§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Sir F. Soskice
I should be glad if the Solicitor-General would give us a short explanation of the purport of this Clause. I have assumed that the object of the Clause is to deal with certain matters which arise from a certain case known as the St. Aubyn's case which went to the House of Lords, and that the provision in subsection (2) is to deal with the opinion formed by their Lordships that the payment to a company in return for shares does not constitute a transfer within the meaning of Section 46 of the Finance Act, 1940. I assume that the other subsections are to make certain amendments to prevent double taxation which might otherwise ensue, but perhaps the Solicitor-General will explain the matter to us.
§ The Solicitor-General
The right hon. and learned Gentleman is quite right about the first part of this Clause. It does refer to the decision in the St. Aubyn's case. The right hon. and learned Gentleman will remember that it was there stated that a gift of money did not come within the meaning of a transfer of property, and that, of course, left a loophole in the operations of the Act. The first part of this Clause is inserted to correct that defect.
Subsection (3) is more complicated and is intended to be a relief provision. Great difficulty has been experienced, I understand, in the acquisition of businesses, because prospective purchasers of private companies have not been able to find out whether they would be taking on a contingent liability under Section 46 of the Finance Act, 1940, and the Revenue could not give them any information or guidance on that point. It is hoped, if this Clause passes, that the Revenue may be able to give some forecast which will be of use in facilitating legitimate transactions. The effect of subsection (3) is 1201 to allow the deduction of the actual consideration paid for the shares sold or the value of the shares sold at the date of death, whichever is the greater, and that gives a certain amount of precision to the calculations, which should be of general assistance and should not result in any appreciable effect upon the Revenue.
§ Clause ordered to stand part of the Bill.