§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ 8.0 p.m.
§ Sir ARTHUR STEEL-MAITLANDPerhaps the Chancellor or the Attorney-General would give us very briefly the purport of the Clause and reassure us. The Clause looks quite a simple one, and there is only one point which causes any doubt in my mind, that property subject to periodical payments "shall be deemed to pass," and so on. It is really to try to prevent evasion of Death Duties by purporting to convey more than three years before a death and yet retaining in fact the benefit. It is to prevent evasion of just the same kind as was dealt with in Clauses 29 to 33. You get the case of a person who has an annuity and who conveys it to another person. If it is a bona fide transaction and he survives for another three years, no Death Duty is payable on his death owing to that annuity. But in certain cases, as I understand it, the so-called transferor has bargained for some kind of payment himself in return, so that he evades duty in a manner somewhat similar to that in Clauses 29 to 33. I think that that is really all that is intended by the Clause. The only point that raises any doubt is that of the words "or payment secured." Perhaps the Attorney-General will look at that. The case contemplated was one in which the annuity was transferred, but that in return the person to whom it was transferred gave the transferor some benefit during his life. A substituted 1246 annuity I can understand would quite properly be excluded, but the words seem to me to be somewhat wide. If the Attorney-General or the Chancellor would consider it and let us know, I should be willing not to make any further remarks on this Clause.
§ The ATTORNEY-GENERALThe right hon. Gentleman has appreciated exactly the object of this Clause. It appears that Section 11 of the Finance Act, 1900, which said that where a person entitled to an interest or annuity, or anything of that sort, surrendered that annuity to a remainderman, that on death within a certain period of time the property was deemed to pass, has been largely cut into by a decision of the learned Judge who heard the case, Attorney-General v. Lane Fox. He decided that the release by an annuitant of his annuity to the person entitled to the property charged would not, if that person were in possession of the property on which the annuity was charged, come within the terms of Section 11, for the reason that the person being in possession of the property was not a remainderman. He was in possession of the property subject to an annuity, and consequently could not be described as a remainderman. The utility of Section 11 has been largely cut into. If the right hon. Gentleman wants the reference it is the Lane Fox case, 1924, 2 King's Bench, No. 498. With regard to the words "payment secured," I am not prepared on the spur of the moment to give an answer, but I will look into that, and if I find there is any danger I will communicate with the right hon. Gentleman and tell him so, and will if necessary take steps to see that the proper action is taken, but I do not anticipate any trouble.
§ Captain BOURNEThe Committee, I think, is very much obliged to the learned Attorney-General for his explanation of this somewhat formidable Clause. I am glad to hear that it is intended to deal with this particular law case and will not affect the right of the ordinary annuitant. I take it it is merely where the person in possession of property is technically not a remainder, and therefore in an annuity rendered in such circumstances the person who benefits escapes duty. I looked into this Clause, thinking it might affect a great number 1247 of cases, and I am very grateful to the Attorney-General for his explanation.