HC Deb 02 July 1958 vol 590 cc1513-5

For the purposes of all the enactments relating to estate duty, in estimating the value of the property passing on death, and the property deemed to pass on death, there shall be deducted the costs actually incurred within two years of the death in disposing of the property.—[Mr. Stevens.]

Brought up, and read the First time.

Mr. Geoffrey Stevens (Portsmouth, Langstone)

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

This Clause deals with the deduction of expenses which are incurred in the realisation of property in the event of the death of a person. I know this is really a very wide subject and that one has in mind, for example, that shares which are in the possession of the deceased person are valued as at the Stock Exchange price, if there is one, at the date of death and that when realisation takes place they may realise a lesser or, indeed, a larger sum. It seems clear that where, for example, a house is concerned the question of the estate agent's charges and that kind of thing are an inevitable expense of realising that property, and it seems unrealistic that death duties should be payable on the gross sum and not on the gross sum reduced by the amount of these essential expenses.

I mention only house property, but there are many other forms of property similarly affected. The logic and reasons seem clear, and I cannot see any argument against them. For that reason, I hope my right hon. Friend will be able to accept the new Clause which I now propose.

Mr. Maudling

I have approached this new, Clause with considerable sympathy, but having seen all the arguments against it, I am convinced that it would not be right for the Committee to accept it. I think it is an argument of metaphysics—what is the true value of an asset—whether it is the market value or the market value after deduction of the necessary expenses of realising—and I will not enter that argument now. But there are other objections to this proposal. There is the objection of principle: that less duty would be paid in a case where the asset is sold than in a similar case where the asset is retained. That is an objection to the Clause as drafted.

Secondly, there is the practical objection, that there could be no income in the administration of any estate until at least two years have elapsed since the death, unless all the property liable for duty on the death had already been sold. Thirdly, there is the objection of cost to the revenue, of which I cannot give an exact figure, but which I am assured could not be negligible, and in so far as it brings a real benefit it must bring a real loss to the Exchequer.

Finally, there are undoubtedly real, practical difficulties in giving such a reduction in a manner that would be fair between taxpayers. One could only use a rough, arbitrary allowance, representing a rough average, and this would be very difficult to arrive at.

So, certainly in the case of the Clause as drafted, there are difficulties of principle and practice which lead me to advise the Committee not to accept it. I would that I could say that my right hon. Friend will give the matter further consideration, but he does not feel that he could go even that far at the moment.

Speaking personally, I would be delighted if my hon. Friend at a subsequent date could find stronger arguments in support of this proposal, because I should very much like to be convinced that it was the right thing to do—but I am not yet entirely convinced, on balance.

Mr. Stevens

So far as my right hon. Friend's first argument goes—that the expense is not suffered if the asset is not sold—I should have thought that that was one of the things that Punch used to call a blinding glimpse of the obvious; and the new Clause does not refer to such a case. It refers to cases where an asset is sold and the expense incurred.

I did not follow his point about averages. Once again, the Clause deals only with cases where expense is incurred. However, I heard him say that his right hon. Friend's mind is not entirely closed to this matter. I entirely agree that in drafting a new Clause it is very easy for an amateur such as myself to go wrong, and in the hopes that in the not far distant future the Chancellor will be able to draft a new Finance Bill Clause incorporating the principle underlying this one, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.