§ Sir HENRY BETTERTONI beg to move, in page 31, line 1, to leave out the words "and whether by one or more transactions."
I submit that these words go far beyond the object of the Clause as expressed in the White Paper. I understand the object of the Clause is to hit transactions in which a tenant for life and a remainder man combine to sell their interest to a company, with the result that on the death of the ex-tenant for life, nothing is deemed to pass and no duty is payable. But as the Clause is drafted at present it may, I submit, give rise to an absurd situation. There may be half a dozen, or a dozen transactions between the original sale by the tenant for life and the purchase by the company. You may have A. the tenant for life, and B. the remainder man, selling to C. and C. reselling to B., and so it may go on through a great number of transactions. As the Clause stands, subject, of course, to the Amendment standing next on the Paper in the name of the Chancellor of the Exchequer—in line 4, at the end, to insert the words: 2015
—and subject also to the proviso dealing with bona fide sales, this position may arise. You may have the absurd result that on the death of the tenant for life the company may have to pay, although it has never had anything at all to do with the tenant for life. There may have been an infinite number of intermediate transactions, and although the purchase by the company may have been for full consideration, if part of that consideration is a payment by instalments or a payment in shares, the company will have to pay on the death of a man of whom they have never heard and with whom they have had no connection whatever. I cannot think that that is the real object of the Clause, and I ask the Attorney-General to agree to the omission of these words.
- "(a) the transfer was made before the first day of August, nineteen hundred and eighteen; or
- (b) the property was settled property and the interest of the deceased would in any case have failed by reason of his death before it would have become an interest in possession; or."
§ Captain BOURNEI beg to second the Amendment.
§ The ATTORNEY-GENERALI cannot possibly accept the Amendment, and I really think that the horrible consequences which the hon. Baronet foresees are not in the least degree possible under the Clause as it is drawn. We are dealing in this Clause with the case in which the estate has been transferred by the deceased and the person interested in the remainder to or for the benefit of the company. True, the words are "whether directly or indirectly." True, that means to say that if they do it through the intervention of an intermediary that does not get them out of the Clause, but it is quite manifest that if there is a sale, let us say to C, who is not the company at all, the fact that C, thereafter, independently sells or transfers to a company cannot possibly make that transaction a sale or transfer to the company "directly or indirectly" by the tenant for life or the remainder man. That is a quite impossible result. The reason for these words "whether by one or more transactions" is that we are dealing with the case, and only with the case, where both the deceased and the person entitled in remainder have transferred and, 2016 manifestly, it is immaterial whether they really append their names to the same piece of paper and transfer by the same instrument, or whether the tenant for life does it by one instrument and the tenant in remainder does it by another. Obviously, that case should be hit. Equally, although there may be one or two transactions in between and although there may be some interval of time, so long as these transactions are all part of a concerted plan, such a transfer by the tenant for life and the remainder man to a company obviously must come within the reach of the Clause. That is why we have inserted these words "whether by one or more transactions" and I could not possibly suggest to my right hon. Friend the Chancellor of the Exchequer that these words should be omitted.
§ Sir D. HERBERTThe explanation of the Attorney-General shows what a mistake it is to make these Clauses date back to cases which have occurred long ago. This is an example of the harm that may result. There is, for example, the case of a man who was the tenant for life of settled property and who has been a spendthrift and has sold his life-interest. You may have in the same family a remainder man also a spendthrift who has sold his reversion. As I understand the statement of the Attorney-General, that life interest and that reversion may separately pass through several hands, being paid for in certain values, and ultimately, at some period in these numerous transactions, the purchaser for value of the life interest gets into touch with the purchaser for value of the reversion. These two together form a company. They may be people who are dealing in these interests in land and engaging in transactions of a semi-speculative nature. They base their purchase price upon what is likely to be the true value, calculated mathematically, after making all arrangements for all Duties which have to be paid and taking into account all the possibilities of avoiding them. These transactions may have been carried out years ago. If this Amendment were accepted, cases of that kind, where those interests have passed through various hands, would escape, as I think they ought to escape if they have taken place years before any legislation of this kind was threatened. I think if 2017 the Government insist on refusing this Amendment they are again doing what I describe as an injustice to people who have acted in a perfectly legal and bona fide way, as the law allowed them to act, years before any legislation of this kind was introduced.
§ Mr. ATKINSONThe Attorney-General said that it was necessary to catch these separate transactions which form part of a concerted plan. I agree, but when we were discussing this matter in Committee I pointed out that the words used in this Clause go far beyond that purpose. I gave a case as an illustration, and I gather that the Attorney-General feels that it is a case which ought not to be hit by the Bill. Supposing the owner of a life estate sells to a company without having the faintest idea of the reversion ever getting into the hands of the company. He and the company have entered into a transaction which nobody attacks. The company has simply bought the life estate and, on the termination of that life estate, duty will be payable in the ordinary way. Perhaps years afterwards the company which has been spending money on the development of the property, thinks that it would be wise to acquire the reversion of the estate. They seek out and find the owner of the reversion and buy the reversion from him, without the original tenant for life knowing anything whatever
§ about it. He has ceased to have any interest in the matter. He has sold his interest in the estate and parted with it for good, and there is no reason why he should be further concerned about the matter. Even the reversioner may not know anything about the sale of the life estate. He gets a price offered for the reversion and he accepts it. Nobody can say that these transactions form part of a concerted plan. They do not form part of a concerted plan, and yet it is clear that together they would be hit by this Clause.
§ I urged in Committee that these words should be omitted. I thought and I still think that if the transactions were part of a concerted plan they would be hit at without these words. If they are part of a concerted plan, if they are it truth one transaction, they would be looked at as a whole, and any Court in the wide world would hold that the transaction was one which was hit at by this Clause, without these words "whether by one or more transactions." Certain words have been used here which the Attorney-General is bound to admit would cover a transaction which in no sense forms part of a concerted plan.
§ Question put, "That the words proposed to be left out stand part of the Bill."
§ The House divided: Ayes, 273; Noes, 151.
2021| Division No. 449.] | AYES. | [7.1 p.m. |
| Adamson, Rt. Hon. W. (Fife, West) | Brown, Rt. Hon. J. (South Ayrshire) | Elmley, Viscount |
| Adamson, W. M. (Staff., Cannock) | Brown, W. J. (Wolverhampton, West) | Freeman, Peter |
| Addison, Rt. Hon. Dr. Christopher | Buchanan, G. | Gardner, B. W. (West Ham, Upton) |
| Aitchison, Rt. Hon. Cralgie M. | Burgess, F. G. | Gardner, J. P. (Hammersmith, N.) |
| Alexander, Rt. Hon. A. V. (Hillsbro') | Buxton, C. R. (Yorks. W. R. Elland) | George, Major G. Lloyd (Pembroke) |
| Ammon, Charles George | Calne, Derwent Hall- | Gibson, H. M. (Lancs, Mossley) |
| Arnott, John | Cameron, A. G. | Gill, T. H. |
| Aske, Sir Robert | Carter, W. (St. Pancras, S. W.) | Gillett, George M. |
| Attlee, Clement Richard | Charleton, H. C. | Glassey, A. E. |
| Baker, John (Wolverhampton, Bilston) | Chater, Daniel | Gossling, A. G. |
| Baldwin, Oliver (Dudley) | Clarke, J. S. | Graham, D. M. (Lanark, Hamilton) |
| Barnes, Alfred John | Cluse, W. S. | Graham, Rt. Hon. Wm. (Edin., Cent.) |
| Barr, James | Clynes, Rt. Hon. John R. | Greenwood, Rt. Hon. A. (Colne) |
| Batey, Joseph | Cocks, Frederick Seymour | Grenfell, D. R. (Glamorgan) |
| Benn, Rt. Hon. Wedgwood | Compton, Joseph | Griffith, F. Kingsley (Middlesbro' W.) |
| Bennett, Capt. Sir E. N. (Cardiff C.) | Cove, William G. | Griffiths, T. (Monmouth, Pontypool) |
| Benson, G. | Cowan, D. M. | Groves, Thomas E. |
| Bentham, Dr. Ethel | Daggar, George | Grundy, Thomas W. |
| Bevan, Aneurin (Ebbw Vale) | Dallas, George | Hall, F. (York, W. R., Normanton) |
| Birkett, W. Norman | Dalton, Hugh | Hall, G. H. (Merthyr Tydvil) |
| Blindell, James | Davies, E. C. (Montgomery) | Hall, Capt. W. G. (Portsmouth, C.) |
| Bondfield, Rt. Hon. Margaret | Davies, Rhys John (Westhoughton) | Hamilton, Mary Agnes (Blackburn) |
| Bowen, J. W. | Day, Harry | Harris, Percy A. |
| Bowerman, Rt. Hon. Charles W. | Denman, Hon. R. D. | Hartshorn, Rt. Hon. Vernon |
| Broad, Francis Alfred | Dukes, C. | Hastings, Dr. Somerville |
| Bromfield, William | Duncan, Charles | Haycock, A. W. |
| Bromley, J. | Ede, James Chuter | Hayday, Arthur |
| Brooke, W. | Edge, Sir William | Hayes, John Henry |
| Brothers, M. | Edmunds, J. E. | Henderson, Arthur, Junr. (Cardiff, S.) |
| Brown, C. W. E. (Notts, Mansfield) | Edwards, E. (Morpeth) | Henderson, Thomas (Glasgow) |
| Brown, Ernest (Leith) | Egan, W. H. | Henderson, W. W. (Middx., Enfield) |
| Herriotts, J. | Mathers, George | Shinwell, E. |
| Hirst, G. H. (York W. R. Wentworth) | Matters, L. W. | Short, Alfred (Wednesbury) |
| Hirst, W. (Bradford, South) | Melville, Sir James | Simmons, C. J. |
| Hoffman, P. C. | Messer, Fred | Simon, E. D. (Manch'ter, Withington) |
| Hollins, A. | Middleton, G. | Sinclair, Sir A. (Caithness) |
| Hopkin, Daniel | Millar, J. D. | Sinkinson, George |
| Horrabin, J. F. | Milner, Major J. | Sitch, Charles H. |
| Hudson, James H. (Huddersfield) | Montague, Frederick | Smith, Ben (Bermondsey, Rotherhithe) |
| Hunter, Dr. Joseph | Morgan, Dr. H. B. | Smith, Frank (Nuneaton) |
| Hutchison, Maj.-Gen. Sir R. | Morley, Ralph | Smith, H. B. Lees- (Keighley) |
| Isaacs, George | Morris, Rhys Hopkins | Smith, Rennie (Penistone) |
| Jenkins, W. (Glamorgan, Neath) | Morrison, Herbert (Hackney, South) | Smith, Tom (Pontefract) |
| John, William (Rhondda, West) | Morrison, Robert C. (Tottenham, N.) | Smith, W. R. (Norwich) |
| Johnston, Thomas | Mort, D. L. | Snell, Harry |
| Jones, F. Llewellyn- (Flint) | Moses, J. J. H. | Snowden, Rt. Hon. Philip |
| Jones, Rt. Hon. Leif (Camborne) | Mosley, Sir Oswald (Smethwick) | Snowden, Thomas (Accrington) |
| Jones, Morgan (Caerphilly) | Muff, G. | Sorensen, R. |
| Jowett, Rt. Hon. F. W. | Muggeridge, H. T. | Stamford, Thomas W. |
| Jowitt, Sir W. A. (Preston) | Murnin, Hugh | Stephen, Campbell |
| Kedward, R. M. (Kent, Ashford) | Nathan, Major H. L. | Stewart, J. (St. Rollox) |
| Kelly, W. T. | Newman, Sir R. H. S. D. L. (Exeter) | Strauss, G. R. |
| Kennedy, Thomas | Noel Baker, P. J. | Sullivan, J. |
| Kinley, J. | Noel-Buxton, Baroness (Norfolk, N.) | Sutton, J. E. |
| Kirkwood, D. | Oldfield, J. R. | Taylor, R. A. (Lincoln) |
| Lambert, Rt. Hon. George (S. Molton) | Oliver, George Harold (Ilkeston) | Taylor, W. B. (Norfolk, S. W.) |
| Lang, Gordon | Oliver, P. M. (Man., Blackley) | Thomas, Rt. Hon. J. H. (Derby) |
| Lathan, G. | Owen, H. F. (Hereford) | Thorne, W. (West Ham. Plaistow) |
| Law, Albert (Bolton) | Palin, John Henry. | Thurtle, Ernest |
| Law, A. (Rosendale) | Paling, Wilfrid | Tillett, Ben |
| Lawrence, Susan | Palmer, E. T. | Tinker, John Joseph |
| Lawrie, Hugh Hartley (Stalybridge) | Parkinson, John Allen (Wigan) | Townend, A. E. |
| Lawther, W. (Barnard Castle) | Perry, S. F. | Trevelyan, Rt. Hon. Sir Charles |
| Leach, W. | Pethick-Lawrence, F. W. | Vaughan, D. J. |
| Lee, Frank (Derby, N. E.) | Phillips, Dr. Marion | Viant, S. P. |
| Lee, Jennie (Lanark, Northern) | Picton-Turbervill, Edith | Walkden, A. G. |
| Lees, J. | Potts, John S. | Walker, J. |
| Lewis, T. (Southampton) | Price, M. P. | Wallace, H. W. |
| Lloyd, C. Ellis | Quibell, D. J. K. | Wallhead, Richard C. |
| Logan, David Gilbert | Ramsay, T. B. Wilson | Walters, Rt. Hon. Sir J. Tudor |
| Longbottom, A. W. | Raynes, W. R. | Watkins, F. C. |
| Longden, F. | Richards, R. | Watson, W. M. (Dunfermline) |
| Lovat-Fraser, J. A. | Richardson, R. (Houghton-le-Spring) | Wedgwood, Rt. Hon. Josiah |
| Lowth, Thomas | Riley, F. F. (Stockton-on-Tees) | Wellock, Wilfred |
| Lunn, William | Ritson, J. | Welsh, James (Paisley) |
| Macdonald, Gordon (Ince) | Roberts, Rt. Hon. F. O. (W. Bromwich) | Welsh, James C. (Coatbridge) |
| MacDonald, Rt. Hon. J. R. (Seaham) | Romeril, H. G. | West, F. R. |
| MacDonald, Malcolm (Bassetlaw) | Rosbotham, D. S. T. | Westwood, Joseph |
| Macdonald, Sir M. (Inverness) | Rowson, Guy | White, H. G. |
| McElwee, A. | Salter, Dr. Alfred | Whiteley, Wilfrid (Birm., Ladywood) |
| McEntee, V. L. | Samuel, Rt. Hon. Sir H. (Darwen) | Wilkinson, Ellen C. |
| McGovern, J. (Glasgow, Shettleston) | Sanders, W. S. | Williams, David (Swansea, East) |
| McKinlay, A. | Sawyer, G. F. | Williams, Dr. J. H. (Llanelly) |
| MacLaren, Andrew | Scrymgeour, E. | Williams, T. (York, Don Valley) |
| McShane, John James | Scurr, John | Wilson, C. H. (Sheffield, Attercliffe) |
| Mander, Geoffrey le M. | Sexton, James | Wilson, J. (Oldham) |
| Mansfield, W. | Shaw, Rt. Hon. Thomas (Preston) | Wilson, R. J. (Jarrow) |
| March, S. | Shepherd, Arthur Lewis | Winterton, G. E. (Leicester, Loughb'gh) |
| Marcus, M. | Sherwood, G. H. | Wright, W. (Rutherglen) |
| Markham, S. F. | Shield, George William | |
| Marley, J. | Shields, Dr. Drummond | TELLERS FOR THE AYES.— |
| Marshall, Fred | Shillaker, J. F. | Mr. Charles Edwards and Mr. |
| William Whiteley. | ||
| NOES. | ||
| Acland-Troyte, Lieut.-Colonel | Brown, Brig.-Gen. H. C. (Berks, Newb'y) | Culverwell, C. T. (Bristol, West) |
| Allen, Sir J. Sandeman (Liverp'l., W.) | Burton, Colonel H. W. | Cunliffe-Lister, Rt. Hon. Sir Philip |
| Allen, Lt.-Col. Sir William (Armagh) | Butler, R. A. | Dalrymple-White. Lt.-Col. Sir Godfrey |
| Ashley, Lt.-Col. Rt. Hon. Wilfrid W. | Carver, Major W. H. | Davidson, Rt. Hon. J. (Hertford) |
| Astor, Viscountess | Cautley, Sir Henry S. | Davies, Dr. Vernon |
| Atholl, Duchess of | Cayzer, Sir C. (Chester, City) | Davies, Maj. Geo. F. (Somerset, Yeovil) |
| Atkinson, C. | Cayzer, Maj. Sir Herbt, R. (Prtsmth, S.) | Davison, Sir W. H. (Kensington, S.) |
| Baldwin, Rt. Hon. Stanley (Bewdley) | Chadwick, Capt. Sir Robert Burton | Duckworth, G. A. V. |
| Balfour, George (Hampstead) | Chamberlain, Rt. Hn. Sir J. A. (Birm., W.) | Eden, Captain Anthony |
| Balfour, Captain H. H. (I. of Thanet) | Chamberlain, Rt. Hon. N. (Edgbaston) | Edmondson, Major A. J. |
| Beaumont, M. W. | Chapman, Sir S. | Elliot, Major Walter E. |
| Berry, Sir George | Christie, J. A. | Erskine, Lord (Somerset, Weston-s. M.) |
| Betterton, Sir Henry B. | Cobb, Sir Cyril | Everard, W. Lindsay |
| Bevan, S. J. (Holborn) | Cockerill, Brig.-General Sir George | Falle, Sir Bertram G. |
| Birchall, Major Sir John Dearman | Cohen, Major J. Brunel | Ferguson, Sir John |
| Bird, Ernest Roy | Cranborne, Viscount | Fermoy, Lord |
| Boothby, R. J. G. | Crichton-Stuart, Lord C. | Fielden, E. B. |
| Bourne, Captain Robert Croft. | Croft, Brigadier-General Sir H. | Galbraith, J. F. W. |
| Braithwaite, Major A. N. | Crookshank, Capt. H. C. | Ganzoni, Sir John |
| Brown, Col. D. C. (N'th'l'd., Hexham) | Croom-Johnson, R. P. | Gilmour, Lt.-Col. Rt. Hon. Sir John |
| Glyn, Major R. G. C. | Mitchell-Thomson, Rt. Hon. Sir W. | Somerville, A. A. (Windsor) |
| Grenfell, Edward C. (City of London) | Mond, Hon. Henry | Southby, Commander A. R. J. |
| Gritten, W. G. Howard | Monsell, Eyres, Com. Rt. Hon. Sir B. | Stanley, Lord (Fylde) |
| Guinness, Rt. Hon. Walter E. | Moore, Sir Newton J. (Richmond) | Stanley, Maj. Hon. O. (W'morland) |
| Gunston, Captain D. W. | Morden, Col. W. Grant | Steel-Maitland, Rt. Hon. Sir Arthur |
| Hacking, Rt. Hon. Douglas H. | Morrison-Bell, Sir Arthur Clive | Sueter, Rear-Admiral M. F. |
| Hall, Lieut.-Col. Sir F. (Dulwich) | Muirhead, A. J. | Thomas, Major L. B. (King's Norton) |
| Hamilton, Sir George (Ilford) | Newton, Sir D. G. C. (Cambridge) | Titchfield, Major the Marquess of |
| Hammersley, S. S. | Nicholson, O. (Westminster) | Todd, Capt. A. J. |
| Hannon, Patrick Joseph Henry | Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld) | Tryon, Rt. Hon. George Clement |
| Haslam, Henry C. | O'Connor, T. J. | Turton, Robert Hugh |
| Henderson, Capt. R. R. (Oxf'd, Henley) | O'Neill, Sir H. | Vaughan-Morgan, Sir Kenyon |
| Heneage, Lieut.-Colonel Arthur P. | Peake, Captain Osbert | Wallace, Capt. D. E. (Hornsey) |
| Hennessy, Major Sir G. R. J. | Penny, Sir George | Ward, Lieut.-Col. Sir A. Lambert |
| Herbert, Sir Dennis (Hertford) | Peto, Sir Basil E. (Devon, Barnstaple) | Wardlaw-Milne, J. S. |
| Howard-Bury, Colonel C. K. | Power, Sir John Cecil | Warrender, Sir Victor |
| Hurd, Percy A. | Ramsbotham, H. | Wayland, Sir William A. |
| Hurst, Sir Gerald B. | Rawson, Sir Cooper | Wells, Sydney R. |
| Iveagh, Countess of | Reid, David D. (County Down) | Williams, Charles (Devon, Torquay) |
| Kindersley, Major G. M. | Richardson, Sir P. W. (Sur'y, Ch'ts'y) | Wilson, G. H. A. (Cambridge U.) |
| King, Commodore Rt. Hon. Henry D. | Roberts, Sir Samuel (Ecclesall) | Windsor-Clive, Lieut.-Colonel George |
| Lamb, Sir J. Q. | Ruggles-Brise, Lieut.-Colonel E. A. | Winterton, Rt. Hon. Earl |
| Leighton, Major B. E. P. | Salmon, Major I. | Withers Sir John James |
| Lewis, Oswald (Colchester) | Samuel, A. M. (Surrey, Farnham) | Wolmer, Rt. Hon. Viscount |
| Llewellin, Major J. J. | Sandeman, Sir N. Stewart | Womersley, W. J. |
| Long, Major Hon. Eric | Sassoon, Rt. Hon. Sir Philip A. G. D. | Worthington-Evans, Rt. Hon. Sir L. |
| Lymington, Viscount | Savery, S. S. | Young, Rt. Hon. Sir Hilton |
| Macquisten, F. A. | Shepperson, Sir Ernest Whittome | |
| Makins, Brigadier-General E. | Sinclair, Col. T. (Queen's U., Belfast) | TELLERS FOR THE NOES.— |
| Marjoribanks, E. C. | Smith, Louis W. (Sheffield, Hallam) | Sir Frederick Thomson and Captain |
| Mason, Colonel Glyn K. | Smith-Carington, Neville W. | Sir George Bowyer. |
| Merriman, Sir F. Boyd | Smithers, Waldron |
§ Mr. PETHICK-LAWRENCEI beg to move, in page 31, line 4, at the end, to insert the words:
- "(a) the transfer was made before the first day of August, nineteen hundred and eighteen; or
- (b) the property was settled property and the interest of the deceased would in any case have failed by reason of his death before it would have become an interest in possession; or."
§ Captain BOURNEI do not want to delay the House, but, I should like to have an explanation or be told that I am right as to the meaning of paragraph (b). This Clause is difficult to construe; it consists of a series of exceptions by which when a transfer has been made to a company, the transferee should be brought within the scope of the Clause. Under paragraph (b) one of these conditions will be where a tenant for life in remainder has predeceased the tenant for life, and therefore the person entitled to the property at the death of the tenant for life is not the tenant for life in remainder but the tenant in tail. I understand that this paragraph is to meet the point raised by the hon. and learned Member for Holborn (Mr. S. Bevan). I should be glad to know if I am right.
§ The ATTORNEY-GENERALYes, the hon. Member is quite right, this is to meet the point which the hon. and learned Member for Holborn (Mr. S. Bevan) put in Committee.
§ Amendment agreed to.
2022§ Mr. PETHICK-LAWRENCEI beg to move, in page 31, line 9, to leave out from the word "or," to the word "or," in line 10, and to insert instead thereof the words:
other right to receive periodical payments, not being payments on account of purchase money being a capital sum of fixed amount.
§ 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."
§ Captain BOURNEI beg to move, as an Amendment to the proposed Amendment, in line 2, to leave out from the first word "payments," to the end of the proposed Amendment.
It will be remembered that one of the points raised in Committee—and I think the Attorney-General agreed—was that where a company contracted to make a capital payment but could not make it in cash all at once, it was necessary to take the disqualification out of this Clause. I am puzzled to make out the effect of these words:
not being payments on account of purchase money being a capital sum of fixed amount.As I understand these words, the effect is that if the company contract with vendors, that is with the tenant for life and the reversioner to make payments, the sum to be paid in three equal instal- 2023 ments, then in that case the whole of the share of the tenant for life will come in under this Clause, and the property will deem to pass on his death, although if he had paid out a fixed sum, or an annuity had been granted to the tenant for life, then the property would not go and would come out of the operation of this Clause.
§ The ATTORNEY-GENERALWe cannot accept this Amendment. We have inserted these words to meet a point raised in Committee. Our object is to see that there must be a capital sum of a fixed amount.
§ Amendment to proposed Amendment negatived.
§ Proposed words there inserted in the Bill.
§
Further Amendment made: In page 31, line 14, after the word "enjoyment," insert the words:
(otherwise than under a lease or agreement for a lease at a rack rent)."—[Mr. Pethick-Lawrence.]
§ Captain BOURNEI beg to move, in page 31, line 21, after the word "of," to insert the words:
dividends on shares of the company.I remember, when this point was raised in Committee, that the Attorney-General argued that because of the Finance Act of 1910, if a tenant for life retained any interest in a property whatsoever after transferring it, then if he transferred it within three years of death, the whole of the property was treated as his, and for that purpose he had to pay Death Duties, but it seems to me very undesirable to put the obligation and the onus of paying duties on a company whenever it is possible to put it on the estate of the deceased. After all, under a later Clause there is a rather complicated method of valuing shares held by a deceased person in one of these companies, under which the value of the shares is related to the assets of the company, and it seems to me that if the tenant for life takes payment in the shape of shares and receives dividends during his life, what should be their value at his death should be the value of the shares as ascertained by that Clause. But what is more important is that the person to be responsible for the payment of the Death Duties in such cases 2024 should not be the company, but should be the executors of the tenant for life.
§ Sir D. HERBERTI beg to second the Amendment.
§ The ATTORNEY-GENERALThe whole principle of the Finance Act of 1900 depends upon this, that there must be a complete severance of interest. If that is a good law—and it has been in force for a large number of years—it is manifestly undesirable that people should get round it by a mere device. We intend by this Clause to stop that being got round, and again, therefore, the whole principle which we insist upon is severance of interest. We want to see that the life tenant really has a severed interest, and therefore we say that he must have severed all his interest in the property or
any part thereof or of any benefit secured to him, whether by contract or otherwise,and then we make certain exceptions and say:otherwise than in respect or on account of debentures or loans or purchase money.No one realises better than the hon. and gallant Member for Oxford (Captain Bourne) that a debenture holder is in a totally different position from a shareholder. The former is merely a person to whom the company owes money, but if a man is a shareholder, by the analogy of the 1900 Act it is idle to say that he washes his hands of all interest in the company. He may be the only shareholder in the company. Consequently, we say that such a man ought to be dealt with under the 1900 Act, and for that reason it is impossible to accept an Amendment which inserts the words proposed by the hon. and gallant Member.
§ Sir L. WORTHINGTON-EVANSIt is difficult to follow the Attorney-General's argument. He wants severance from the property, and I agree that there is a test there, whether the man still retains an ownership or control as owner in a property which he is purporting to pass over to a company, but the ownership of shares does not entitle him to the benefit of the property in any way. He would have exactly the same rights as any other shareholder in the company, and no other rights, and the hon. and learned Gentleman does not go quite far enough, because there is a lot of transactions which, although they might come within the Act, 2025 are bona fide intended to develop an estate which may, for example, want financing. It may want new money so that roads and public services may be given to the estate and a building estate developed. A property of that sort may be financed by outsiders, who may say, "We are not going to give cash for your property, but if you will take shares in the company, we will finance the venture."
That is highly desirable, but the hon. and learned Gentleman, in refusing this Amendment, is refusing to allow the development of an estate company in the most usual way. He is putting a totally unnecessary obstacle in the way of the development of an estate, and he is doing that in order to be consistent with the Act of 1910. That Act requires severence. I do not object to that—I think that is a reasonable test—but it surely is complete severance if a man transfers his property to a company, even though he gets some shares in that company. If the hon. and learned Gentleman says the man must not have control of that company, he has already provided for that in other Clauses. He is taking now an unnecessary protection, which will be an interference with the ordinary development of a building or other estate.
§ Amendment negatived.
§ Mr. PETHICK-LAWRENCEI beg to move, in page 32, line 9, at the end, to insert the words:
(3) 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.
§ Mr. O'CONNORWhat is the meaning of these words? We have heard about our not assisting the Revenue, but it would appear that this Amendment of the Government's may result in loss to the Revenue, and that the purpose of these words is to invite people to separate up their estates into so many private companies because they will then be charged Estate Duty not on the total of the estate but on the separate amounts, which will not be aggregated together, and therefore will bear duty at a lower rate than would otherwise be the case. That would appear to be the plain meaning of the Amendment, and I ask, for the purpose of enlightenment, whether that is the intention of the Government.
§ The ATTORNEY-GENERALThis is an Amendment which was pressed upon my right hon. Friend in Committee, and it means that he will lose a certain amount of revenue, as the hon. and learned Member opines. That is the object of the Amendment.
§ Amendment agreed to.