§ Sir Alexander Russell (Tynemouth)
I beg to move, in page 27, line 11, at the beginning, to insert:The last preceding Section shall have effect in the case of all persons dying after the twenty-seventh day of Tune, nineteen hundred and forty, but save as aforesaid.The object of this Amendment is to extend the provisions of Clause 39 of the Bill, to the case of all persons dying after 27th June, 1940, which was the date on which the Finance Act, 1940, became law. Clause 39 amends Section 44 of the Finance Act, 1940. That Section was directed against avoidance of Estate Duty, 750 which took the form of giving a lump sum during the life of the donor to a relative, in exchange for a life annuity calculated actuarially. On the donor's death, no charge to Estate Duty arose in respect of the cessor of the annuity, and the gift, being for full consideration, was also not chargeable. The remedy provided by the Section was, in such a case, to make the whole of the gift chargeable to duty on the donor's death. The Section, however, made no provision for any deduction in the case in which the annuity payments to the donor, up to the date of his death, exceeded the income earned by the property given by him to the relative over the same period, although in fact, such an excess is, clearly, in substance, a refund of part of the gift by the relative and should not, therefore, be charged to duty as part of the gift on the donor's death. Clause 39 makes provision for the deduction of this excess from the gift but its scope is limited by Clause 40 to the case of persons dying after the date on which this Finance Bill becomes law.
This limitation, I suggest, is clearly unjust, for it will exclude from relief all past cases in which duty has been charged, ever since the date of the passing of the Finance Act, 1940, on a basis now admitted to have been wrong. The remedy should be dated back to the date on which the wrong basis was first enacted, and I hope, therefore, that the Government will see their way to accept my Amendment, which will have that result.
§ Sir J. Anderson
The hon. Member for Tynemouth (Sir A. Russell) has explained, quite correctly, the effect of the Amendment proposed and the case for it. The case for it is, quite briefly, that there are provisions in the Bill, as it stands, for correcting any inequity which has existed since the Finance Act, 1940, and it is perfectly logical and quite reasonable that, if the inequity is to be corrected, as we propose, it should be corrected from the date on which it arose. I do not think that any practical difficulty is likely to result, and I recommend the House to accept the Amendment.
§ Amendment agreed to.
§ Bill to be read the Third time Tomorrow.