FINANCE BILL. (Hansard, 11 June 1931)

§ Mr. MARJORIBANKS
The Solicitor-General and my hon. Friends on this side of the House are entirely agreed on principle. The only division now is on the question of expression. I think, having, regard to the word "revised" in line 21, and to the phrase "respective values of those parts at that date," 1231 there is still some obscurity in the matter, and no one but a trained lawyer would probably come to the conclusion which has been expressed by the Solicitor-General, at any rate at the first glance. If he would reconsider the words and put a proviso in to make the matter certain, we should be satisfied. My Amendment to add a new Sub-section is, of course, rendered unnecessary after the explanation of the Solicitor-General, because, if the intention which he has stated is the meaning of the Bill, paragraph (a) of the first Sub-section of the next Clause is explained, and we have no grievance whatever in respect of that. My hon. Friend and myself have thought that, whereas the owner of a split-up unit could appeal as against the apportionment, he could not appeal against the increase in valuation, which we thought was implicit and possible under Clause 10, especially as the Solicitor-General has said almost invariably that when one unit is split up into several the value of the whole increases. We did not credit him with the Christian charity of waiting until the next quinquennium and only then increasing the value as a whole. We now realise that the milk of human kindness was in his heart from the start, and we appeal to him to make the matter absolutely clear for the protection of the public in future.

§ The SOLICITOR-GENERAL
I am quite prepared to look again at Clause 10, but I have already tried to make the matter as clear as possible. With regard to the question of the hon. Member for Chippenham (Captain Cazalet), as to the mechanism by which the valuer will get to know—there are of course at present district valuers in every part of the country and it will be by an extension of their work that this will be carried through. Under Clause 23 notice has to be given to the Commissioner, and through that he will get to know of the splitting up of the land. If he did not by any chance get to know of it he would serve the wrong owner with the next assessment, and the wrong owner would of course refuse to pay, because he was not the owner. The Commissioner would thus get to know in that way. But he will actually get to know by seeing the documents upon which the sale takes place.
1232 In reply to a question put by the hon. and gallant Member for Clitheroe (Sir W. Brass), about the splitting up of a site of which he gave an example, in the City of London, a case in which there are rights of light, with a user on one side and not on the other—there you would have to ascertain at the 1st January, which is the date when the new valuation of these sub-units would come into force, what the relative value of these units was within the original aggregate valuation. That is to say, you would in a sense revalue it, but you would not add together those new values and make them the new aggregate value, but only use them for the purpose of apportioning the original aggregate value. Take the example I gave, original value £3,000, new value £4,000, one of the units £1,000, which would merely show that one quarter of the original value had been dealt with.

§ Sir W. BRASS
With reference to the land unit in the City of London, and the splitting up into three parts, with two parts affected by light restrictions, if the new valuation of the three units is to be in aggregate the same as the value of the unit when it was originally valued, and assume that part of it is highly valued and another part valued at a low amount, and there is an appeal by the person who owns the highly valued part against that value, and the appeal is successful, what is to happen to the person who owns the lower valued part? Is he going to have something added to him to make up the added value of the original aggregate value?

§ The SOLICITOR-GENERAL
The answer is in a sense "yes," and in a sense "no." The appeal will not be against the new value; the appeal will be against the apportionment of the original value into the three parts. Therefore anyone interested in that apportionment will come to the appeal on apportionment.

§ Sir GERALD HURST
I accept everything that the Solicitor-General has said. That the original aggregate cannot be increased is clear. But I suggest, from what the Solicitor-General has said, that it is absolutely essential that a fresh valuation should be made. The Amendment, therefore, is justified. Take the case of a man whose plot of land, assessed as one land unit, is valued at £1,000. It is not 1233 assessed as consisting of a number of parcels of land of different values. The man sells one parcel for £1,000. How is it possible to apportion the original £1,000 between the land which is retained and the land which is sold without a fresh valuation? The Solicitor-General drew attention to Clause 23, which provides machinery whereby district valuers can value. That is our point. The machinery is there to enable them to make a fresh valuation. I submit that it is impossible to make Clause 10 work without having a fresh valuation.

§ Sir W. MITCHELL-THOMSON
I beg to move, in page 9, line 30, at the end, to insert the words: (2) Any owner of a part of a land unit which has become divided as aforesaid may serve upon the Commissioners a notice stating the fact of such division and thereupon the Commissioners shall proceed to cause such revised entries to be substituted as aforesaid. This is a comparatively small matter, but I am not sure that it does not deal with a case of remissness on the part of the draftsman. As far as we can see, there is no machinery for providing that the owner of part of a divided unit has the power to stir the Commissioners into action to apportion the value. I think the Solicitor-General will agree, on reflection, that this power ought to be given to the owner of a divided unit. The Government may say that what will happen will be that notice of assessment will be served on the original owner of the entire unit, and that he will reply to the Commissioners that he is not liable to pay, and that the unit has been divided; and thereupon the Commissioners will proceed to the matter if apportionment. But it is quite possible that the owner of the original undivided unit may not be in the country or may have put the assessment into the fire, or may have overlooked it. It may not be possible to catch him. I can see no objection, from the point of view of the taxpayer or the Government, to giving the owner of part of a divided unit, if he desires to have it, the power to ask the Commissioners to make this apportionment. I suggest that the Solicitor-General should consider the insertion of these words, or some such words.

§ Sir S. ROBERTS
The Amendment is a very desirable provision. Assume that you have a fairly large piece of land which has one unit site value put upon it. Part of it is sold to a builder, and the builder then divides it into various plots. The builder wants to sell the land to the people who are going to occupy houses on the plots. The occupiers of those houses will want to know very much what the site value is. They will want to know particularly whether the value is under £120, that is to say, whether they will have anything at all to pay. The knowledge that they would have nothing to pay might make a good deal of difference to their willingness to buy and to the price that they would pay. It would not cause the Commissioners a great deal of trouble if an individual owner in this case had the right to go to them and to say, "I want this piece of land that I have bought, apportioned"; or the intermediate owner might go and say, "I want this particular piece apportioned because I want to sell it to the person who wishes to know what the site value will be." The Amendment would not hurt the scheme of the Bill and it might be very useful.

§ The SOLICITOR-GENERAL
As regards the question of notification, there is certainly no objection to it, though to us it seems unnecessary. I cannot imagine any stronger cause urging the Commissioners to act, than the fact that they will not get the tax paid unless they act. We thought that that was a strong enough urge. As regards the second part of the Amendment, I do not think that my right hon. Friend would really desire to press it, because it is obviously impossible for the Commissioners "thereupon" to cause such revised entries to be substituted. There may be an appeal on the apportionment. Under Clause 10 the date is 1st January; the effective date of the apportionment is to be 1st January. That is the date on which the register is made up. Suppose that the division takes place in June. Obviously the Commissioners could not "forthwith" or "thereupon" apportion, because they have to wait to do it as on 1st January. Apart from that point I am quite prepared to put in some words giving the owner or sub-owner the right 1235 to notify the Commissioners and to ask them to act as soon as they can under the Act.

§ Sir W. MITCHELL-THOMSON
I appreciate that fact, but I think the Solicitor-General does not do justice to the actual words of the Amendment. The Amendment does not say that the Commissioners shall cause such revised entries to be substituted, but that they shall "proceed to cause," and that means by due process of law.

§ Sir DENNIS HERBERT
The learned Solicitor-General said just now that you could not get the tax unless and until this apportionment was carried out. Is he absolutely certain as to that, and, if the point is quite clear, will he explain it to me? I am not satisfied that that is the case.

§ The SOLICITOR-GENERAL
The answer is that there would be no entry, as regards the subdivided portions, in any register, nor would there be any notification to any owner as regards the valuation, and there could not be an assessment until after one or other of those two things had happened. There would be an entry in regard to the original unit, but as on the 1st January that had ceased to exist, a tax could not be levied on it; and, if the owner was assessed to a tax, he would be able to appeal on assessment and to say, "I am not the owner of this unit. It no longer exists; it belongs to these sub-purchasers, or part of it does"; and until that sub-unit appeared in some register, the tax could not be secured.

§ Sir THOMAS INSKIP
I am not sure that the Solicitor-General has satisfied my right hon. Friend, but he has certainly not satisfied me. The prospect that he envisages, of an appeal by the owner, terrifies me and will, I think, terrify the owner, too. He suggests that the owner of the land unit may appeal against the assessment, but that is not very satisfactory to the taxpayers. They do not want to be involved in appeals against assessments, and the whole importance of the Amendment is not so much in the power of the owner of the unit to serve the Commissioners with notice—because there is nothing to prevent a man writing to the Commissioners—but the importance is that the Commissioners shall then proceed to cause the entries to be 1236 made which will relieve the owner of the undivided land unit from the possibility of being assessed to a tax to get rid of which he will have to appeal.
I am not clear what words the Solicitor-General proposes to insert. It will not be sufficient to put in words empowering the taxpayer to serve the Commissioners with notice of the division. We want the subsequent words, and can the Solicitor-General assure us that we shall have words to the same effect, that upon receiving notice the Commissioners shall proceed to take the steps forthwith? I do not like the words, "If it appears to the Commissioners." They may turn a blind eye to what is happening, they may be blocked up with business, and there may be all sorts of difficulties which prevent them making the necessary entries at the proper time. Do let us have machinery which does not contemplate appeals by the taxpayers, which are always expensive and may very likely involve difficulties.

§ The SOLICITOR-GENERAL
What I said when I first made a statement on this matter was that I was prepared to put in some Amendment which gave power to the owner of the sub-unit to give notice to the Commissioners, and which gave power to the Commissioners to proceed upon it so far as they could within the Section of the Act. The difficulty that I pointed out with regard to the word "thereupon" was that if notice was given in the early part of the year, and the Commissioners had to make the apportionment as at the 1st January next, they could not proceed "thereupon" to apportion, but would have to take the value as at the 1st January next. Therefore, they could not really do it till the 1st January next, and that is why I said that "thereupon" was a word which I could not accept.

§ Sir W. BRASS
The Solicitor-General says that this apportionment has a value as at the 1st January next. The Clause says, "as at that first day of January," and I want to know whether it is in fact the 1st January next or the previous 1st January, before the sale took place.

§ The SOLICITOR - GENERAL
The Clause reads: Where it appears to the Commissioners that on the first day of January in any year of charge any piece of land. … has become divided. 1237 It has to appear to them on the 1st January. At the previous 1st January, it will not have been divided, so that it could not mean that one, but must mean the next 1st January.

§ Sir W. MITCHELL-THOMSON
That makes it rather more difficult than I thought, because the position of the unfortunate original owner of the unit which is subsequently subdivided is that during the whole of the calendar year he will be liable to be assessed, and to have an assessment served upon him, and the Commissioners will make him pay, and his only remedy is to appeal. I do not think that that is very satisfactory. I understood that the hon. and learned Solicitor-General was going to put in some words which would have substantially the effect of our Amendment, but I would call attention to the fact that the word "thereupon" is by no means unimportant. I agree that, as the Bill is drawn, it may be difficult for the Commissioners to do it, but that is no reason for doing an injustice. Rather is it a reason for endeavouring to make some modification which will meet the point.

§ The SOLICITOR-GENERAL
I am sorry to keep on interrupting, but the date which is the effective date in any financial year, under Clause 14, for assessment of the tax is the 1st January. First, let me assume that in June, 1935, there is a division of the unit.

§ Sir W. MITCHELL - THOMSON
Assume that it is in February.

§ The SOLICITOR-GENERAL
Very well. Then as on the 1st January, 1935, the register will show all the people who are to pay tax on that assessment. If someone divides it up in February and wants to divide up the liability for the current year, he will do it, of course, just as he does now in regard to rates, in his agreement of sale. He will apportion it between himself and the man who buys. He will pay two months' tax and the other man will pay 10 months' tax, but it is impossible for the Commissioners of Inland Revenue to apportion the tax as between the seller and the buyer. They must charge it on one of them, and the apportionment between those two is done by agreement at the sale. On the next 1st January, when it comes along, the unit has been divided, and at that date the Commissioners have to 1238 serve the notice on the owners of the divided units, and they will be the people who at that next 1st January will be in the register as the owners of the new sub-units and will be assessed and liable to tax, the other man having gone out in the intervening period, so that you have the two dates of the 1st January following one after the other. On the first of them the owner of the whole unit will be chargeable, and on the second of them the owners of the sub-units will be chargeable.

§ Sir D. HERBERT
Suppose the owner of a 10-acre unit sells it in plots of one acre each, the sales being completed on the 26th or the 27th December, which is a very common date for completion, on the 1st January the original owner is no longer the owner of the 10-acre unit, but surely the reapportionment and revaluation will not have been made by the 1st January. At the moment nothing will be known about it, and the wretched owner of the 10 acres will be served with the assessment as on the 1st January. I do not see what protection he has against paying it, except an appeal.

§ The SOLICITOR - GENERAL
The answer is that in such a case as that, if he is served with an assessment and sends it back as he will do, of course, to the Commissioners of Inland Revenue, and says, "This is not my unit," and they still proceed with the assessment, he will have to appeal; but it is a rather long cry to imagine that in those circumstances the Commissioners will insist on an appeal which inevitably they must lose. I think the real solution is that the owner will write back and say, "This land has been split up, and I am no longer chargeable." They will find that that is the fact, and they will proceed accordingly.

§ Mr. CHARLES WILLIAMS
I see that when you split up a £1,000 piece of land between, say, four people, in lots of £250 each, you will get the money as from the 1st January from the four people, but, suppose that the land is sold to 10 people. In that case, each lot will be only £100, and none of them will be liable to the tax. You cannot expect them to pay under those circumstances, because in your own Bill you have eliminated them on the ground that they come below the £120 limit. That seems to have nothing to do with the case which we have been 1239 discussing, and the result is that they will not want to pay and that the original owner will be justified in claiming that he also is exempt. He has gone out of it, and you cannot force them to pay because in their case there is no longer a taxable unit. It is, I think, a question which ought to be explained, and I should not like to have to explain it to my constituents.

§ The SOLICITOR-GENERAL
The unit does not became non-taxable because it is under £ 120. It is just as much taxable. The individual who would have to pay less than 10s. does not have to pay, but that is a question of an individual exemption. It is not the exemption of a unit, so that that question does not arise.

§ Captain CAZALET
Suppose that he sold the 1,000 acres on the 1st February, the original owner would only be liable to tax from the 1st January to the 1st February on the 1,000 acres. He cannot be responsible for it after the 1st February, I imagine, or is he responsible for the whole year?

§ Sir T. INSKIP
It is impossible to discuss an Amendment which the Solicitor-General has not yet put down. I only wish it were possible, as on these occasions it used to be possible, to get the statement that we could discuss it on Report, but that is too much to expect. At any rate, we shall get the Amendment put on the Paper. The Solicitor-General may have expounded aright the Clause as it stands. Taking the case of the division of the unit in February, he says that everybody must wait until the following January at least, and that only then will the alteration be made. My right hon. Friend's Amendment contemplates procedure being taken immediately upon the division of the land unit in order to get the necessary entries made, so that at the earliest possible moment the new land units may be on the register. It may be that the Solicitor-General will say that this Amendment does not fit in with the opening words of the Clause, but will he be good enough to consider, in connection with his Amendment, whether it is not desirable to put in words which will enable the owner of the land unit that has been divided to get rid of his liability as early as possible? That is why we 1240 want some such words as "shall thereupon proceed to make the necessary entries" put in here. If the Solicitor-General will consider that aspect and try to meet us as far as possible in anything that we put down, we can withdraw the Amendment.

§ Sir W. MITCHELL-THOMSON
On that understanding, I beg to ask leave to withdraw the Amendment.