CLAUSE 42.—(Gifts inter vivos, etc.) (Hansard, 15 July 1946)

§ The Solicitor-General
I beg to move, in page 36, line 8, to leave out "and two years."
This and the succeeding Amendments deal with a point made by the hon. Member for Twickenham (Mr. Keeling) which the Chancellor of the Exchequer accepted in principle during the Committee stage. Clause 42 is the Clause which deals with gifts inter vivos and extends the period from three years to five years in the case of ordinary gifts 997 and one year to two years in the case of charitable gifts. The argument addressed to the Committee by the hon. Member for Twickenham was that the period should not be extended in the case of charitable gifts. My right hon. Friend, after having heard the arguments, thought that a case was made out for that, and undertook, if the hon. Member for Twickenham would withdraw his Amendment, to put down an Amendment suitably worded on the Report stage. This is the first part of that Amendment, and I ask the House to approve it. What it does is to remove charitable gifts from the scope of Clause 42.

§ Captain Crookshank
We are very grateful to the Government for having done this. It puts the position back exactly where we were when we started—

§ Mr. Dalton
As regards charities.

§ Captain Crookshank
As regards charities, and as regards the other cases in which the five or three years have run out. But what is interesting to those who have studied these things is the fact that in Committee the Amendment of the hon. Member for Twickenham (Mr. Keeling) was to leave out "and two years," and here the Amendment of the Chancellor of the Exchequer is to leave out "and two years."—[An HON. MEMBER: "There are other Amendments."] I am speaking about the one on this Clause. I want to call attention to the fact that when the Solicitor-General then said that they felt in a position to accept the principle of the Amendment, he went on to say: We are satisfied that it would be right to continue with the period of one year, in the case of charities. I ask the hon. Gentleman opposite to withdraw the Amendment to give us an opportunity to make quite sure that we get the correct wording for the Report stage and to ' vet ' the wording he has used in his Amendment."—[OFFICIAL REPORT, 24th June, 1946; Vol. 424, c. 810.] The words in the Amendment were "and two years," and the result of the further consideration and the vetting is to prove that he was right in the beginning.

§ Mr. Assheton
I beg to move, in page 36, line 22, at the end, to insert: (2) Where by virtue of this Section and of the enactments mentioned in the Tenth Schedule to this Act as amended by such Schedule any property taken under a gift inter vivos or such other transaction as is referred to in the foregoing Subsection is included as property passing on the death of a deceased person the amount of the estate duty (if any) payable in respect of the value of such properly shall be reduced by the amount of the stamp duty paid upon the conveyance or other disposition by which the gift of or other transaction relating to such property was effected. This is a small point but I think quite an important one, and the matter is not very controversial. The alterations which have been made to the law in Clause 42, dealing with gifts inter vivos, have resulted in the chance of there being some hardship in the case of those who have made gifts inter vivos which have not been completed before the end of the three years. To take an example, suppose some four years ago a man made a gift inter vivos and at that time the property was transferred and a duty of one per cent. was paid on the transfer. Supposing that particular man dies during the course of this year, and duty has to be paid on the estate, the one per cent. Transfer Duty would have been payable in relation to that particular transaction as well as the Estate Duty on the whole amount, and this Amendment merely proposes that in such circumstances the ore per cent. which has already been paid should be accounted, as it were, as a contribution towards the total Estate and Legacy Duties which are due. In view of the changes made under this Bill, and the fact that those who have made gifts of that kind could not possibly have known of them, it is only reasonable that the right hon. Gentleman should accept this Amendment.

§ The Solicitor-General
We feel on this side of the House that there is no ground at all for this Amendment. Supposing, instead of transferring the gift as a gift inter vivos, the donor had retained it as part of his estate until he died and had willed it by his will, the position would be that Stamp Duty would have to be paid on the transfer to a beneficiary. Estate Duty, of course, would have to be paid in either case. Also the beneficiary would 999 have to pay Legacy Duty. There is no possible reason why, in the event of a gift not being invalidated, there should be any exemption in the case of Stamp Duty. Stamp Duty is payable in either event, and it does not make the least difference as a matter of commonsense whether the gift is transferred while the donor is living, or whether he leaves it as part of his estate. There is no reason why in either case it should be forgone by the Revenue.

§ Mr. Assheton
Before the hon. and learned Gentleman sits down, is it not the case that the one per cent. Legacy Duty or Succession Duty would be payable as well as the Estate Duty in the event of the testator dying? That seems to me to invalidate the argument which he has put forward.

Hon. Members
Answer.

§ Captain Crookshank
I hope the Solicitor-General will answer that conundrum.

§ The Solicitor-General
May I speak again, Mr. Speaker—

§ Captain Crookshank
Before the hon. and learned Gentleman does so, may I ask him this question? The giver having died before the expiration of the free period for gifts inter vivos, the gift falls to be considered as part of his estate, but supposing it is to be given to the same person as received the gift inter vivos, there is no question of Stamp Duty being paid the second time, is there? That is what is not quite clear in what the learned Solicitor-General said, and it was to safeguard that position that I think my right hon. Friend rose. Does it have to be paid a second time?

§ Captain John Crowder (Finchley)
I want to ask this question: If somebody made a trust for his children during 1945, the law was that he only had to live three years to avoid paying Estate Duty and Succession Duty. Since, however, this Finance Bill enacts that he has to live five years, this is really retrospective legislation. Will he, therefore, have to live five years in order to avoid paying full Stamp Duty and Succession Duty?

§ The Solicitor-General
I cannot really see what the question put by the hon. and gallant Member for Finchley (Captain 1000 Crowder) has to do with Stamp Duty. In the case of a gift, whether it is made before the five year period, or during the five year period, or as part of a testamentary disposition, Stamp Duty has to be paid on the transfer. Therefore, it does not make the slightest difference whether or not the gift forms part of the donor's estate for the purposes of Stamp Duty. No argument which I have heard, either by the mover of the Amendment or by any other hon. Member, has disclosed any case for the Amendment. Therefore, I ask the House to reject it.