HC Deb 29 June 1897 vol 50 cc782-6

"Section 2, sub-section 1 (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 truth' were inserted, and as if after the words ally other person,' the words, at the time of such death,' were inserted."

The hon. Member said that what the proposed Clause came to was this—that by the Finance Act of 1894 it was enacted, and was clearly intended by the promoters of the Act, that settled property should pay a special duty, called settlement duty, of 1 per cent., and in consideration of that payment (which was remitted only in the case of settlement made previous to the passing of the Act) only one duty should be paid in the course of each settlement. There were two conditions necessary under the Act to exonerate any particular settled property. One was, that the estate duty must already have been paid; the other, that the person at whose death the duty was claimed must have been competent to dispose of the property. If A settled property on B with remainder to C, the duty was payable on A's death, but not on B's, because he was not competent to dispose of the property, and the duty had been paid previously at A's death. But in the case of settlements which were in existence prior to the passing of the Act, duty was claimed upon the death of B, because it had not previously been paid when A's death preceded the passing of the Act, and as the Act was interpreted by many solicitors, and, he believed, by the ex-Attorney General (Sir R. T. Reid, duty would again be payable on the death of C, and so payable twice during the settlement instead of once. If A made the original settlement and B were competent to dispose of the property, B had to pay duty as well as C if A had not paid it. He had permission to quote the case of property in North Devon, a poor agricultural estate now owned by a gentleman named Troyte, who was in the position of C. He was tenant in tail under an old settlement. The present owner came of age about 1890, and re-settled the property with his father. The father, Colonel Troyte, had recently died, and duty was claimed on the father's death, and the present Mr. Troyte was treated as if absolute owner. It was decided that he inherited under the old settlement as absolute owner; and that, he imagined, would make the estate again liable to pay duty at his death. If he could get an authoritative decision that the estate would not have to pay duty on Mr. Troyte's death, he would be satisfied. But the opinion was that, as the Act said that any person who was competent to dispose of property would have to pay at his death, and as Mr. Troyte had been treated as the absolute owner, the presumption seemed to be that on his death duty would again be payable. Had duty been paid by the original settlor, no duty would have been payable at all on Colonel Troyte's death, but only on the death of the present owner. But the Inland Revenue said, and said justly, that, according to the terms of the Act, duty was payable on the death of Colonel Troyte, because t he estate never paid duty before. What he wished to bring about was, that this duty, having to he paid now, should not be exacted from the same property a second time under the same settlement, and he believed the wording of the Amendment would bring about that result. In a case where a new settlement is made, as was made in 1891 in this case, and where duty had subsequently been paid, no duty should be again exacted until the death of a person competent to make a new disposal of the property. It was now exacted in the case cited, that of Colonel Troyte, and it would, unless authoritatively decided otherwise in the sense of his Amendment, be again payable on the death of the present owner. The settlement in 1891 was on Mr. Troyte's son, and he would be competent to dispose of the property which would thus be liable to duty again at his death. That appeared to be absolutely unfair, and if his Amendment were now inserted, the effect would be that the duty now payable would not be again payable on the death of the present owner, because it had been paid subsequent to the new settlement made, but it would be again payable on the death of the son, who would probably be the next successor. It was difficult to argue the point whether estate duty should be held to be payable at the beginning or the end of a settlement; but it really made no difference. If the duty were payable at the beginning of the settlement, the Treasury was asking Colonel Troyte's estate to pay on a death which took place before the Act was passed, and could not then he claimed. If, on the other band, it were payable at the end of the settlement, they were simply ante-dating payment. It was exacted now, and the question was, whether it would be again exacted later on, from the successor, though paid so many years previously. The position of the Treasury might be thus described. Suppose a person bad a bill becoming due at a certain date, and owing to certain legal formalities he received payment for that bill six months before it fell due, and then six months later claimed payment again, because payment was not made on the proper date; that would be exactly the position if duty were demanded again on the next life. It was no extraordinary case. It was an ordinary case, and might arise on every existing settlement affecting property throughout the country. He believed that the Amendment was within the four corners of the Act, and did not contradict any principle laid down. In course of time that which he now desired to bring about by the Amendment would be the natural operation of the Act. The words of the Amendment had been examined by lawyers, and he was assured would bring about the effect desired; but, of course, it was with great diffidence he submitted the Amendments to the Chancellor of the Exchequer and the Law Officers. If there were any other words that would better bring about the desired result, he would be perfectly prepared to accept them. The question only came to the front recently. Only lately the case of Colonel Troyte came to his knowledge, and it arose out of inquiries directed to a totally different purpose, when he observed that the duty had been charged against the present owner as absolute owner, not as tenant for life. Then arose the doubt; and the opinion of competent lawyers was that a second duty might be claimed. He would be perfectly satisfied with an authoritative answer that duty would not be claimed at the death of the owner, or a promise that words would be accepted to bring about the desired result.


said if the language of the Amendment were closely criticised it would be found to go fir beyond the expressed intention, and give persons power to indefinitely postpone payment of estate duty. But he thought he could satisfy his lion. Friend that the grievance referred to did not really exist. Property having been settled on A for life and remainder to B as tenant in tail, they joined to break the entail, and the estate entailed was converted to remainder in fee, and so resettled on B for life with remainder to his son. Such was the case put by his lion. Friend. After that resettlement and after the Finance Act, 1894, came into force, A died, and estate duty was paid on the transmission of the property from A to B under settlement, and his lion. Friend said that on the death of B estate duty would be claimed again. To that he had to say—and he spoke with the full concurrence of the Attorney General that under the circumstances described by his hon. Friend the fact of duty having been paid on the death of A made it impossible to claim it on the death of B. It would be seen on reference to the subsection of the Act, that if estate duty had already been paid in respect, to any settled property since the death of the settlor duty would not again be payable until the death of the person who at the time or since was competent to dispose of the property.


said he was perfectly satisfied with this declaration, but he justified himself to the Committee for raising the point. The words in the Act referred to by the Solicitor General were a little doubtful, and an authoritative interpretation was required. The words declared that duty should not be payable except on the death of the person competent to dispose of the property. As the person in the case he had cited had been held competent, and was charged as absolute owner, the point naturally arose whether the property would be again liable. The point appeared doubtful, and the case being submitted to competent lawyers, it was considered doubtful how it would be interpreted by the Inland Revenue. He was perfectly satisfied with the authoritative decision given.

Clause, by leave, withdrawn.

*THE LORD ADVOCATE (Mr. GRAHAM MURRAY, Buteshire) moved the insertion of the following new clause:—