HC Deb 01 August 1913 vol 56 cc937-51

Increment Value Duty.

Where, on an occasion for the collection of Increment Value Duty which is the transfer on sale of the fee simple of the land or any interest in the land or the grant of any lease of the land, deductions are to be made for the purpose of ascertaining the site value of the land on the occasion, those deductions shall include—

  1. (a) where the occasion is the tranfer on sale of the fee simple of the land, a deduction of the amount (if any) by which the value of the consideration on any such transfer or grant is proved to the Commissioners of Inland Revenue (in this Act referred to as the Commissioners) to have been increased in consequence of any guarantee or financial assistance given by the vendor or lessor to persons erecting buildings or executing other works upon the land, or in consequence of any beneficial arrangements made after the thirtieth day of April, nineteen hundred and nine, for the purpose of facilitating the disposal of the land, or in consequence of any other action on the part of the vendor or lessor taken after that date; and
  2. (b) where the occasion is the transfer of any interest in the land, or the grant of any lease of the land, a deduction of the like amount, increased in accordance with the relation which the fee simple of the land bears to the interest transferred or the term of the lease granted.

Mr. PRETYMAN

Would it be in order to ask the Chancellor of the Exchequer a question as to the course of procedure which he thinks it necessary at this stage to take on the Bill, or shall I put my question when the first Amendment is called?

The CHAIRMAN

I think there must be some question before the Committee. I think the first Amendment to be taken is one of substance. The Amendment in the name of the hon. Member for Pontefract is not in order.

Mr. BOOTH

I do not propose to move it.

The CHAIRMAN

The second Amendment is to leave out "an" and insert "any."

Mr. BOOTH

That Amendment is really consequential, but I and my hon. Friend decided not to move it, but the hon. Member for the Tradeston Division has an Amendment on the Paper, and lie might move it with it.

The CHAIRMAN

Yes, that is so, to leave out "an" and insert "any," and the two could be taken together.

Mr. PRETYMAN

I beg to move, "That you do report Progress, and ask leave to sit again."

Merely to put myself in order, I formally move to report Progress in order to ask the Chancellor of the Exchequer, for the general convenience of the House, what would be the procedure on this Bill? I ask the right hon. Gentleman the Chancellor of the Exchequer is he prepared to give the Committee any indication of how much time he considers the Government will be able to allot to this measure, and what will be his view as to the Amendments on the Paper? They are very numerous, and I think it is desired on both sides of the House to obtain the material parts of the Bill without undue delay, and to facilitate the passage of such parts of the Bill as are agreed, at the same time retaining such reasonable facilities for discussion of other points as we have a right to expect. Perhaps the right hon. Gentleman will give us some indication of what will be the course of procedure.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

I think my hon. and gallant Friend has consulted the general convenience of the House by his Motion and by inviting the Government to indicate what their position is with regard to the Bill. The members of the committee will remember that we were not very sanguine of being able to carry the Bill when the Prime Minister made his statement as to the course of business until the end of the Session, but there was a very general desire expressed on both sides that the Government should find time for the discussion of the measure, inasmuch as there were provisions which, generally speaking, were desired by Members sitting on both sides of the House. Since then I have received other representations, and no doubt other Members have also received representations, especially from builders and estate agents in different parts of the country, pressing that the Bill should be put through by the Government. It was decided, therefore, to give time for it; but, obviously, we cannot give very much time, and looking at the Amendments carefully, it would be quite impossible if they were discussed at any length, to find time to get the Bill through. And, therefore, I must invite the co-operation of Members on the other side of the House as well as Members supporting the Government, in helping us to get the Bill. I should like to say this, at the beginning, that it is the intention of the Government early next Session to bring in a Revenue Bill dealing with other matters which we had intended to include in this Bill—Licensing and Death Duties, and one or two other matters of that kind which have to be dealt with.

The Committee would like to know what our view is with regard to Amendments which we could accept. I went through the Amendments very carefully this morning with a view to accepting as many of them as I possibly could. Perhaps I might now indicate generally what we should be prepared to accept, subject to Amendments in form. The Committee will not expect me to bind myself at present to the exact form of the Amendments as put down on the Paper. As to Clause 1, in the main we accept the Amendments standing in the name of the hon. and learned Member for West St. Pancras (Mr. Cassel) and my hon. Friend the Member for the Luton Division (Mr. Cecil Harms-worth), which propose alterations as to what "occasion" shall include. I think that involves the acceptance of further Amendments down in the name of the same two hon. Gentlemen with respect to the words in the Bill as to any guarantee or financial assistance given by the vendor or lessor to persons erecting buildings or executing other works upon the land. I am not sure about the words of the Amendment, but in substance we propose to accept that Amendment. That means that we really accept nearly all the Amendments to Clause 1.

Mr. PRETYMAN

What about proof to the Commissioners?

Mr. LLOYD GEORGE

I am coming to that. I am afraid that we cannot possibly accept that Amendment, for the simple reason that I do not see how the Commissioners could deal with the matter unless a case is made out by the other side. After all, it is for the vendor or the estate developer to prove that he did finance the builder. The Commissioners cannot assume this unless the proof is furnished to them. Therefore I am afraid we could not possibly accept that Amendment. The same reason applies to other Amendments of the same character to Clauses 2 and 3. There are two Amendments down in the name of two hon. Members from Ireland dealing with Reversion Duty. We cannot accept either of these in the form in which they are drafted. They do, however, represent an attempt to deal with a real grievance, and I would rather like to submit them to the Government draftsman with the view of arriving at some form of Amendment which would be acceptable. So much for Reversion Duty. I come now to Clause 11 ("Record of deductions for agricultural improvements"). As to this Clause, we accept the criticism passed during the Second Reading discussion, that thirty years perhaps is not a fair limit, more especially so far as drainage is concerned, and that therefore we ought to extend it. Our present view is that it ought to be fifty years.

Sir G. YOUNGER

Not enough.

Mr. LLOYD GEORGE

That is all I have to say at present. Inasmuch as it is not a valuation which it is proposed should be acted upon immediately, and inasmuch as it is a valuation which right hon. Gentlemen opposite may wish to use in future, all we want is a record of everything which Members of the House think it is desirable or necessary should be known in order to arrive at a fair basis of taxation. It is purely a record, and therefore if hon. Members on the other side of the House think that there are some other facts which ought to be officially ascertained with the view of deciding when the time comes what the basis of taxation should be, I am perfectly prepared to accept an Amendment which will constitute an instruction to the valuers to ascertain the facts. For instance, I do not say absolutely that there should be nothing recorded beyond fifty years. I should not object to any words being inserted in Clause 11, which would constitute an instruction to the valuers to ascertain the facts, so that they would be on record when the House comes to deal with the question of taxation, and if they came to the conclusion that fifty years is insufficient, these other facts ought to be recorded, so that it will not be necessary to make any fresh valuation.

Mr. PRETYMAN

Is it necessary to make a valuation now?

Mr. LLOYD GEORGE

You have to make a valuation. The valuation will take at least years before it can come into operation, and the sooner you begin to ascertain the facts the better. The same thing applies to the question of the full site value. Some of my hon. Friends want to ascertain the facts to enable that to be arrived at. A record can be kept of all these figures and facts.

I think there are two Amendments down which provide for the exemption of the non-Income Taxpayer with respect to Undeveloped Land and Reversion Duty. These we will consider. I think that covers the whole of the ground of the Amendments in substance.

Mr. CHIOZZA MONEY

What about Reversion Duty?

Mr. LLOYD GEORGE

I think the Amendments I have mentioned cover the whole ground. Whether there may be drafting Amendments or not, I am not prepared at present to say. My statement represents substantially the Amendments we are prepared to accept. I think, on the whole, we have met the criticism which was directed to the Clauses of the Bill by the hon. and gallant Gentleman (Mr. Pretyman) and others on the opposite side of the House, and which was directed also to them by hon. Members on this side as well. Unless the hon. and gallant Gentleman has something to say I hope we shall now be able to proceed with the discussion.

Mr. PRETYMAN

I think it will be for the convenience of the Committee if I say a few words on the statement made by the Chancellor of the Exchequer and indicate our views. Although it is a little bit unusual to discuss Amendments in this way, I think I may say that at this time of the Session it appears to me that we are justified in doing it. I do not propose to go any further than the Chancellor of the Exchequer did in discussing these Amendments. We are very glad to hear that there is to be another opportunity offered next Session, but I noted the very careful and guarded language of the right hon. Gentleman. The expression he used was that the Government propose to bring in a Bill dealing with revenue early in the Session. This Bill was brought in early in the Session.

Mr. LLOYD GEORGE

indicated dissent.

Mr. PRETYMAN

Yes, this Bill was brought in about three months ago, and I think before we can substitute that promise of the right hon. Gentleman for the opportunity of discussion under this Bill we would like the Chancellor of the Exchequer to give an undertaking that the Revenue Bill next Session will not only be brought in, but carried through at an early period, or a comparatively early period, of the Session.

Mr. LLOYD GEORGE

I think so.

Mr. PRETYMAN

The right hon. Gentleman thinks he can do that, It is very material. As to the position of the Government on this Bill, I think we may accept the Amendments on Clause 1 as satisfactory on the whole. There will have to be a short discussion on the question of the Improvement Commissioners. The Chancellor did not refer to Clause 2, which will involve some discussion. There are points arising on the Lumsden Judgment delivered yesterday by the Court of Appeal, connected with Clause 2, as to which we shall be bound to raise certain considerations before the Committee. On Clauses 4 and 5 there are Amendments which raise points which will have to be discussed as to Reversion Duty. The right hon. Gentleman will find that the Amendment which stands in the name of the bon and learned Gentleman the Member for Kingston is an Amendment of substance which goes to the root of the matter. It covers the point raised by the hon. and learned Member for Cork (Mr. T. M. Healy), and I understand that he will be prepared to accept the Amendment as one which meets the difficulty better and more comprehensively than his own. There will be a question of order arising on Clause 6 as to whether it will not increase the charge on the subject. That will be a matter which, when we come to it, will be put before you. As to Clause 11, I understand that I should not be in order in raising the point now, but I only desire to indicate to the House that I propose to ask you whether it is within the scope of the Bill. It does appear to me to be very inconvenient that a question which is connected with valuation, and has no connection with finance or revenue in any shape or form, should be introduced into a revenue Bill. The Chancellor of the Exchequer said nothing about the new Clauses which are down. In regard to one of them I am sure that the hon. Member for Ayr Burghs will feel that a pledge was given to the Committee that something must be done to remedy the position in regard to Clause 2 of the Revenue Bill of last year. I am glad to see that the Attorney-General assents to that, because costly litigation has now begun through the unfortunate blunder made by the House at two o'clock in the morning, and in the interests of private individuals, the trade, and litigants, we are bound to put the matter right and not to see this costly litigation continued. I take it that this is a matter which is really agreed by both sides of the House. Therefore, I hope that the new Clause will be dealt with. As to the others, we must reserve the position until we see how long it takes to get through the Bill itself. I hope what has been said now will facilitate the passage of the Bill. The Chancellor of the Exchequer cannot expect that important points can go wholly undiscussed. It is the general desire on both sides of the House to get the Bill through, but, of course, no undertaking can be given on this side of the House that hon. Members will not raise points of substance which they have placed on the Paper.

Sir RYLAND ADKINS

made some observations which were inaudible.

Mr. T. M. HEALY

(was understood to say): The Amendment to Clause 9 standing in the names of the hon. Member for Sleaford and the hon. Member for Kingston may be a preferable way of dealing with the matter which has been referred to by the hon. and gallant Gentleman (Mr. Pretyman). I was only attempting to deal with the Irish case, but this is the general case, and I shall be glad to hear a statement on the subject.

Mr. LLOYD GEORGE

What the hon. and gallant Gentleman wants is an assurance that the discussion on the Committee stage of the Revenue Bill next Session will not be put off until towards the end of the Session. He cannot possibly ask that it should be taken before April. I do not know whether we shall meet early or late. The later the better, I should say, in the interests of Members, but as he knows very well the time is taken up so completely with financial business up to the 31st of March that no progress can be made with any Bill at all. What he wants is that when the Session is fairly fresh we shall have a discussion on the Revenue Bill. That I am prepared to undertake on behalf of the Government.

Mr. JAMES HOPE

Will it take precedence of the House of Lords Reform Bill?

Mr. LLOYD GEORGE

I think that I had better not enter into any controversial matters of that kind. I am afraid that it would not facilitate the progress of the Revenue Bill. In reference to Clause 9, of course, the Amendment in the names of the hon. Member for Sleaford and the hon. Member for Kingston must be dealt with, and also Clause 11. I should like to have had the Committee stage through to-day if possible, and I promise this, that between now and the Report stage I shall be glad to meet not merely my hon. and learned Friend, but anyone else on either side who has got any suggestions with regard to that Clause, and to move an agreed Amendment on the Report stage. Inasmuch as it does not impose a charge on the subject, and as I conceive that the Amendment that my hon. and learned Friend is pressing for would rather have the effect of diminishing any possible charge, there would be no difficulty in inserting an Amendment of the kind on the Report stage if we get the Bill. If after consultation we could have an Amendment of that kind before the Report stage we would get a much better Bill, as a whole. I understand that my hon. Friend is the authority with regard to drafting an Amendment with regard to this Clause last year, and if there is an agreed Clause of this kind I am sure that the Committee, as a whole, would be glad to adopt it.

Sir G. YOUNGER

I took advantage of the right hon. Gentleman's offer to see the Government draftsman, and I have put on the Paper to-day a Clause which I think will meet the point. Whether the Clause may be quite satisfactory I cannot say, because I have consulted no one whatever.

Mr. T. M. HEALY

(was understood to say): Can we have an assurance from the. Chancellor of the Exchequer that the Clause will remove the grievance to which I called attention?

Mr. LLOYD GEORGE

I shall consider it between now and the Clause.

Mr. DUNDAS WHITE

It would not be in order now to discuss the merits of Clause 11, but I would like the Committee and the right hon. Gentleman to know that there arc some Members on this side of the House and some on the other who hold strong views as to some Amendments along those lines and I venture to hope we will have the opportunity of discussing that Clause.

Motion, by leave, withdrawn.

Mr. DUNDAS WHITE

(who had given notice to move at the beginning of the Clause, to insert the words: "From and after the passing of this Act.")

For the convenience of the Committee, and in view of the general desire to proceed at once to the Amendments which have been outlined, my hon. Friends and myself have decided not to ask the Committee to go into the merits of these Amendments. Accordingly I do not move.

Amendments made: Leave out the words. "which is the transfer on sale of the fee simple of the land or any interest in the land or the grant of any lease of the land."

In paragraph (a), leave out the words, "where the occasion is the transfer on sale of the fee simple of the land." [Mr. Cassel.]

Mr. CASSEL

had given notice to move to leave out the words "of the consideration on any such transfer or grant is proved to the Commissioners of Inland Revenue ["in this Act referred to as the Commissioners"] to have," and insert the words "from which deductions are made for the purpose of arriving at the site value of the land on the occasion, has."

Mr. LLOYD GEORGE

I will accept that Amendment in another form.

Mr. CASSEL

I think it would not read in the form suggested, and I had better move it as it is on the Paper. The reason for moving is this, that you are dealing with every occasion, whatever you start to, make a deduction from. I intend to provide that in addition to the deductions already provided by Section 25 (4), this new deduction shall be made. It is, I think, consequential on the original Amendment leaving out certain words.

Mr. LLOYD GEORGE

The hon. and learned Gentleman will quite see what I want to safeguard. I think it is important that the onus of proof should be cast on those who say they have given financial assistance that has affected the value. I am not at all sure that the value "from which deductions are made" is proof to, the Commissioners. If I can find some way by which the Commissioners are safeguarded I shall be happy to accept the Amendment.

The CHAIRMAN

It is not quite clear as it appears, and perhaps it would be better to put the Amendment in the form of leaving out the words "of the consideration on any such transfer or grant."

Mr. CASSEL

I beg to move, in paragraph (a), to leave out the words "of the consideration of any such transfer or grant," and to insert instead thereof the words "from which deductions are made for the purpose of arriving at the site value of the land on the occasion."

Amendment agreed to.

Mr. PRETYMAN

I beg to move to leave out the words "is proved to the Commissioners of Inland Revenue ["in this Act referred to as the Commissioners"] to have," and to insert instead thereof the word "has."

I move the omission of these words, although the Chancellor of the Exchequer has indicated his objection to the Amendment. I do not ask for any favour to one side or the other. I do not ask that those who claim these deductions should not have to prove them. All I ask is that both parties should stand on a level, knowing that these deductions, if properly claimed, will be allowed. The inclusion of the words has in practice created very great difficulty. Why are the Commissioners to be the judges? That is what I object to. The Commissioners are raised into the position of judges, which is not one that they really have. The effect of these words upon those against whom claims are made is very unfortunate, because they naturally feel that they have to prove their claims to the Commissioners, and the Commissioners may decide. I know that the decision is not final. But the words appear to me to be either mischievous or to have no object. I cannot see what is gained by their insertion. What the House said and desired to enact was that where these deductions could be properly claimed they should be allowed. It is purely a question between the Crown, Who may claim the duty, and the subject, who may desire that the duty should be reduced because he can prove certain expenditure. Why should it be necessary to insert these words at all? I do not see what good the words can do, unless the Commissioners have some other power outside that of being merely parties to a claim. What I understand the House enacted is that the Commissioners, on behalf of the Crown, are parties to a claim if that claim is contested, and that is all.

Mr. LLOYD GEORGE

The onus of proof must be upon those who claim that the financial assistance they have negotiated has increased the price of the land. The only objection the hon. Member has to the inclusion of these words is that he thinks that somehow or other they give an undue bias in favour of the Commissioners. But if you omit the words the Courts will come to the conclusion that there was some special reason for so doing, because this Bill will have to be read with the Act of 1909. In that Act the words "proved to the Commissioners" were always used in connection with claims for deductions. For instance, Section 25 (4) (b) says:— any part of the total value which is proved to the Commissioners to be directly attributable to works executed or expenditure of a capital nature incurred.… This is practically a part of that—

Mr. PRETYMAN

In order to save time I will not press the Amendment if the Chancellor of the Exchequer will undertake to give consideration to Amendments which will be put down to the Revenue Bill of next Session dealing with the whole question of these words in both Acts. I do not ask him to say now that he will accept them.

Mr. LLOYD GEORGE

I will do that.

Mr. PRETYMAN

We can raise the whole question then.

Amendment, by leave, withdrawn.

Mr. CASSEL

I beg to move to leave out the words "by the vendor or lessor" ["financial assistance given by the vendor or lessor."]

I should like to draw the attention of the right hon. Gentleman to another point which may affect the form of words to be adopted. The words I propose to substitute here are "any person interested in the land." But as the Clause is worded it may work serious injustice, as it will result in throwing the Increment Value Duty upon the purchaser in the case in question. As the matter stands at present the vendor is going to make the deduction. He has to pay the Increment Value Duty himself on the amount by which he has increased the value of the property by the efforts he has made or whatever it may be. In future it will be deducted by him, so that the site value will be fixed at a lower figure by that amount. Therefore, when the purchaser comes to resell, he will have to pay more Increment Duty, because he will pay on a difference increased by the amount of the deduction. Suppose the site value of a property is £1,000, and this deduction is £500. If a man sold the property, under the law as it stands at present, he would have to pay Increment Duty on £1,000. Under this Bill he will have to pay on only £500. But what about the purchaser? The site value, instead of being registered at £1,000, is registered at £500, so that if the purchaser resells at, say, £2,000, instead of having to pay on £1,000, he will have to pay on £1,500. In the result the unfortunate purchaser has to pay on that very increase in the property for which he has paid the vendor. That is obviously an absurdity. Either you must adopt words here in place of "the vendor or lessor" or you must insert a provision that for the purpose of future assessments the Increment Duty on the amount of that deduction shall be deemed to have been paid.

Mr. LLOYD GEORGE

Which Amendment is the hon. Member moving?

Mr. CASSEL

I am suggesting alternative Amendments. If my first suggestion is adopted in a wide enough form, the later Amendment will be unnecessary. I think the words "any person interested in the land" are sufficient, because if those words are inserted the purchaser will also claim the deduction. I think I have here words wide enough to cover the case, and it would be well to amend the Clause in this way.

Mr. LLOYD GEORGE

We have words here that go further than those of the hon. and learned Gentleman. We propose to amalgamate the words of the hon. and learned Gentleman and those of the hon. Gentleman behind me (Mr. Cecil Harms-worth). Perhaps the hon. and learned Gentleman will move the words, "or any person acting in behalf of or solely in the interest of such person."

Mr. CASSEL

I will move them in that form.

Question, "To leave out the words 'by the vendor or lessor,'" put, and agreed to.

Mr. CASSEL

I beg to move, in Subsection (1), paragraph (a), after the words "financial assistance" ["financial assistance given by the vendor or lessor"], to insert the words, "by any person interested in the land or any person acting on behalf of or solely in the interests of any person so interested."

Mr. LLOYD GEORGE

If the hon. and learned Gentleman thinks these words are insufficient, we will consider them on Report.

Mr. PRETYMAN

We must have them in the past tense, or the Amendment at the end of the Sub-section—which I think is perhaps the most convenient form although it is very difficult to express a decided opinion. It is quite obvious, unless this is put in the past tense, the matter goes even further than suggested by the right hon. Gentleman. If the person who is going to buy the property is to be subjected to the Increment Value Duty on the next transfer he will simply discount that in his purchase, and the difference will simply be this, that the vendor, instead of paying the Increment Value Duty to the Government, will have to pay it in respect of the less price for his property, and the Government will not get it until the next sale.

1.0 P.M.

Mr. LLOYD GEORGE

I will undertake that if these words do not carry out the object of the hon. and learned Gentleman and of the hon. and gallant Gentleman that we will deal with the matter on the Report stage. We have exactly the same object in view as hon. Gentlemen opposite. The point has got to be met, and if these words do not meet it I will accept others.

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

In Sub-section (1), paragraph (a), leave out the words, "the vendor or lessor" ["son the part of the vendor or lessor"], and insert instead thereof "any such person as aforesaid."

Mr. CASSEL

I beg to move, in Subsection (1), to leave out paragraph (b).

Question put, and agreed to.

Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. ROYDS

I would like to be satisfied that this Clause will not whittle down the rights of the taxpayers under Section 25, Sub-section (4), paragraph (b) of the principal Act on the occasions specified. It is a matter of considerable importance. I do not quite know why this Clause was introduced; it does not apply to the original valuation. I would like to ask the right hon. Gentleman if the Commissioners have not in fact already refused deductions. The paragraph of the Act that I have mentioned appears to be quite as wide as any of the words of this new Sub - section. Section 24 (4) (b) shows that matters personal to the occupier or other persons in the land shall be deducted. It seems to me very curious that the Commissioners do not allow deductions for financial arrangements such as are suggested by this Section. I should like to know whether this Clause is introduced because the Commissioners have refused deductions of that kind. If the Commissioners have refused them they have taken a very narrow view of the construction of the Section.

Mr. LLOYD GEORGE

I think the hon. Member has raised a point we must consider. I should not like to give an answer straight away, but should like to consult the authorities. We introduced this under very strong pressure from the builders, who were under the impression that the Commissioners did not allow this kind of financial arrangement. I will consider the point, and if an Amendment is introduced at all it would be an Amendment in the direction of reducing the burden upon the subject. It is evidently a matter for consideration on Report.

Mr. PETO

I should like to ask whether it is not perfectly obvious that the words put in in line 19, "the more people who claim a deduction because of financial assistance the more certain you are to increase the amount of Increment Duty payable on any subsequent occasion." It seems to me the words put in do not meet the case at all.

Mr. LLOYD GEORGE

If they do not meet the case, I have already given an undertaking that we shall certainly insert words which will meet the case. We agree with the hon. Member the case ought to be met.

Mr. JAMES HOPE

Would the right hon. Gentleman, on Report stage, undertake to recommit in regard to this Clause?

Mr. LLOYD GEORGE

Yes, if necessary.

Mr. CECIL HARMSWORTH

I should like to thank the Chancellor of the Exchequer for his attitude towards the Amendments standing in my name. [HON. MEMBERS: "Speak up."] I gather from the assurance of the Chancellor, that these Amendments will be gratefully accepted by those on whose behalf I moved.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.