§ 37. Mr. Peter Freemanasked the Chancellor of the Exchequer whether his attention has been called to Form 15 (17340) M21009/FS185— 10/50— 120,000 J.H.718/24A which states that Estate 1405 Duty is to take the pre-war value of property in certain circumstances at the time of death in accordance with a statement in the House of Commons on 18th May, 1944; whether he is aware that this valuation is not being accepted by the District Valuers Office, who are insisting on the replacement value of the property; and under which of his regulations and at what date this change was made.
§ Mr. Boyd-CarpenterAs there appears to be some misapprehension about the scope of this concession, I think it desirable to give a rather long answer which, with the hon. Member's permission, I will therefore circulate in the OFFICIAL REPORT.
§ Mr. FreemanIs the hon. Gentleman quite satisfied that the designation of the form is not such as to cause any misunderstanding, but to enable people to follow it without difficulty and without any misrepresentation?
§ Mr. Boyd-CarpenterIf the hon. Member had inspected the form before putting down his Question he would have realised that its designation is complete with the words "Form No. 15," and that the various other figures embodied in his Question are simply the printer's code number at the back.
§ Mr. FreemanIs it not a fact that these details are given on the form itself?
§ Mr. Boyd-CarpenterOwing to the fact that the Stationery Office observe the law, they are given in the usual position at the back.
§ Mr. McCorquodaleMay I ask that the hon. Gentleman does not get away with it by blaming the printers?
§ Mr. Boyd-CarpenterI can assure my right hon. Friend that I will always look after printers.
§ Mr. NicholsonWas it a reputable firm of printers?
§ Mr. Boyd-CarpenterAs I understand it, all firms of printers are reputable.
§ Following is the answer:
§ The statutory basis of valuation for Estate Duty is the price which the property would have fetched in the open market at the date of death. In the case of a house owned and occupied by the 1406 deceased at that date this would be the full market value with the benefit of vacant possession.
The effect of the concession announced on 18th May, 1944, in the cases to which it applies, is to exclude from that valueany increase … above the pre-war value in so far as it could only be realised by a sale with vacant possession.
§ The concession does not substitute the pre-war value of property for its value at the date of death. It does not exclude such value as there was in vacant possession pre-war. Nor does it exclude increases of value due to causes other than sale with vacant possession, e.g. a rise in the value of property due to the change in the value of money generally since before the war. The only element of value to be excluded where the concession applies is that which represents the degree to which vacant possession at the date of death inflated value more than it did pre-war; no other factor which would influence the value is to be disregarded.
§ There has been no change in the Board of Inland Revenue's interpretation of the concession, which has from the first been interpreted as described above. As to the method of valuation, it would be inappropriate to lay down a formula to be applied in all cases in which the concession is available, since the value of the property with the benefit of the concession is capable of being arrived at in a variety of ways. There is, however, no reason why regard should not be had in appropriate cases to cost of replacement less depreciation as one of the factors in estimating value.