HC Deb 19 June 1935 vol 303 cc517-9

Section thirty of the Finance Act, 1922 (which relates to residuary legacies to charitable institutions), shall have effect subject to the following amendment:— For the words "the expiration of the said year," there shall be substituted the words "the date of the death of the testator."—[Mr. H. Williams.]

Brought up, and read the First time.

12.13 a.m.


I beg to move, "That the Clause be read a Second time."

I hope that I shall have better luck with this Clause. In 1922 an Amendment was made which provided that if an estate took more than 12 months to wind up and the residue of that estate was going to a charity the charity should be exempt from the Income Tax payable on the residue at any period after the expiration of 12 months from the period when the residue was handed over to the charity. The executors were given a year, and during that year the estate was treated as a corporation subject to Income Tax. The residue belonged to a charity and the charity paid Income Tax in respect of the income arising during a year after the death of the testator.

Let us imagine the theoretically perfect conditions, though not perfect for the testator. A person dies and leaves the whole of his estate to a charity. The whole of his estate consists of money in the bank, and therefore there is no problem of realisation. At the earliest conceivable moment after the testator dies the death has been proved, the will has been proved, the money is handed over to the charity, and theoretically that might happen within 48 hours after the death of the testator. The charity would get the income practically from the date of the death of the testator without having to pay any tax on the income. If delay arises, the charity loses in respect of the income from the first year to the extent of 4s. 6d. in the pound. The Exchequer is robbing the charity, it seems to me. I am not blaming the present Chancellor. The system goes back to the year 1922, the year before he became Chancellor, because he first occupied his exalted office in 1923, and the Budget of that year was introduced by the present Prime Minister. The sum involved cannot be very great. I was moved to propose this Clause by a chartered accountant in my constituency who has had a number of experiences where charities have suffered an unnecessary grievance.

12.15 a.m.


The hon. Member said that he hoped he would have better luck with this Clause than he had with the last one. I do not know what he means by luck. He said, in moving the last Clause, that he hoped it would not be accepted. His hopes have been fulfilled, and I am quite sure that they will be fulfilled again. When he studies the wording he will be glad that the Clause should not be accepted, because it will leave standing the words where residue is not paid from the charity until after one year of the death of the testator, and will then go on to insert what he proposes. The result would be that, where an estate is wound up 13 months after the death of the testator, it would have the effect he desires, but where it is wound up before the charity would not be entitled to relief at all.


If that be the case, the Clause is out of order.


On that point of Order—


The proposed charge does not now exist. Therefore the Clause is out of order.


Because the Financial Secretary gives an interpretation of a Clause, which I think is inaccurate, that does not establish the fact that it is out of order.


It appears to me that it might impose a charge, and that being so I shall have to withdraw the Clause from the Committee.

Ordered, "That the Chairman do report Progress, and ask leave to sit again."—[Captain Margesson.]

Committee report Progress; to sit again To-morrow.