DEATH DUTY (Hansard, 29 June 1897)

§ *CAPTAIN PRETYMAN
rose to move the following Clause:— Section two, Sub-section one (b), of the Finance Act, 1894, shall he 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 of such death" were inserted. He said it was possible under the terms of the Finance Act of 1894 for any person who was the absolute owner of any property to transfer any portion of that property during his lifetime, in which case any property so transferred did not become liable to duty. But, with regard to settled properties, any person who had a life interest in them was held to be unable to divest himself of that interest, and if he should during his 767 lifetime transfer it to any other person, and thus at the time of his death should have no interest whatever, it was still held to be liable to duty exactly the same as if lie had retained it until the time of his death. He cited the case of a man who died leaving a widow and some young children. The property of the father would naturally pass direct to the children if those children were of age at the time of his death, but if they were under age it was customary that he should give to his widow a life interest in the property, and that the children should take her interest at her death. It was a very common thing in such a case for the widow on one or other of the children coming of age to transfer to the child some portion of the life interest vested in herself. That property then passed entirely from the widow and was enjoyed by the child absolutely from the date of the transfer; but on the death of the widow seine years after the transfer Estate Duty was claimed to be payable on the property exactly as if she had retained it to her death. He had put down the Amendment to the Finance Bill of last year to meet the hardship of such a case as that, but on the suggestion of the Chancellor of the Exchequer, who pointed out that the point was one of an extremely doubtful nature, he withdrew the Amendment. On looking into the matter it was found that at first the Finance Act of the right hon. Gentleman the Member for West Monmouthshire was interpreted by the Treasury in the sense that a person had an absolute right to transfer his or her life interest in a property exactly as a freehold was transferred. That might be taken as the original view of the authors of the Act.

§ *SIR W. HARCOURT
expressed dissent.

§ *CAPTAIN PRETYMAN
said the way the Act was administered by the right hon. Gentleman when he was in charge of the Treasury was that duty was not claimed in the case he had just described. Just before the Liberal Government went out of Office advice was given by the then Law Officers of the Crown that duty was chargeable in that particular case, and the Treasury proceeded to claim duty in all cases. But it was found after a time that this created enormous difficulties in regard to settlements made 768 prior to the passing of the Act, and then the Treasury proceeded to administer the Act in a third sense—namely, that duty should only be claimed when the settlement was made subsequent to the passing of the Act. It was therefore evident that the interpretation of the Act was a matter of extreme doubt and difficulty, and, in the circumstances, the Chancellor of the Exchequer, when the Amendment was before the House last year, expressed the wish that the proper interpretation of the Act as at present worded should be made clear in the Courts of law before the House was asked to deal with the point raised in the Amendment. It appeared to him that it was hardly fair that any private individual should be asked to bear the cost of art action against the Crown in order to have this doubtful point settled, and the Chancellor of the Exchequer, recognising the force of the argument, agreed that if a case should be found which, in the opinion of the Law Officers of the Crown distinctly raised this point, the Treasury would pay the reasonable costs of both sides. On that understanding he postponed his Amendment until this Session. He was glad to say that within the last few weeks a case had arisen which had been accepted by the Law Officers of the Crown as raising the point in question in a clear and definite manner. It was rather curious that in this case the widow should have borne the name of the Chancellor of the Exchequer, and the son to whom the property passed should be one of his constituents in the Woodbridge division of Suffolk. (Laughter.) He therefore asked the leave of the Committee to further postpone his Amendment until the case was decided by the Law Courts.

*THE CHAIRMAN OF WAYS AND MEANS
called upon Mr. Lough in whose name stood the next Amendment on the Paper.

§ SIR ROBERT REID (Dumfries Burghs)
rose to a point of order. He asked whether any opportunity was to be given for a reply to the statement of the hon. Member for the Woodbridge Division, who was mistaken in regard to the law?

*THE CHAIRMAN OF WAYS AND MEANS
There is no question before the Committee.

§ *SIR W. HARCOURT
said he should like to have it made clear, in the interest of the Committee, whether a Member could make a long speech in reference to an Amendment he did not move, incorporating in that statement a number of extremely controversial topics, and then that no opportunity should be given for a reply. If so it was a great waste of the time of the Committee. ["Hear, hear"]

*THE CHAIRMAN OF WAYS AND MEANS
I was under the impression that the hon. Member was going to conclude his speech by moving his Amendment.

§ *CAPTAIN PRETYMAN
said he had not been aware that any one desired to enter into a discussion on the matter. He now begged to move his Amendment, and after the discussion would withdraw it by leave of the Committee.

§ *THE CHANCELLOR OF THE EXCHEQUER
said that the point raised by the Amendment, about which there was considerable doubt, was now before the Courts, and he ventured to suggest that in the circumstances debate on the Amendment was unnecessary and would be a waste of the time of the Committee.

§ SIR R. REID
said he did not desire to see a debate raised. But what he objected to was that the statement of the hon. and gallant Member, winch was in the highest degree controversial, should be made and that no opportunity should be given for a reply. He would urgently press on the attention of the Chancellor of the Exchequer the fact that if the Amendment were accepted a portion of the Finance Act would be seriously imperilled. Take the case of a man having an estate for life with some one else having the estate in remainder. The man with the estate for life had only, when it was declared he had but a month to live, to sell the value of his life estate, for perhaps a third of the year's interest or less, and the effect would be that the property would escape from Estate Duty altogether. He did not wish to argue the question; but it must not be supposed that those who helped to pass the Finance Act of 1894 were willing to see a coach and six driven through it as the hon. Member proposed in his Amendment. If the decision of the Courts were opposed to the contention of the Attorney General, he 770 wished to point out what a necessity there would be for rescuing the Act.

MR. GIBSON BOWLES (Lynn Regis)
pointed out that if the Amendment were carried the administration of the Act of 1891 would only be restored to the principle on which it was conducted for a whole year after the Act was passed. The present system was not carrying out lie intention of the right hon. Member for West Monmouth. It was a refinement of the Law Officers.
Clause, by leave, withdrawn.