HC Deb 22 July 1930 vol 241 cc1987-2014

I beg to move, in page 26, line 37, to leave out the words, "whether before or after that date," and to insert instead thereof the words, at any time after the thirty-first day of July, nineteen hundred and eighteen.

Question, "That the words proposed to be left out stand part of the Bill," put, and negatived.

Question proposed, "That those words be there inserted in the Bill."


I beg to move, as an Amendment to the proposed Amendment, in line 2, to leave out the word "eighteen," and to insert instead thereof the word "twenty-seven."

The Chancellor of the Exchequer, in the Amendment that he has moved, has met us to a very slight extent. In Committee I pointed out that, in the case of a transfer to a company, there would have to be inquiries roving back over a very long period, in order to ascertain whether the company was in fact liable to duty or not under the Act. I sug- gested that there ought to be a limited time—that we ought not to have to rove back for ever. The Chancellor of the Exchequer has now limited the period to 12 years. If, however, there should be a limit at all, it seems to me that a period of 12 years is too long. I thought at first that 12 years might be a period which could be accepted, but, on reflection, I think that it is far too long, and that it would not be at all unreasonable if we were now to ask the Chancellor of the Exchequer to accept three years instead of 12 years.

That is the effect of my Amendment. I think that the right hon. Gentleman ought to accept it, because, while this is not legislating ex post facto, yet it is in fact legislating with respect to transactions which were perfectly bonâ fide when they were entered into, but which will be made subject to duty by this Bill. Perfectly honest and legal transactions have been entered into up to this very moment, which will in future be penalised by this Bill. It is no use my arguing that you ought not to legislate backwards, but ought to start as from this date, and not consider transactions which took place before; but I would ask that transactions should not be taken into account which took place more than three years ago, because of the difficulty that there will be in carrying on the ordinary business of the country if every transaction may become suspect so many years after it has taken place. The degree of research and the degree of care and the want of confidence which will be generated by a Clause such as this, even with the 12-year limit, is such that it is not worth while, either from the Revenue point of view or from the point of view of the trade of the country, to put such an obstacle in its way.


I cannot accept the Amendment to the proposed Amendment. I promised to make a concession in Committee, and this Amendment is an illustration of the wisdom of the old saying that if you concede an ell they will demand a yard. There is clearly nothing at all in the right hon. Gentleman's contention about the difficulty of going back for a longer period. He said many of these companies had been formed in perfectly good faith. That may be true in a sense, but still they have been formed for the purpose of avoiding the payment of Estate Duty. There is no doubt about that fact. It is a form of legal avoidance and, ever since this practice began, it has been known that sooner or later Parliament would have to stop it. My predecessor, I believe on more than one occasion, expressed his intention of doing that, and I am not quite sure that in one of his Finance Bills he did not make a moderate attempt to deal with it. When I made the announcement in the Budget speech that I proposed to deal with this matter, he said he would support me in two proposals that I had announced. This was one and the other was the matter of the single premium policy. Those who have followed the progress of the Finance Bill through the Committee stage know the amount and the value of the support I have received from the other side, and their anxiety to help me has been shown by their voting against every one of these Clauses. They have certainly sought to carry out what was declared by Lord George Hamilton on one occasion as being the purpose of the Tory party, and that is to look after the interests of their own friends. It has been known for long that this matter would be dealt with by Parliament, and certainly further back than three years ago the announcement was made that Parliament must deal with it.


By whom?


By the Chancellor of the Exchequer.


Three years ago?


I am speaking from memory. It was in one of his Budget statements. But that is not material, because it has been known for long that sooner or later Parliament must deal with the matter, and, therefore, for a good many years the steps that have been taken to avoid payment have been taken in the knowledge of the warning and the fact that, as soon as Parliament could find time, it would deal with it. I could not, therefore, accept the proposal. It would not be fair to include a company that was formed three years ago and allow one that was formed four years ago to escape. The Bill, as originally drafted, would have included all these matters. I made a big concession to meet the views expressed by the Opposition to the extent of going back for 12 years, and I am not going to extend that.


I am very sorry the Chancellor of the Exchequer has introduced this quite unnecessary note of acrimony. I am speaking as one who sees ahead on the Order Paper several Amendments in the Chancellor's name to give effect to points on these Clauses about which I addressed questions to the Attorney-General in Committee. We all agree that you have to go some way back, and the very reason the right hon. Gentleman has given is an unanswerable argument for going only three years back, namely, that it is exactly three years ago that the late Chancellor of the Exchequer first made it perfectly plain that these Estate Duty companies were to be attacked. There is every reason, therefore, why three and not 12 years should be selected as the fair date to which this part of legislation should be made retrospective. That is the broad ground, but I should like to make a minor point, and here I address myself particularly to the Attorney-General.

My right hon. Friend who moved this Amendment raised a point with regard to gifts inter vivos, and the Attorney-General assured the House that it was the intention of the Chancellor of the Exchequer not to interfere with the rule by which gifts made more than three years before death should be immune. My right hon. Friend and I both pointed out to the Attorney-General at the time that the effect of these Clauses might be, though it was said it was not the intention, to extend the time within which gifts inter vivos might be made liable to duty. I want to repeat that, unless you accept this three years limitation of the time before which a transfer to a company shall not become an offending transaction by reason of benefits being received within the prescribed period before the death, you are going to make it possible to hit gifts inter vivos made more than three years before the death. Suppose that a man transfers to a company money or land, or whatever it may be, and, by reason of the accounting period dating back three and three-quarters years before the death, what would otherwise be an innocent transaction becomes an offending transaction. It was said it was not intended that that should be the effect, but it is bound to be the effect in these circumstances unless this three years limit is adopted.

Lieut.-Colonel Sir FREDERICK HALL

I am surprised at the ungracious manner in which the Chancellor of the Exchequer has recognised the assistance that has been given from this side. What would have been his position if he had not adopted our suggestion and withdrawn Clause 10 until after the other Clauses had been considered? He would have had his Bill in a glorious muddle. And again with regard to Clauses 29 to 33 inclusive. We have done our best to help in framing a reasonable Budget out of something which neither the Government nor anyone else could understand, and it was owing very much to the Attorney-General, who saw the difficulties with which the Government were faced and recognised them, not in the ungracious manner which the Chancellor now shows, a manner to which we are accustomed from him. I think he may just as well know that, if that is the manner in which he is going to accept suggestions, he is not going to get his Measures through with the harmony and assistance that he might expect, because he does not deserve it. I have no doubt the Attorney-General will recognise the difficulties my hon. and learned Friend has referred to. We do not want to have all sorts of difficulties coming up in the Law Courts, as they will do. If the Chancellor of the Exchequer wishes to do away with the difficulties to which my hon. and learned Friend has referred, I hope the Attorney-General will point out to him the unwisdom of saying that he will not under any circumstances go back less than 12 years.

In season and out of season, I have always expressed my disgust at retrospective legislation, because you never know how far you are going. When measures have been adopted by Parliament, the people of the country are entitled to know that legislation shall not be upset by later legislation of a retrospective character. I have said that I do not want to lend too much assistance to those desiring to evade taxation, though they have been perfectly justified in the action that they have taken heretofore. The time has certainly arrived when some steps should be taken to prevent the continual leakage of the revenue that is expected from the Death Duties, but for goodness sake do not let us go back for 12 years. It does not seem as though the Chancellor of the Exchequer has given any help in the matter at all. The theory is wrong, and I hope that the Chancellor of the Exchequer will, even at this period, say, "I am prepared to carry out what was my desire, and, having learnt the facts, I recognise that the Amendment which is proposed by the right hon. Gentleman is one which can be accepted." I hope that the Chancellor of the Exchequer will, in his quieter moments, recognise the assistance which has been given to him, and that it is no good saying, "Because I have given an inch, you ask for a yard," and all that sort of thing. When the right hon. Gentleman and his party were in opposition they used to ask for a good deal more than they expected to receive, and I hope that the right hon. Gentleman will yet agree to accept the Amendment which has been moved by my right hon. Friend. I hope that we shall not have any more expressions of dissatisfaction when we have done all that is possible to render help in this important matter.


I feel that we on this side of the House have some cause to complain of the attitude taken by the Chancellor of the Exchequer in the speech which he has just delivered. I would ask him if, at a moment when he does not feel quite so bitter, he would kindly compare these Clauses as they were originally put into the Bill with the Clauses which are now before the House. They bear no resemblance whatever. I venture to say that the Clauses as they were originally put forward were slipshod and wholly unworkable, and brought in a large number of companies which it was never intended should be brought in at all. I support the Amendment for several reasons. I have no interest in preventing the Chancellor of the Exchequer or any Chancellor of the Exchequer from catching people who so devise their affairs as to escape just Revenue duties. None of us on this side of the House desires to offer any obstruction to a constructive proposal which has that end in view, but the following considerations ought to be urged upon the right hon. Gentleman. First of all, as the result of these Clauses, I think that in the future people will be very careful and circumspect in their dealings with and the transfers they make to, private companies. That is one of the disastrous effects which we see in the Clauses, because they make transactions with private companies very dangerous and very susceptible of being brought within the ambit of the Measure.

That is all right as regards the future. No doubt in the future those who have dealings with private companies will take care that they are advised so that they can keep outside the Act, and in many cases private companies will not be formed at all, or they will be public companies or partnerships to which transfers are made. But there are many perfectly legitimate transactions which will be caught by these Clauses. Every year you go back brings into the ambit of the Measure a larger number of transactions which were perfectly fair and legal at the time they were entered into. We feel very strongly, that although, possibly, some retrospective period of time may be necessary, it should in any case be the shortest possible period, and should be no longer than the period of time prescribed for gifts inter vivos, that is to say, three years.

The Chancellor of the Exchequer had really no cause to complain of the attitude taken by this side of the House. As an instance of that, I would point out that even among the Amendments which be is sponsoring to-day are Amendments dealing with matters of copyright and patents which we pointed out to him from this side of the House at the time these Clauses were last under discussion. Arrangements may be so made that persons may not be caught under the Act because transfers will not take place, but it is necessary to consider some of the transactions which may be caught and which have already taken place. Take the case of a man who sells machinery to a company under a hire-purchase agreement. The last payment is made by the company to him just before his death, and at his death he is insolvent. So that it is not a payment for his own use or benefit within the exception made in Sub-section (2, a). In these circumstances, the company is liable to pay Estate Duty, if the Measure means what it says, upon the property so transferred, because it is not a bona fide sale for full consideration.

Mr. DEPUTY-SPEAKER (Mr. Dunnico)

This Amendment deals with the question of dates, and that is the only question the hon. and learned Member is entitled to debate.


With the greatest possible respect, my argument is directed to show that transactions which these Clauses were never intended to catch, bona fide transactions which have nothing to do with evading Estate Duty, will, in fact, be caught by this Clause, and that therefore it is essential—


We are not discussing the substance of the Clause, but the date upon which it is to begin to operate. The hon. and learned Member must restrict his speech to reasons for or against the suggested date becoming part of the Bill.


With respect, I bow to your Ruling, Mr. Dunnico, but may I submit this fact in order to point out that the longer you go back, the more anomalous cases you bring into the net of this Clause. Such transactions as have nothing to do with evasion of Estate Duty at all, such as the hire purchase case, and the case which I pointed out on a previous occasion, of a man who transfers a business to his son in order to set him up in business, and the son forms a private company—


The only question here is whether the proposals shall be retrospective or not. The illustrations the hon. and learned Member is giving of the alleged injustice of the Bill would apply whichever date is accepted.


I bow to your Ruling, Mr. Dunnico, and I appreciate the force of that argument. We recognise that there must be cases of harshness with which the Treasury can deal under this Clause if the date is retrospective. We recognise that fact, but what we feel is, that as the Clauses are at present designed, they are bound to operate harshly in cases with which it was never intended to deal in this kind of legislation. The least that the Chancellor of the Exchequer can do is to make the date so little retrospective that the fewest possible number of cases are brought within the Act. I support what my hon. and learned Friend the Member for Rusholme (Sir B. Merriman) said, that in any case the date ought to be limited so that there can be no possibility of gifts inter vivos being brought into the operation of the Act. I must express my very great surprise that the right hon. Gentleman the Chancellor of the Exchequer did not congratulate us on this side in allowing him to escape from the ignominy of having to see these Clauses on the Statute Book in the appalling and discreditable form in which they were originally put forward.


I should not have intervened in the debate on this Amendment had it not been for the speech of the right hon. Gentleman the Chancellor of the Exchequer. It has been a bitter lesson in recent months during the controversy on this Bill to learn that he has no regard for accuracy, but we are entitled at least to expect that he should have regard to facts. When gratuitously in a House which, to say the least of it, is not in an excited condition, he chooses to fling charges of insincerity at Members on this side of the House, he might at least produce accurate facts upon which to make them. He has charged hon. Members on this side with deliberately obstructing the passage of Clauses which are designed to stop that tax evasion which every one of us who does not evade taxes must deplore. Upon what has he based that charge? A very short speech by my right hon. Friend, not in any way attacking the principle of the Clauses, and not in any way destroying his own Amendment, but simply suggesting one date for the purely arbitrary date which the right hon. Gentleman has inserted.

After all, whatever the Chancellor of the Exchequer may think of it, there are certain logical arguments in favour of the Amendment of my right hon. Friend. The first is that it dates back to the period when an authoritative statement was first made on behalf of the Government of this country that steps of this kind were contemplated, and, sooner or later, would be taken. The second is that three years coincide with that period of three years which has been so long looked upon as the period of safeguard for a gift inter vivos before the death of one of the parties. Therefore, there is more logical support for the date proposed by my right hon. Friend than there is for the date selected by the right hon. Gentleman, which appears to be a perfectly arbitrary one. We are entitled to be answered by arguments. It is possible that the right hon. Gentleman might have been able to give a very good answer, and if he could have shown that so many companies had been formed during this period, he might have arrived at a logical conclusion that the acceptance of this Amendment might have had the effect of ruining the object of the Clause. But he made no attempt to do this. He merely brought forward an entirely inaccurate assertion. He said that Members on this side of the House had deliberately, for the sake of their friends and to protect the taxes of their friends, made every attempt to ruin it. [Interruption.] I am glad to see some signs of life from hon. Members opposite. We do not get many signs that they either appreciate or understand our arguments.

The right hon. Gentleman mentioned two particular things. The first was the single premium policy, and the second had regard to the Clause we are discussing now. He remembers well the history of the single premium policy, and that he had to withdraw the Clause dealing with this matter before it was put to the decision of the Committee, and he had to reinsert the Clause in an entirely different form. How can he, with any sincerity, Charge hon. Members on this side with having made any attempt to obstruct a Clause which they have not had the opportunity of discussing? With regard to the Clause we are discussing to-day, unfortunately, during the discussion on the Committee stage I was absent through illness, but I read carefully the debates at that time. It is true that the debates were lengthy, but the Clauses, as the Attorney-General admitted, are Clauses of extreme complexity and difficulty. The debate, as far as I could see, was conducted almost entirely by hon. Members of this House learned in the law. It was conducted on a technical basis. It was answered in technical language by the Attorney-General, who made no complaint whatever of ill-treatment by hon. Members on this side. The result has been that a large number of Amendments were put down on Report. I cannot help feeling that speeches such as the right hon. Gentleman has made really make the conduct of business in this House almost impossible, and that if purely technical questions such as this, which call for the closest argument on both sides, are going to be treated in such a spirit, the attacks on the Parliamentary system made by some hon. Gentlemen have some justification.

6.0 p.m.


There are one or two things which can be said in support of this Amendment, and which it is absolutely necessary should be said for the benefit of those who will read the report of this debate, even though they may have no effect upon the right hon. Gentleman. Had he simply refused to accept this Amendment in rather a different form, we might not have felt it necessary to press forward so many arguments but I want, in justification of those of us who have tried to improve the Clauses, to point out one or two arguments which have not been used hitherto, and which certainly have not been replied to from the other side. When the Chancellor of the Exchequer proposes to go back a period of 12 years in order to bring companies within this Clause, he is in- dulging in a form of retrospective legislation which is unfair for several very good reasons. At the time, 12 or 10 years ago, when some of these companies were formed, there was no threat or suggestion of legislation of this kind. They were perfectly justifiable transactions, perfectly legal and perfectly proper, and therefore on general grounds it is doubtful whether it is right to rake up these transactions and impose taxation on the death of a man who carried out a transaction of this kind such long time ago.

I want to point out another reason why it is unfair that the Revenue are endeavouring to get more than they ought to get. The Attorney-General will appreciate the fact that when these companies were formed and these transactions were carried out, a very heavy Stamp Duty was paid. That Stamp Duty was paid on the capital of these companies, and duty was paid on the sales and transfers of property to these companies. These were transactions which, according to the Chancellor of the Exchequer's own argument, would not have been carried out unless there had been a benefit to be obtained by avoiding, in a perfectly legal way, the payment of certain duties. Now the Chancellor of the Exchequer comes along, nearly 12 years after these transactions have been carried out, after heavy sums have been paid for Capital Duty and very heavy sums have been paid for Stamp Duty and, without giving any consideration whatever to these heavy duties, he is endeavouring to impose in respect of these transactions duties for which the property of these persons was not liable at the time when those perfectly legal transactions were carried out.

Therefore the Chancellor of the Exchequer in going back so far, long before there was any warning that any legislation of this kind would be introduced, is unfairly taking advantage of the heavy Company Duty and Stamp Duty that has been paid and is levying this extra duty without giving any consideration whatever for that extra money which will have been paid to the Revenue in connection with transactions for a legal purpose but which transactions in consequence of the Government's action, have no effect and, from the point of view of the taxpayer, will have been thrown away into the revenues of the country. I hope that we shall get through the rest of the Report stage this afternoon more quickly than we have done in regard to this Amendment, but if we are to do so I hope that the Chancellor of the Exchequer will give us credit for having some good reason, at any rate a reason which is a good one to our mind, if not to his, for the Amendments which we move. In view of the fact that I cannot expect the Chancellor of the Exchequer now to alter his decision, I do wish to point out most

clearly the very good reason that we have for objecting to these matters being raked up, in order that duties may be levied upon people who have already paid very heavy Stamp Duty and very heavy Company Duty, for which they will get no consideration whatever in the levying of these Estate Duties on their properties.

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

The House divided: Ayes, 273; Noes, 160.

Division No. 447.] AYES. [6.6 p.m.
Adamson, Rt. Hon. W. (Fife, West) Elmley, Viscount Lawrence, Susan
Adamson, W. M. (Staff., Cannock) Freeman, Peter Lawrie, Hugh Hartley (Stalybridge)
Addison, Rt. Hon. Dr. Christopher Gardner, B. W. (West Ham, Upton) Lawson, John James
Aitchison, Rt. Hon. Cralgie M. Gardner, J. P. (Hammersmith, N.) Lawther, W. (Barnard Castle)
Alexander, Rt. Hon. A. V. (Hillsbro') George, Major G. Lloyd (Pembroke) Leach, W.
Alpass, J. H. Gibson, H. M. (Lancs, Mossley) Lee, Frank (Derby, N. E.)
Ammon, Charles George Gill, T. H. Lee, Jennie (Lanark, Northern)
Arnott, John Gillett, George M. Lees, J.
Aske, Sir Robert Glassey, A. E. Lewis, T. (Southampton)
Attlee, Clement Richard Gossling, A. G. Lloyd, C. Ellis
Baker, John (Wolverhampton, Bilston) Graham, D. M. (Lanark, Hamilton) Logan, David Gilbert
Baldwin, Oliver (Dudley) Graham, Rt. Hon. Wm. (Edin., Cent.) Longbottom, A. W.
Barnes, Alfred John Gray, Milner Longden, F.
Barr, James Greenwood, Rt. Hon. A. (Colne) Lovat-Fraser, J. A.
Batey, Joseph Grenfell, D. R. (Glamorgan) Lowth, Thomas
Benn, Rt. Hon. Wedgwood Griffith, F. Kingsley (Middlesbro' W.) Lunn, William
Bennett, Capt. Sir E. N. (Cardiff C.) Griffiths, T. (Monmouth, Pontypool) Macdonald, Gordon (Ince)
Benson, G. Groves, Thomas E. MacDonald, Rt. Hon. J. R. (Seaham)
Bentham, Dr. Ethel Grundy, Thomas W. MacDonald, Malcolm (Bassetlaw)
Bevan, Aneurin (Ebbw Vale) Hall, F. (York, W. R., Normanton) McElwee, A.
Birkett, W. Norman Hall, G. H. (Merthyr Tydvil) McEntee, V. L.
Bondfield, Rt. Hon. Margaret Hall, Capt. W. G. (Portsmouth, C.) McGovern, J. (Glasgow, Shettleston)
Bowen, J. W. Hamilton, Mary Agnes (Blackburn) MacLaren, Andrew
Bowerman, Rt. Hon. Charles W. Harris, Percy A. McShane, John James
Broad, Francis Alfred Hartshorn, Rt. Hon. Vernon Mander, Geoffrey le M.
Bromfield, William Hastings, Dr. Somerville Mansfield, W.
Bromley, J. Haycock, A. W. March, S.
Brooke, W. Hayday, Arthur Marcus, M.
Brothers, M. Hayes, John Henry Markham, S. F.
Brown, C. W. E. (Notts. Mansfield) Henderson, Right Hon. A. (Burnley) Marley, J.
Brown, Ernest (Leith) Henderson, Arthur, Junr. (Cardiff, S.) Marshall, Fred
Brown, Rt. Hon. J. (South Ayrshire) Henderson, Thomas (Glasgow) Mathers, George
Brown, W. J. (Wolverhampton, West) Henderson, W. W. (Middx., Enfield) Matters, L. W.
Buchanan, G. Herriotts, J. Melville, Sir James
Burgess, F. G. Hirst, G. H. (York, W. R., Wentworth) Messer, Fred
Buxton, C. R. (Yorks. W. R. Elland) Hirst, W. (Bradford, South) Middleton, G.
Caine, Derwent Hall- Hoffman, P. C. Millar, J. D.
Cameron, A. G. Hollins, A. Mills, J. E.
Carter, W. (St. Pancras, S. W.) Hopkin, Daniel Milner, Major J.
Charleton, H. C. Horrabin, J. F. Montague, Frederick
Chater, Daniel Hudson, James H. (Huddersfield) Morgan, Dr. H. B.
Church, Major A. G. Hunter, Dr. Joseph Morley, Ralph
Cluse, W. S. Hutchison, Maj.-Gen. Sir R. Morris, Rhys Hopkins
Cocks, Frederick Seymour Isaacs, George Morris-Jones, Dr. J. H. (Denbigh)
Compton, Joseph Jenkins, W. (Glamorgan, Neath) Morrison, Herbert (Hackney, South)
Cove, William G. John, William (Rhondda, West) Morrison, Robert C. (Tottenham, N.)
Cowan, D. M. Johnston, Thomas Mort, D. L.
Daggar, George Jones, F. Llewellyn- (Flint) Moses, J. J. H.
Dallas, George Jones, Rt. Hon. Leif (Camborne) Mosley, Sir Oswald (Smethwick)
Dalton, Hugh Jones, Morgan (Caerphilly) Muff, G.
Davies, E. C. (Montgomery) Jowett, Rt. Hon. F. W. Muggeridge, H. T.
Davies, Rhys John (Westhoughton) Jowitt, Sir W. A. (Preston) Murnin, Hugh
Day, Harry Kelly, W. T. Nathan, Major H. L.
Denman, Hon. R. D. Kennedy, Thomas Noel Baker, P. J.
Dukes, C. Kinley, J. Noel-Buxton, Baroness (Norfolk, N.)
Duncan, Charles Kirkwood, D. Oldfield, J. R.
Ede, James Chuter Knight, Holford Oliver, George Harold (Ilkeston)
Edge, Sir William Lambert, Rt. Hon. George (S. Molton) Oliver, P. M. (Man., Blackley)
Edmunds, J. E. Lang, Gordon Owen, H. F. (Hereford)
Edwards, C. (Monmouth, Bedwellty) Lansbury, Rt. Hon. George Palin, John Henry.
Edwards, E. (Morpeth) Lathan, G. Paling, Wilfrid
Egan, W. H. Law, A. (Rosendale) Palmer, E. T.
Perry, S. F. Shiels, Dr. Drummond Tinker, John Joseph
Pethick-Lawrence, F. W. Shillaker, J. F. Townend, A. E.
Phillips, Dr. Marion Shinwell, E. Trevelyan, Rt. Hon. Sir Charles
Picton-Turbervill, Edith Short, Alfred (Wednesbury) Vaughan, D. J.
Pole, Major D. G. Simmons, C. J. Viant, S. P.
Potts, John S. Simon, E. D. (Manch'ter, Withington) Walker, J.
Price, M. P. Simon, Rt. Hon. Sir John Wallace, H. W.
Quibell, D. J. K. Sinclair, Sir A. (Caithness) Wallhead, Richard C.
Ramsay, T. B. Wilson Sinkinson, George Walters, Rt. Hon. Sir J. Tudor
Raynes, W. R. Smith, Ben (Bermondsey, Rotherhithe) Watkins, F. C.
Richards, R. Smith, Frank (Nuneaton) Watson, W. M. (Dunfermline)
Richardson, R. (Houghton-le-Spring) Smith, H. B. Lees- (Keighley) Wedgwood, Rt. Hon. Josiah
Riley, Ben (Dewsbury) Smith, Rennie (Penistone) Wellock, Wilfred
Riley, F. F. (Stockton-on-Tees) Smith, Tom (Pontefract) Welsh, James (Paisley)
Ritson, J. Smith, W. R. (Norwich) Welsh, James C. (Coatbridge)
Roberts, Rt. Hon. F. O. (W. Bromwich) Snell, Harry West, F. R.
Romeril, H. G. Snowden, Rt. Hon. Philip White, H. G.
Rosbotham, D. S. T. Sorensen, R. Whiteley, Wilfrid (Birm., Ladywood)
Rowson, Guy Stamford, Thomas W. Wilkinson, Ellen C.
Salter, Dr. Alfred Stephen, Campbell Williams, David (Swansea, East)
Samuel Rt. Hon. Sir H. (Darwen) Stewart, J. (St. Rollox) Williams, Dr. J. H. (Lianelly)
Sanders, W. S. Strachey, E. J. St. Loe Williams, T. (York, Don Valley)
Sawyer, G. F. Strauss, G. R. Wilson, C. H. (Sheffield, Attercliffe)
Scrymgeour, E. Sullivan, J. Wilson, J. (Oldham)
Scurr, John Sutton, J. E. Wilson, R. J. (Jarrow)
Sexton, James Taylor, R. A. (Lincoln) Winterton, G. E. (Leicester, Loughb'gh)
Shaw, Rt. Hon. Thomas (Preston) Thomas, Rt. Hon. J. H. (Derby) Wright, W. (Rutherglen)
Shepherd, Arthur Lewis Thorne, W. (West Ham, Plaistow)
Sherwood, G. H. Thurtle, Ernest TELLERS FOR THE AYES.—
Shield, George William Tillett, Ben Mr. Allen Parkinson and Mr.
William Whiteley.
Acland-Troyte, Lieut.-Colonel Duckworth, G. A. V. Merriman, Sir F. Boyd
Albery, Irving James Dugdale, Capt. T. L. Mitchell-Thomson, Rt. Hon. Sir W.
Allen, Sir J. Sandeman (Liverp'l., W.) Eden, Captain Anthony Monsell, Eyres, Com. Rt. Hon. Sir B.
Allen, Lt.-Col. Sir William (Armagh) Edmondson, Major A. J. Moore, Sir Newton J. (Richmond)
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Elliot, Major Walter E. Morrison-Bell, Sir Arthur Clive
Astor, Maj. Hn. John J. (Kent, Dover) England, Colonel A. Muirhead, A. J.
Astor, Viscountess Erskine, Lord (Somerset, Weston-s.-M.) Newton, Sir D. G. C. (Cambridge)
Atholl, Duchess of Everard, W. Lindsay Nicholson, O. (Westminster)
Atkinson, C. Falle, Sir Bertram G. Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Baldwin, Rt. Hon. Stanley (Bewdley) Ferguson, Sir John Nield, Rt. Hon. Sir Herbert
Balfour, Captain H. H. (I. of Thanet) Fermoy, Lord O'Connor, T. J.
Beaumont, M. W. Fielden, E. S. O'Neill, Sir H.
Berry, Sir George Fison, F. G. Clavering Ormsby-Gore, Rt. Hon. William
Betterton, Sir Henry B. Ford, Sir P. J. Peake, Capt. Osbert
Birchall, Major Sir John Dearman Galbraith, J. F. W. Penny, Sir George
Bird, Ernest Roy Ganzoni, Sir John Peto, Sir Basil E. (Devon, Barnstaple)
Boothby, R. J. G. Gilmour, Lt.-Col. Rt. Hon. Sir John Pliditch, Sir Philip
Bourne, Captain Robert Croft Glyn, Major R. G. C. Power, Sir John Cecil
Bowater, Col. Sir T. Vansittart Grace, John Ramsbotham, H.
Bowyer, Captain Sir George E. W. Gulnness, Rt. Hon. Walter E. Rawson, Sir Cooper
Boyce, H. L. Gunston, Captain D. W. Rentoul, Sir Gervais S.
Bracken, B. Hacking, Rt. Hon. Douglas H. Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Braithwaite, Major A. N. Hall, Lieut.-Col. Sir F. (Dulwich) Roberts, Sir Samuel (Ecclesall)
Brown, Col. D. C. (N'th'l'd., Hexham) Hamilton, Sir George (Ilford) Rodd, Rt. Hon. Sir James Rennell
Brown, Brig.-Gen. H. C. (Berks, Newb'y) Hammersley, S. S. Ruggles-Brise, Lieut.-Colonel E. A.
Buckingham, Sir H. Hannon, Patrick Joseph Henry Salmon, Major I.
Burton, Colonel H. W. Harvey, Major S. E. (Devon, Totnes) Samuel, A. M. (Surrey, Farnham)
Butler, R. A. Haslam, Henry C. Sandeman, Sir N. Stewart
Carver, Major W. H. Henderson, Capt. R. R. (Oxf'd, Henley) Savery, S. S.
Cautley, Sir Henry S. Hennessy, Major Sir G. R. J. Shepperson, Sir Ernest Whittome
Cayzer, Sir C. (Chester, City) Herbert, Sir Dennis (Hertford) Smith, Louis W. (Sheffield, Hallam)
Cayzer, Maj. Sir Herbt, R. (Prtsmth, S.) Hills, Major Rt. Hon. John Waller Smith-Carington, Neville W.
Chadwick, Capt. Sir Robert Burton Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Somerville, A. A. (Windsor)
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.) Howard-Bury, Colonel C. K. Southby, Commander A. R. J.
Chamberlain, Rt. Hon. N. (Edgbaston) Hurd, Percy A. Stanley, Maj. Hon. O. (W'morland)
Christie, J. A. Hurst, Sir Gerald B. Steel-Maitland, Rt. Hon. Sir Arthur
Cobb, Sir Cyril Iveagh, Countess of Sueter, Rear-Admiral M. F.
Cockerill, Brig.-General Sir George Kindersley, Major G. M. Thomas, Major L. B. (King's Norton)
Colfox, Major William Philip King, Commodore Rt. Hon. Henry D. Thomson, Sir F.
Crichton-Stuart, Lord C. Lamb, Sir J. Q. Todd, Capt. A. J.
Croft, Brigadier-General Sir H. Lane Fox, Col. Rt. Hon. George R. Tryon, Rt. Hon. George Clement
Crookshank, Capt. H. C. Law, Sir Alfred (Derby, High Peak) Turton, Robert Hugh
Croom-Johnson, R. P. Lewis, Oswald (Colchester) Vaughan-Morgan, Sir Kenyon
Culverwell, C. T. (Bristol, West) Little, Dr. E. Graham Wallace, Capt. D. E. (Hornsey)
Cunliffe-Lister, Rt. Hon. Sir Philip Llewellin, Major J. J. Ward, Lieut.-Col. Sir A. Lambert
Dalrymple-White, Lt.-Col. Sir Godfrey Long, Major Hon. Eric Warrender, Sir Victor
Davidson, Rt. Hon. J. (Hertford) Lymington, Viscount Wayland, Sir William A.
Davidson, Major-General Sir J. H. Macquisten, F. A. Wells, Sydney R.
Davies, Dr. Vernon Makins, Brigadier-General E. Williams, Charles (Devon, Torquay)
Davies, Maj. Geo. F. (Somerset, Yeovil) Marjoribanks, E. C. Wilson, G. H. A. (Cambridge U.)
Davison, Sir W. H. (Kensington, S.) Mason, Colonel Glyn K. Windsor-Clive, Lieut.-Colonel George
Winterton, Rt. Hon. Earl Wood, Rt. Hon. Sir Kingsley TELLERS FOR THE NOES.—
Withers, Sir John James Worthington-Evans, Rt. Hon. Sir L. Captain Margesson and Major the
Wolmer, Rt. Hon. Viscount Young, Rt. Hon. Sir Hilton Marquess of Titchfield.
Womersley, W. J.

Proposed words there inserted in the Bill.


I beg to move, in page 27, line 10, to leave out the word "total," and to insert instead thereof the word "gross."

This Amendment deals once more with the question of reasonable remuneration. The case is this. A man transfers a landed estate to a company, but reserves to himself the right to be managing director, and he receives a payment for the work he does which is not excessive but reasonable. That being so, it seems reasonable that the benefit which that payment represents ought not to be struck at by this Clause. In the earlier stages of our debates the Chancellor of the Exchequer said that it was a reasonable point for consideration, and that the real difficulty was how to make a proper allowance for it without at the same time prejudicing the object he had in mind by the Clause as a whole. I suggest that it ought not to be difficult to do this. This is one alternative method; and a second alternative method is suggested by a later Amendment, on page 29, line 11, after the word "payment," to insert the words: such sum as in the opinion of the Commissioners of Inland Revenue (subject to right of appeal under Section ten of the principal Act) represents the value of any services rendered in consideration of the payment. The two Amendments offer alternative methods by which it can be done. In the first Amendment I take the gross income instead of the total income, as one way of endeavouring to reach a fair measurement of the amount of work that is to be done in relation to any benefit, and the second Amendment provides a further alternative for determining that reasonable remuneration shall not be struck at by this Clause, while at the same time preserving the object of the Chancellor of the Exchequer not to open the door to evasion under this Bill. It may be that my Amendment to leave out "50 per cent." and insert "one-twelfth" might be considered to impose a charge, but the combination of the two, if the Chancellor of the Exchequer accepts them, would mean that the right hon. Gentleman would be able to meet the point which he himself has said deserves consideration without in any way prejudicing the object of the Clause. If he will work it out, he will see that this method would not open the door to any evasion, and that in some cases it might be stricter than the Clause as it stands at present. The result would be a basis of measurement which would be uniform and justifiable, whereas under the Clause you cannot tell whether a benefit that is allowed is too high or too little. Either of these methods provides that if a man has a benefit which merely consists of reasonable remuneration for the work he does, he should not be struck at, and I hope the Chancellor of the Exchequer will be able to see his way to accept one or the other. For preference, I would suggest the Amendment on page 29, line 11, to which I have referred, but in either case justice is done, and in neither is the object of the Clause prejudiced in any way.

The ATTORNEY - GENERAL (Sir William Jowitt)

This Amendment has been on the Order Paper for some time, and, consequently, the Chancellor of the Exchequer and I have had an opportunity of considering it. We are unable to accept it. So far as the actual Amendment is concerned, to substitute the word "gross' for the word "total," the two things are very much the same but for the definition which appears in the Bill. There is not much in the Amendment. It is rather the starting point of a new scheme, and in regard to that scheme our view is that the proper method is to take the free income, that is, the income available for distribution, disregarding what I may call prior charges altogether in the way of debentures or preference shares, and see how much of that free income a deceased person got. If a deceased person received on an average 50 per cent. over the three accounting years, then it is perfectly safe to assume, with the safeguards we have inserted, that it is a tax evasion device which may safely be struck at.

With regard to the desirability of having a Clause entitling the Commissioners of Inland Revenue to evaluate the services, I would only say that the experience which they have had of doing that under the Excess Profits Duty in the War has made everybody acquainted with the machinery realise how exceedingly undesirable it is. It is almost impossible to arrive at any conclusion. It necessarily results in a hard-and-fast rule-of-thumb being taken, which in many cases is wholly unsatisfactory. I appreciate the reasons which the right hon. Member for Tamworth (Sir A. Steel-Maitland) has advanced, but I have to say that the Chancellor of the Exchequer prefers the machinery we have devised, namely, 50 per cent. of the free income rather than a percentage of the gross income or the total income of the company.

Amendment negatived.

Amendments made: In page 27, line 22, after the word "value," insert the words: at the date of the death—(1).

In line 22, leave out from the word "transfer" to the word "is," in line 25, and insert instead thereof the words: or (2) if the subject of the transfer has been sold or exchanged by the company, either of the subject of the transfer or of the property in the hands of the company which is or represents the proceeds of the sale or exchange.

In page 28, line 34, leave out the words "personal chattels not yielding income," and insert instead thereof the words: patents or copyrights, or of any moveable tangible property, except money and securities.

In line 35, leave out the words "of property made," and insert instead thereof the words "where either the deceased or the company is acting."

In line 40, after the word "than," insert the words: the following payments, that is to say:—(1).

In line 40, leave out the word "and," and insert instead thereof the words: the company; (2).

In page 29, line 1, leave out the word "and," and insert instead thereof "(3)."

In line 4, at the end, insert the words: (4) Payments of or on account of royalties, not being royalties limited to cease at the death of the deceased."—[Mr. P. Snowden.]


I beg to move, in page 29, line 11, after the word "payment," to insert the words: and (2) such sum as in the opinion of the Commissioners of Inland Revenue (subject to right of appeal under Section ten of the principal Act) represents the value of any services rendered in consideration of the payment. I am not going to take up the time of the House by speaking again on this question, but let me say that nothing more unjust, after the remarks of the Chancellor of the Exchequer earlier this afternoon, I can hardly imagine. The Clause as it now stands is ridiculous. I have in my hands the estimate of an estate which might be capitalised in two different ways. In one way it means that the benefit which would be allowed would be £1,500 on a comparatively small estate. Capitalised in a somewhat different way no benefit at all would be allowed, because the income as defined by this Clause is a minus quantity. The Chancellor of the Exchequer has accused us of not trying to amend this Clause. In this particular case it is one of the most ridiculous provisions which can be imagined, and I take this opportunity of saying so.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 162; Noes, 272.

Division No. 448.] AYES. [6.29 p.m.
Acland-Troyte, Lieut.-Colonel Balfour, Captain H. H. (I. of Thanet) Brown, Col. D. C. (N'th'l'd., Hexham)
Albery, Irving James Beaumont, M. W. Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Allen, Sir J. Sandeman (Liverp'l., W.) Berry, Sir George Buckingham, Sir H.
Allen, Lt.-Col. Sir William (Armagh) Betterton, Sir Henry B. Burton, Colonel H. W.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Birchall, Major Sir John Dearman Butler, R. A.
Astor, Maj, Hon. John J. (Kent, Dover) Bird, Ernest Roy Cadogan, Major Hon. Edward
Astor, Viscountess Boothby, R. J. G. Carver, Major W. H.
Atholl, Duchess of Bourne, Captain Robert Croft Cautley, Sir Henry S.
Atkinson, C. Bowyer, Captain Sir George E. W. Cayzer, Sir C. (Chester, City)
Baldwin, Rt. Hon. Stanley (Bewdley) Boyce, H. L. Cayzer, Maj. Sir Herbt, R. (Prtsmth, S.)
Balfour, George (Hampstead) Braithwaite, Major A. N. Chadwick, Capt. Sir Robert Burton
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.) Henderson, Capt. R. R. (Oxf'd, Henley) Reid, David D. (County Down)
Chamberlain, Rt. Hon. N. (Edgbaston) Heneage, Lieut.-Colonel Arthur P. Rentoul, Sir Gervais S.
Christie, J. A. Hennessy, Major Sir G. R. J. Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Cobb, Sir Cyril Herbert, Sir Dennis (Hertford) Roberts, Sir Samuel (Ecclesall)
Cockerill, Brig.-General Sir George Hills, Major Rt. Hon. John Waller Rodd, Rt. Hon. Sir James Rennell
Cohen, Major J. Brunel Howard-Bury, Colonel C. K. Ruggles-Brise, Lieut.-Colonel E. A.
Colfox, Major William Philip Hurd, Percy A. Salmon, Major I.
Cranborne, Viscount Hurst, Sir Gerald B. Samuel, A. M. (Surrey, Farnham)
Crichton-Stuart, Lord C. Iveagh, Countess of Sandeman, Sir N. Stewart
Croft, Brigadier-General Sir H. Kindersley, Major G. M. Sassoon, Rt. Hon. Sir Philip A. G. D.
Crookshank, Capt. H. C. King, Commodore Rt. Hon. Henry D. Savery, S. S.
Croom-Johnson, R. P. Lamb, Sir J. Q. Shepperson, Sir Ernest Whittome
Culverwell, C. T. (Bristol, West) Lane Fox, Col. Rt. Hon. George R. Sinclair, Col. T. (Queen's U., Belfst)
Cunliffe-Lister, Rt. Hon. Sir Philip Leighton, Major B. E. P. Smith, Louis W. (Sheffield, Hallam)
Dalrymple-White, Lt. Col. Sir Godfrey Lewis, Oswald (Colchester) Smith-Carington, Neville W.
Davidson, Rt. Hon. J. (Hertford) Little, Dr. E. Graham Smithers, Waldron
Davidson, Major-General Sir J. H. Llewellin, Major J. J. Somerville, A. A. (Windsor)
Davies, Dr. Vernon Locker-Lampson, Com. O. (Handsw'th) Southby, Commander A. R. J.
Davies, Maj. Geo. F. (Somerset, Yeovil) Long, Major Hon. Eric Stanley, Maj. Hon. O. (W'morland)
Davison, Sir W. H. (Kensington, S.) Lymington, Viscount Steel-Maitland, Rt. Hon. Sir Arthur
Duckworth, G. A. V. Macquisten, F. A. Sueter, Rear-Admiral M. F.
Eden, Captain Anthony Makins, Brigadier-General E. Thomas, Major L. B. (King's Norton)
Edmondson, Major A. J. Margesson, Captain H. D. Titchfield, Major the Marquess of
Elliot, Major Walter E. Marjoribanks, E. C. Todd, Capt. A. J.
Erskine, Lord (Somerset, Weston-s-M.) Mason, Colonel Glyn K. Tryon, Rt. Hon. George Clement
Everard, W. Lindsay Merriman, Sir F. Boyd Turton, Robert Hugh
Falle, Sir Bertram G. Mitchell-Thornton, Rt. Hon. Sir W. Vaughan-Morgan, Sir Kenyon
Ferguson, Sir John Mond, Hon. Henry Wallace, Capt. D. E. (Hornsey)
Fermoy, Lord Moore, Sir Newton J. (Richmond) Ward, Lieut.-Col. Sir A. Lambert
Fielden, E. B. Morden, Col. W. Grant Wardlaw-Milne, J. S.
Galbraith, J. F. W. Morrison-Bell, Sir Arthur Clive Warrender, Sir Victor
Ganzoni, Sir John Mulrhead, A. J. Wayland, Sir William A.
Gilmour, Lt.-Col. Rt. Hon. Sir John Newton, Sir D. G. C. (Cambridge) Wells, Sydney R.
Glyn, Major R. G. C. Nicholson, O. (Westminster) Williams, Charles (Devon, Torquay)
Grace, John Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld) Wilson, G. H. A. (Cambridge U.)
Grenfell, Edward C. (City of London) Nield, Rt. Hon. Sir Herbert Windsor-Clive, Lieut.-Colonel George
Guinness, Rt. Hon. Walter E. O'Connor, T. J. Withers, Sir John James
Gunston, Captain D. W. O'Neill, Sir H. Womersley, W. J.
Hacking, Rt. Hon. Douglas H. Ormsby-Gore, Rt. Hon. William Wood, Rt. Hon. Sir Kingsley
Hall, Lieut.-Col. Sir F. (Dulwich) Peake, Capt. Osbert Worthington-Evans, Rt. Hon. Sir L.
Hamilton, Sir George (Ilford) Peto, Sir Basil E. (Devon, Barnstaple) Young, Rt. Hon. Sir Hilton
Hammersley, S. S. Power, Sir John Cecil
Hannon, Patrick Joseph Henry Ramsbotham, H. TELLERS FOR THE AYES.—
Haslam, Henry C. Rawson, Sir Cooper Sir Frederick Thomsom and Sir
George Penny.
Adamson, Rt. Hon. W. (Fife, West) Carter, W. (St. Pancras, S. W.) Graham, Rt. Hon. Wm. (Edin., Cent.)
Adamson, W. M. (Staff., Cannock) Charleton, H. C. Gray, Milner
Addison, Rt. Hon. Dr. Christopher Chater, Daniel Greenwood, Rt. Hon. A. (Colne)
Aitchison, Rt. Hon. Craigie M. Church, Major A. G. Grenfell, D. R. (Glamorgan)
Alexander, Rt. Hon. A. V. (Hillsbro') Clarke, J. S. Griffith, F. Kingsley (Middlesbro' W.)
Alpass, J. H. Cluse, W. S. Griffiths, T. (Monmouth, Pontypool)
Ammon, Charles George Clynes, Rt. Hon. John R. Groves, Thomas E.
Arnott, John Cocks, Frederick Seymour. Grundy, Thomas W.
Aske, Sir Robert Compton, Joseph Hall, F. (York. W. R., Normanton)
Attlee, Clement Richard Cove, William G. Hall, G. H. Merthyr Tydvil)
Baker, John (Wolverhampton, Bilston) Cowan, D. M. Hall, Capt. W. G. (Portsmouth, C.)
Baldwin, Oliver (Dudley) Daggar, George Hamilton, Mary Agnes (Blackburn)
Barnes, Alfred John Dallas, George Hamilton, Sir R. (Orkney & Zetland)
Barr, James Dalton, Hugh Harris, Percy A.
Batey, Joseph Davies, E. C. (Montgomery) Hartshorn, Rt. Hon. Vernon
Benn, Rt. Hon. Wedgwood Davies, Rhys John (Westhoughton) Hastings, Dr. Somerville
Bennett, Capt. Sir E. N. (Cardiff C.) Day, Harry Haycock, A. W.
Benson, G. Denman, Hon. R. D. Hayday, Arthur
Bentham, Dr. Ethel Dukes, C. Hayes, John Henry
Bevan, Aneurin (Ebbw Vale) Duncan, Charles Henderson, Right Hon. A. (Burnley)
Birkett, W. Norman Ede, James Chuter Henderson, Arthur, Junr. (Cardiff, S.)
Bondfield, Rt. Hon. Margaret Edge, Sir William Henderson, Thomas (Glasgow)
Bowen, J. W. Edmunds, J. E. Henderson, W. W. (Middx., Enfield)
Bowerman, Rt. Hon. Charles W. Edwards, C. (Monmouth, Bedwellty) Herriotts, J.
Broad, Francis Alfred Edwards, E. (Morpeth) Hirst, W. (Bradford, South)
Bromfield, William Egan, W. H. Hoffman, P. C.
Bromley, J. Elmley, Viscount Hollins, A.
Brooke, W. Freeman, Peter Hopkin, Daniel
Brothers, M. Gardner, B. W. (West Ham, Upton) Horrabin, J. F.
Brown, C. W. E. (Notts, Mansfield) Gardner, J. P. (Hammersmith, N.) Hudson, James H. (Huddersfield)
Brown, Ernest (Leith) George, Major G. Lloyd (Pembroke) Hunter, Dr. Joseph
Brown, Rt. Hon. J. (South Ayrshire) Gibson, H. M. (Lancs, Mossley) Hutchison, Maj.-Gen. Sir R.
Buchanan, G. Gill, T. H. Isaacs, George
Bergess, F. G. Gillett, George M. Jenkins, W. (Glamorgan, Neath)
Buxton, C. R. (Yorks, W. R. Elland) Glassey, A. E. John, William (Rhondda, West)
Caine, Derwent Hall- Gossling, A. G. Jones, F. Llewellyn- (Flint)
Cameron, A. G. Graham, D. M. (Lanark, Hamilton) Jones, Rt. Hon. Leif (Camborne)
Jones, Morgan (Caerphilly) Morrison, Herbert (Hackney, South) Simon, E. D. (Manch'ter, Withington)
Jowett, Rt. Hon. F. W. Morrison, Robert C. (Tottenham, N.) Simon, Rt. Hon. Sir John
Jowitt, Sir W. A. (Preston) Mort, D. L. Sinclair, Sir A. (Caithness)
Kelly, W. T. Moses, J. J. H. Sinkinson, George
Kennedy, Thomas Mosley, Sir Oswald (Smethwick) Sitch, Charles H.
Kinley, J. Muff, G. Smith, Frank (Nuneaton)
Kirkwood, D. Muggeridge, H. T. Smith, H. B. Lees- (Kelghley)
Knight, Holtord Murnin, Hugh Smith, Rennie (Penistone)
Lambert, Rt. Hon. George (S. Molton) Nathan, Major H. L. Smith, Tom (Pontefract)
Lang, Gordon Noel Baker, P. J. Smith, W. R. (Norwich)
Lansbury, Rt. Hon. George Noel-Buxton, Baroness (Norfolk, N.) Snell, Harry
Lathan, G. Oldfield, J. R. Snowden, Rt. Hon. Philip
Law, A. (Rosendale) Oliver, George Harold (Ilkeston) Sorensen, R.
Lawrence, Susan Oliver, P. M. (Man., Blackley) Stamford, Thomas W.
Lawrie, Hugh Hartley (Stalybridge) Owen, H. F. (Hereford) Stephen, Campbell
Lawson, John James Palin, John Henry Stewart, J. (St. Rollox)
Lawther, W. (Barnard Castle) Paling, Wilfrid Strauss, G. R.
Leach, W. Palmer, E. T. Sullivan, J.
Lee, Frank (Derby, N. E.) Parkinson, John Allen (Wigan) Sutton, J. E.
Lee, Jennie (Lanark, Northern) Perry, S. F. Taylor R. A. (Lincoln)
Lees, J. Peters, Dr. Sidney John Thomas, Rt. Hon. J. H. (Derby)
Lewis, T. (Southampton) Pethick-Lawrence, F. W. Thorne, W. (West Ham, Plaistow)
Lloyd, C. Ellis Phillips, Dr. Marion Thurtle, Ernest
Logan, David Gilbert Picton-Turbervill, Edith Tillett, Ben
Longden, F. Pole, Major D. G. Tinker, John Joseph
Lovat-Fraser, J. A. Potts, John S. Townend, A. E.
Lowth, Thomas Price, M. P. Trevelyan, Rt. Hon. Sir Charles
Lunn, William Quibell, D. J. K. Viant, S. P.
Macdonald, Gordon (Ince) Ramsay, T. B. Wilson Walker, J.
MacDonald, Malcolm (Bassetlaw) Raynes, W. R. Wallace, H. W.
McElwee, A. Richards, R. Wellhead, Richard C.
McEntee, V. L. Richardson, R. (Houghton-le-Spring) Walters, Rt. Hon. Sir J. Tudor
McGovern, J. (Glasgow, Shettleston) Riley, Ben (Dewsbury) Watkins, F. C.
McKinlay, A. Riley, F. F. (Stockton-on-Tees) Watson, W. M. (Dunfermline)
MacLaren, Andrew Ritson, J. Wedgwood, Rt. Hon. Josiah
McShane, John James Roberts, Rt. Hon. F. O. (W. Brorrwich) Wellock, Wilfred
Mander, Geoffrey le M. Romeril, H. G. Welsh, James (Paisley)
Mansfield, W. Rosbotham, D. S. T. Welsh, James C. (Coatbridge)
March, S. Rowson, Guy West, F. R.
Marcus, M. Salter, Dr. Alfred White, H. G.
Markham, S. F. Samuel, Rt. Hon. Sir H. (Darwen) Whiteley, Wilfrid (Birm., Ladywood)
Marley, J. Sanders, W. S. Wilkinson, Ellen C.
Marshall, Fred Sawyer, G. F. Williams, David (Swansea, East)
Mathers, George Scrymgeour, E. Williams, Dr. J. H. (Llaneily)
Matters, L. W. Scurr, John Williams, T. (York, Don Valley)
Melville, Sir James Sexton, James Wilson, C. H. (Sheffield, Attercliffe)
Messer, Fred Shaw, Rt. Hon. Thomas (Preston) Wilson, J. (Oldham)
Millar, J. D. Shepherd, Arthur Lewis Wilson, R. J. (Jarrow)
Mills, J. E. Sherwood, G. H. Winterton, G. E. (Leicester, Loughb'gh)
Milner, Major J. Shield, George William Wright, W. (Rutherglen)
Montague, Frederick Shiels, Dr. Drummond
Morgan, Dr. H. B. Shillaker, J. F. TELLERS FOR THE NOES.—
Morley, Ralph Shinwell, E. Mr. B. Smith and Mr. William
Morris, Rhys Hopkins Short, Alfred (Wednesbury) Whiteley.
Morris-Jones, Dr. J. H. (Denbigh) Simmons, C. J.

I beg to move, in page 30, line 38, at the end, to insert the words: (7) Property which is deemed to pass on a death by virtue of the provisions of this section shall, notwithstanding anything in any Act, be an estate by itself, and shall not be aggregated with any other property. The object of the Amendment is to insert a Sub-section which provides that when duty is payable under this Clause, the property in respect of which it is payable shall not be aggregated, but shall be an estate by itself. The Chancellor of the Exchequer, as a result of discussions during the Committee stage, has put down an Amendment in exactly the same form to exempt from aggregation property which falls under Clause 33. I hope that it is only by an over sight that the exemption from aggregation was not applied to property passing under Clause 32 as well as that passing under Clause 33. I ought to call attention to the fact that later on, where the Chancellor of the Exchequer has the Amendment to which I have referred, I have put down an Amendment to his Amendment in order to make his Amendment cover not only "this Section," to use the words of his Amendment, but the preceding Section also. Of course, if the Chancellor of the Exchequer or the Financial Secretary is prepared to accept the principle of my Amendment, it is a matter of indifference to us, and it is only a question of draftsmanship as to which is the better way of doing what is intended. But I suggest that if non-aggregation is to be permitted in respect of one of these Clauses, it should be permitted in the case of the other as well. I do not think I can say more unless any objection is made to my proposal. In that event, and if there is any more argument to be given on the subject, I must leave it to my hon. Friends who are supporting the Amendment.

Captain BOURNE

I beg to second the Amendment.

I find it rather difficult to understand why on Clauses which are admittedly designed to catch land companies, in the case of land which is settled the Chancellor of the Exchequer should have agreed to non-aggregation, and in the case where the estate is not settled he has apparently omitted to do so. In fairness the condition of aggregation should apply in both cases.


There should be no objection to accepting the Amendment. The only reason why we have not got the words in is that we are advised, and I think it is the fact, that it is quite plain that there is no aggregation under this Clause, for this reason: The question as to whether you aggregate property or not for the purpose of Estate Duty depends upon Section 4 of the Finance Act, 1894. Broadly speaking, the question is whether the deceased ever had an interest in the property. The House will observe that there is this distinction between Clause 32 and Clause 33: In Clause 33, what is deemed to pass is the property. That being so, it is necessary, since the deceased at one time had an interest in the property, to prevent Section 4 of the Finance Act of 1894, applying, and it is necessary to put in precise words. Hence my right hon. Friend's Amendment. When we come to Clause 32, on the other hand, what is deemed to pass is a hypothetical sum of money which, it is quite plain, the deceased never had any interest in at all.

We entirely agree with the hon. Member that there should be no difference between Clauses 32 and 33, but having gone into the matter we are satisfied that there is no difference. The only reason why we put the proviso into Clause 33 is that there you have a case of the deceased having had an interest in that which is deemed to pass. The present case is not a case of a person having had an interest in that which is deemed to pass. If any right hon. or hon. Gentleman opposite satisfies me that there is any real ground for doubt in the matter, I can only say that the draftsman naturally does not want to have inserted words which would make it look as if he does not know his law and which appear to be wholly unnecessary. If I am satisfied that there is any real ground for doubting the correctness of what I have said, I shall certainly accept the Amendment, but as at present advised, I say frankly that it seems to me that what I have been told is the law, is the law, and I cannot see any ground for accepting the Amendment. But I am quite willing to listen to arguments.


If I may speak again by the leave of the House I wish to say that although the argument of the Attorney-General is a very excellent one and one which might well carry the day in the courts, I do not feel that the Clause is by any means so plain in this respect as he thinks. Certainly I think that the draftsman would be absolved from any charge of being foolish or of not knowing his law if he put in these words. I think it would be much safer to insert the words and I venture to press for the acceptance of the Amendment.


I do not venture to put my opinion against that of the Attorney-General and I confess that, at first sight, his point appears to be right. That was not, however, the view which I took on reading the Order Paper and the Bill itself. If the Attorney-General feels any difficulty from the draftsman's point of view in accepting this Amendment perhaps he would accept the Amendment in the name of the hon. Member for Watford (Sir D. Herbert) to the Chancellor's Amendment on Clause 33—I refer to the proposal to insert after the word "this" in the Chancellor's Amendment the words "or the last preceding," making the Chancellor's proposal read Property which is deemed to pass on a death by virtue of the provisions of this or the last preceding section. That Amendment to the Chancellor's Amendment would have exactly the same effect as this Amendment.


I will accept this Amendment.


I think it would be highly desirable, because, without wishing to argue the matter, I may say that considerable doubt have been felt on this side of the House as to whether or not our point was covered. I understand that the Government have no wish to do otherwise than accept the spirit of the Amendment. Perhaps they will also accept the words. The alternative form to which I have referred might be rather easier from the draftsman's point of view, but from our point of view it does not matter which Amendment is accepted.


By leave of the House, since I have been asked a question, may I say that we will accept this Amendment, in this form.

Amendment agreed to.


I beg to move, in page 30, line 38, after the words last inserted, to insert the words: Where the total assets of a company, by reference to which a sum of money deemed to pass under this section is calculated, consist to any extent of real property, that proportion of estate duty payable under this section which is applicable to the proportion of such assets consisting of real property may be paid in the manner provided by Sub-section (8) of Section six of the principal Act, as amended by Sub-section (1) of Section eighteen of the Finance Act, 1919, and where any such real property consists to any extent of agricultural property the provisions of Section twenty-three of the Finance Act, 1925, shall apply to the proportion of duty payable under this section applicable to such agricultural property as if the duty were payable directly in respect of such agricultural property. The object of this Amendment is simply to secure that Estate Duty in this case shall be payable by instalments, as in the case of estates or agricultural land passing at the death of the present owner. The general effect of this Clause is that where landed estates are conveyed to a company they shall be liable to Estate Duty on the death of the transferor, to the same degree as though they were still his property. I am putting the matter quite broadly. If they are punished to that extent, they ought at any rate to have this compensaion. If they are to pay duty to the same extent, they ought to have the benefit of being able to pay the duty by instalments. I do not wish to labour the point; it is, I think, obviously just, and I trust the Attorney-General will accept the Amendment.


I am sorry that we cannot accept this Amendment. The House realises that personal property bears duty as from the date of the death. Real property of course differs in that Estate Duty is not payable until a year after the death. Agricultural property is in a still more favoured position because the rate of duty is not so high. What passes under Clause 32 is, of course, a sum of money, and we feel that it is unfair to confer this exceptional privilege—for it is a privilege—upon a sum of money in the case of a company which, on the hypothesis that our Clause is right, is a tax-dodging company. It is for those reasons that we feel that we should not depart from the ordinary law in regard to the liability to duty of personal property as from the date of death.

Amendment negatived.