HC Deb 09 July 1896 vol 42 cc1187-9

Section two, Sub-section one (b), of the Finance Act, 1894, shall be read and have effect as if after the words "property in which the deceased," the words "at the time of his death" were inserted, and as if after the words "any other person," the words "at the time such death" were inserted.

He contended that the clause in the Act of 1894 clearly contemplated pro- perty in which the deceased had an interest at the time of his death, and that alone. It never entered the mind of any man in the House that any property of which a man had entirely divested himself and extinguished it perhaps twenty years before his death, should be chargeable with duty. That, indeed, was the construction the Inland Revenue had put upon the Act when it was first passed. At first, when a man had, more than a year before his death, extinguished his life interest, the Inland Revenue never attempted to charge duty; but at about the end of a year, in June or July 1895, the Inland Revenue began to read the Act differently, to put upon it a false construction which it would not bear, and to charge duty wherever a man had a life interest and divested himself of it, no matter how long before his death. Yet another change took place in the kaleidoscopic constructions placed upon this Act by the Inland Revenue, and after July 1895 they sometimes and in some cases levied the full duty and sometimes they did not. There had been three constructions of this single clause, which at the time when it was passed was understood to refer only to the interest possessed by a man at the time of his death. He maintained that it was necessary to restore to the Act its original construction. He knew that the Chancellor of the Exchequer had undertaken to pay the legal expenses of both sides if a fitting test case for the trial of this question should arise. That was all very well, but there might be a delay of two or three years before such a case was tried and decided, and in the meantime he supposed that the duty would continue to be levied in accordance with the construction put upon the clause by the Inland Revenue. Moreover if, as he expected, the decision were against the Inland Revenue, the Chancellor of the Exchequer might have to introduce a Bill of Indemnity in respect of the illegal levy of duties contrary to the Act. If at a future time it should be proved that the Government had been levying these duties unlawfully in consequence of an improper construction of the clause, would the Chancellor of the Exchequer promise to return the duties received up to that time? If an undertaking of that kind were given him he should be willing to withdraw his Amendment. If there should be a legal decision unfavourable to the Exchequer, and the right hon. Gentleman were to retain the amount of the duties already levied his action would hardly be fair.

*THE CHANCELLOR OF THE EXCHEQUER

said that his hon. Friend had placed a certain construction upon a very difficult clause in the Finance Act of 1894, but the ex-Law Officers who were responsible for that Act had placed a diametrically opposite construction upon it, and it was upon the advice of the ex-Law Officers that the Inland Revenue had been levying this duty. When he was asked some days days ago whether, as there did appear to be some doubt as to the law, he would do his best to secure that the law on the subjact should be decided definitely as soon as possible, he readily agreed, and he took the very exceptional course of saying that as soon a fitting test case should arise, he would, as Chancellor of the Exchequer, pay the reasonable costs of both sides to the suit. It was an advantage to the Exchequer as well as to the public, that the subject should be decided by a Court of Law. In the meantime he hoped his hon. Friend would not press his Amendment to a Division.

*MR. GIBSON BOWLES

said he would only express the hope that when any persons came up for taxation they would be informed of the arrangement the right hon. Gentleman had made, and would not be required to pay the duty.

*THE CHANCELLOR OF THE EXCHEQUER

All we want is a test case.

Amendment, by leave, withdrawn.

Schedules added to the Bill.

Bill reported; as amended, to be considered upon Monday next, and to be printed. (No. 309.)