taxed than the estate of a dead man whose executor made up his accounts very rapidly. He did not quarrel with the principle that interest should be paid upon the duty as from the death; but then the Government should carry that out consistently. If the Government wished to carry out the principle, they should embody it in their Bill and let the interest accrue from the date of the death. They should not cut the theory into two halves, during the first of which the Government were to be entitled to dividends, and during the second only to get interest.

*MR. TOMLINSON (Preston)

said, there was no mystery as to the rule for ascertaining the amount of the estate upon which Probate Duty was payable. It was the personal estate of the testator; and the executor's strict duty was to turn the estate into money as soon as possible, and to distribute the residue of the proceeds of the sale after payment of debts. In law there was no distinction between income and capital for this pur- pose. The estate, therefore, upon which duty was payable was the value of the testator's property, after deducting debts at the time he obtained possession of the estate, or, in other words, when he obtained a grant of probate. There was therefore no analogy which applied in the case of the present Estate Duty.

MR. WYNDHAM (Dover)

said, on the question of principle these words were in flagrant contradiction with the intention expressed by the Government from the very commencement of the Debate, to deal with this Estate Duty as a posthumous charge on the estate of the deceased person. The Government had relieved the Opposition from one of the results they were fearing by giving up much of, if not all, the advantage of retaining the words of the Bill as they stood. The principle embodied in the words which the hon. Gentleman moved to omit was in direct contradiction to one of the principles on which the Government had harped as a recommendation of this Bill. From the first they had said that the Estate Duty was a posthumous duty; but the Solicitor General now compared the income accruing after death to the interest payable upon a debt due under the rule in probate. The objections were—first, that the income was not at all the same thing as the interest upon a debt; and, secondly, the Government had over and over again repudiated any supposed analogy between this duty and Probate Duty. They quoted the analogy when it told in their favour, and repudiated it when it was against them. If they adhered to the theory that this new duty was only an improved graduated Income Tax, if they stuck to the plan of taxing the estate according to this drastic method of taxation, they were bound to accept the Amendment.

SIR F. S. POWELL (Wigan)

said, it would be necessary to know what was meant by income, whether it was gross or net income, whether reductions were to be made for repairs that were going on, and whether, if the interest due on a mortgage turned out to be a bad debt, duty would have to be paid upon it? That was a point of considerable importance. It was often difficult to say what sum was necessary to be expended on repairs, and in that case an open account must be kept and difficulty would arise.

*SIR SEYMOUR KING (Hull, Central)

said, the Government wanted, in charging interest on the Estate Duty, to profit by their own ill-doing, and they ought to give the right to take out a provisional certificate for the payment of duty where large estates scattered all over the globe were to be aggregated, just as probate could now be taken out in 10 days on the payment of a provisional sum, which could be afterwards increased or reduced as might be found necessary.

MR. BUTCHER

desired to raise the question whether this part of the duty was really covered by the Budget Resolutions at all. Could it be said that this income or interest was property which in any conceivable way passed on the death of the deceased? Were not the Government exceeding the Budget Resolutions in proposing this tax, a tax which, he submitted, was in accordance neither with reason nor justice? The Government were acting in this matter upon an unsound and illogical basis.

MR. R. T. REID,

in answer to the question whether "income received or accrued" meant gross or net income, said that unquestionably net income was meant, and if necessary that would be put right. Of course, interest which had not been received, as upon a mortgage, would not be included, simply because it had not been received. The point of Order which had been raised by the hon. Member for York with regard to the Budget Resolutions was a question for the Chair.

THE CHAIRMAN

said that, having considered the point of Order, he was bound to say that he thought the subsection went beyond the terms of the Budget Resolution.

MR. R. T. REID

proposed that instead of "income" the clause should read that "interest" received or accrued, &c, should be payable. That seemed a reasonable thing.

MR. WYNDHAM

asked whether the hon. Member for Islington would accept, at the end of his Amendment, as an addition, the words— and interest at the rate of 3 per cent, per annum on the total value of the Estate Duty so ascertained.

MR.R. T. REID

suggested that in view of the Chairman's decision on the point of Order, and as this was a highly technical matter, the whole question should be reserved to be dealt with on Report.

MR. A. J. BALFOUR

said, that would hardly be in Order. In order to be within the Rules of the Committee the sub-section must be adjusted in some rough-and-ready fashion now, and, if necessary, it could be amended on Report.

MR. R. T. REID

said, the best and shortest way would be to accept the words proposed by the hon. Member for Dover, and, if necessary, they could be amended at a further stage.

MR. BARTLEY

urged that his Amendment should come in first.

Question put, and negatived.

Words inserted.

SIR R. WEBSTER

proposed to insert in Sub-section 4 the words, from another portion of the Bill— Up to the date of the delivery of the Inland Revenue affidavit or account, or the expiration of six months from the death of the deceased, whichever first happens.

Amendment agreed to.

On Motion of Mr. T. H. BOLTON, the following Amendment was agreed to:—Page 3, line 32, after the first "account," insert— But such interest shall not be included in calculating the aggregate of the estate for the purpose of determining the rate of duty.

MR. GRANT LAWSON

(in the temporary absence of the hon. Member for Lynn Regis) moved the following Amendment:—Page 3, line 32, after "and the," insert "estate." The object, he explained, was to make it clear that the duty referred to was the Estate Duty.

Amendment proposed, in page 3, line 32, after the words "and the," to insert the word "estate."—(Mr. Grant Lawson.)

Question proposed, "That the word 'estate' be there inserted."

MR. REID

thought it would be undesirable to press the Amendment, as they should then have to go on repeating the words "Estate Duty" instead of "duty" merely all through the Bill.

Question put, and negatived.

On Motion of Mr. T. H. BOLTON, the following Amendment was agreed to:—Page 3, line 32, leave out "when collected."

On Motion of Mr. R. T. REID, the following Amendments were agreed to:—

Page 3, line 33, after "account," insert "or the expiration of six months from the death, whichever first happens."

Page 3, line 34, before "real," insert "an account of."

Line 34, leave out "at the option of the person paying the duty."

MR. R. T. REID

moved, in page 3, line 35, after "or," insert— The expiration of six months from the death whichever first happens, or, at the option of the person paying duty. The Amendment was amended so as to read at the option of the person "accountable for," instead of at the option of the person "paying," the duty.

Amendment, as amended, agreed to.

SIR R. TEMPLE (Surrey, Kingston) (on behalf of Mr. HANBURY) moved the following Amendment:—Page 3, lines 35 and 36, leave out "with interest at the rate of three per centum per annum." He said the sentence to which the Amendment referred was as follows:— Except that the duty on real property may, at the option of the person paying the duty, be paid either on the delivery of the account, or, with interest at the rate of 3 per cent, per annum, by eight equal yearly instalments. Considering that this tax was levied in a lump sum, and that when it reached a large sum it might become very burdensome on the payer, they were very thankful it should be spread over a term of eight years by instalments. The effect of that mercy, however, was somewhat impaired by the condition as to interest which had to be paid on the unpaid portion of the duty. He believed there was no precedent whatever for the levying of interest upon instalments of taxes. If there was a precedent at all, it ran in a direction opposite to this. There was, he believed, a precedent for a discount deducted upon a tax being paid down on the spot, but no precedent whatever for this levying of interest. This arrange ment would fall with peculiar severity when the tax was levied upon real property. In the case of personal property it was possible for the executor to raise the amount speedily by the sale of Stock or other means, but in the case of real property it became necessarily difficult. Therefore, the levying in a lump sum of taxes of this nature on one man was a very difficult matter, and, if the amount were large, would fall upon a poor man with oppressive severity. In these circumstances, while they admitted that the Government were quite right to spread the amount over a term of years by instalment, they submitted that the Government were wrong, very harsh, and very hard in proposing to levy interest upon the unpaid duty, and the words relating to interest at 3 per cent, per annum ought to be struck out.

Amendment proposed, in page 3, lines 35 and 36, to leave out the words— With interest at the rate of 3 per cent, per annum."—(Sir R. Temple.)

Question proposed, "That the words 'with interest' stand part of the Clause."

MR. R. T. REID

said, the hon. Baronet could hardly expect that this Amendment could be accepted, because it had been a part of the proposal of the Budget from its very introduction by the Chancellor of the Exchequer that this charge should be made, and he ventured to submit that no reason had been adduced since that date which should induce them to alter the arrangement. Real property was treated in this Bill with exceptional indulgence as compared with personalty. ["Oh, oh!"] He was sorry if lion. Gentlemen did not agree with him, but let him point out what was the proposal of the Bill. In the case of personalty this duty had to be paid down within six months or thereabouts, but in the case of realty they could either pay them or, if they thought fit, they could take eight yearly equal instalments in which to pay it. He could not imagine that anyone could deny that in that respect realty was treated with exceptional indulgence as compared with personalty. Surely in the matter of a payment it was preferable to have the option of paying in instalments in eight years, or paying down rather than to be constrained to pay down without having the option of instalments in eight years. He would have thought that that was a self-evident proposition to hon. Gentlemen opposite. In the case of personalty the duty had to be paid within six months; in the case of realty, however, the duty could either be paid within a year or in eight equal yearly instalments. That preference in favour of real property was founded on the ground that real property was in an exceptional position; and, therefore, ought to be treated exceptionally. But he thought that it would be unjust to extend the preferential treatment of real property any further by exempting the yearly instalments from the payment of interest.

MR. W. LONG (Liverpool, West Derby)

said, that with the exception of the Solicitor General, no one yet, in all the discussions on the Bill, had ventured to say that in the Bill there was an advantage given to realty as compared with personalty. The Chancellor of the Exchequer and the few hon. Members on the Benches behind him who had taken part in those discussions had always endeavoured to justify the fact that the Budget proposed to equalise the treatment of real and personal property; and it had never been said, except by the Solicitor General, that in this particular there was a distinct advantage given to realty. He denied that realty was unduly favoured as compared with personalty, because the owner of realty was penalised by having to pay interest on the deferred amount due to the State. How could that be described as an option which gave an advantage to realty? It was the State that would have the advantage in the transaction. The State would have in the land good security for the amount of the original debt, and for the accruing interest, which it would be difficult for it to get in the case of any other property. He did not know what were the reasons which induced the Government to make this proposal with regard to the payment of interest. The difference in the two kinds of property ought to be borne in mind. While personalty could be easily realised in order to pay duties to the State, no one would contend that the owner of realty would be able either to sell a portion of his estate or the whole of it with the same facility and satisfactory result; and, therefore, to charge the owner of realty with interest under the circumstances was one of the most unjust proposals in the Bill. The unfortunate owners of realty were already overburdened with debt; and the Solicitor General knew very well that the option, which he described as an advantage in favour of realty, the owners of realty would in 99 cases out of 100 be compelled to adopt, owing to their inability to pay the duty down, or to realise it by the sale of portions of their property.

*SIR MARK STEWART (Kirkcudbright)

pointed out that proprietors of land usually received their rents twice a year—oftentimes months after they were due, in some cases unpaid till January and August, instead of November and May; and as they were not allowed to pay the duty to the State in half-yearly instalments, but must pay it in one yearly instalment, half the instalment would lie in the bank, earning no interest whatever, while 3 per cent, interest would have to be paid to the Government. The Solicitor General seemed to think that there was a large sum of money always lying at the bank ready for the Government when the day for the payment of the instalment arrived. But he himself knew of numbers of instances in which a large expenditure had to be made on landed property in order to keep it up to the proper mark, and as there was absolutely no return for this outlay, was it not too much to ask this very high tax in the shape of interest from owners of realty?

MR. GIBSON BOWLES

said, he believed that this system of payments by instalments had been devised by the Government solely with the view of getting rid of an intolerable difficulty they would otherwise have found themselves in. It would be impossible for men whose property consisted of realty to pay this tax down in a lump sum, and if there was not the option of instalments the only other course left the Government would have been to seize the land in order to realise the sum required. The Chancellor of the Exchequer was too wide awake to do that, however, for he was fully aware of the difficulties of selling lauded property in England. He very strongly objected to the Government persisting in their statement that the Bill was framed with special regard to the interest of the landowner. To say that the offer of payment by instalment was a concession was simply absurd. How could anything be a concession for which you had to pay 3 per cent, interest? No old Jew money-lender even would venture to call it a concession. It had been stated in the House only the other day that money could be borrowed by the Government at ½ per cent. Yet the Government proposed charging the unfortunate landowner 3 per cent. The fact of the matter was, that the Chancellor of the Exchequer got the money at ½ per cent, and lent it to others at 3 per cent. That was what the proposal of the Government came to. Real estate had never yet been saddled with Probate Duty. Why should it be charged now? The framers of the Act of 1858 recognised that real estate could only be regarded as income for the purposes of the imposition of any tax. It was not on the same footing in any way as personalty. They never could compare a property consisting of acres with one consisting of sovereigns. They could never take the acres in the hands and hand them about as they could the sovereigns. He therefore submitted that real estate should only be called upon to pay this new duty by instalments, and that no interest whatever should, during the period of eight years, be charged by the Government on the outstanding debt.

MR. BRODRICK (Surrey, Guildford)

said, that in this case the Government would be demanding interest from people who would have to borrow money to pay them. Take the case of an Irish proprietor of land, who was supposed to receive rents from his tenants. The rents due on the 25th of March were not paid till November, if they were ever paid at all. Therefore, in order to pay his yearly instalment the Irish landlord must borrow money at 4 or 5 per cent., and besides that must pay the Government 3 per cent, interest on money that perhaps he has never received himself. The Government proposal was really an unjust attempt to get out of land that which the land had never yielded, and at the same time to save the Government from the difficulty of having to seize the land to realise their debt. The Chancellor of the Exchequer seemed to have forgotten that very much of the estimated capital value of land produced no income to the owner at all. Take, for example, the case of timber which the owner for life was restrained from cutting down. He had to pay interest on a thing he could not sell. The same argument applied to cottages. All such improvements effected on farms paid no interest on the outlay, and in some instances hardly paid their upkeep. As a matter of fact, as far as the Bill had gone, the landed interest were going to pay on what they had not received, and interest in addition. He protested against the obvious inequality as between realty and personalty which was about to be perpetrated.

MR. GRANT LAWSON

said, he had made a calculation as to what would be the extra burden which would be put on the payers of the duty in instalments by the 3 per cent, interest, and he found it worked out at 10½ per cent, of increase of duty.

COLONEL KENYON-SLANEY (Shropshire, Newport)

reminded the Committee that Ireland was not the only portion of the United Kingdom in which the rents were received months after they were due. There was hardly a county in England in which it was not the rule that rent was not received for a number of months after it was due. Therefore to ask landowners to pay instalments, with interest, at a time when the rents were still due, was to ask them, most distinctly, to pay on that which they had not received. It had been proved conclusively that there was nothing in the alleged act of kindness on the part of the Government which was deserving of the name at all. It was a mere matter of business, and should be treated as a matter of business.

SIR R. TEMPLE

said, ho claimed the indulgence of the Committee to say a few words in answer to the Solicitor General who said he had given no specific reasons for his Amendment. He submitted that he had. He had pointed out that the levying of such a large sum as was involved in the proposal must necessarily, in the case of realty, be by instalments, and that the allowance of instalments was not a matter of grace but a necessary concession, and, therefore, interest ought not to be charged. On the other hand, the Solicitor General had not given as against the Amendment one single reason that would hold water.

Question put.

The Committee divided:—Ayes 154; Noes 111.—(Division List, No. 93.)

Committee report Progress; to sit again upon Thursday.