HC Deb 05 July 1960 vol 626 cc369-72
Sir Henry d'Avigdor-Goldsmid (Walsall, South)

I beg to move, in page 52, line 11, at the end to insert: (e) the ceasing of any direction or power made or given in any instrument by way of voluntary settlement inter vivos executed on or before the fifth day of April, nineteen hundred and sixty, to the effect that the income of the property thereby settled should or might be accumulated for a period not exceeding five years from the date on which the settlement took effect. This is the Estate Duty Clause which grants modification in respect of transfers made inter vivos which would previously have been caught owing to the death of the transferror taking place before the end of the five-year period. Those modifications are detailed in the first part of the Clause and there is no need for me to repeat them.

The Amendment takes up a point made by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) when this Clause was discussed during the Committee stage proceedings. My hon. Friend made a speech on the Motion, That the Clause stand part of the Bill, indicating that there are a number of settlements which provide that the income from trust funds shall be accumulated for five years or the life of the settlor. It seemed reasonable then to my hon. Friend and it seems reasonable to me now that such accumulated income should be treated in the same way as the remainder of the contents of the estate in the event of death occurring within the five-year period subject to the modifications in the first subsection of this Clause.

In answering my hon. Friend the Financial Secretary said: The point is a fair one, but the proposal…goes rather beyond the scope of the Clause.—[OFFICIAL REPORT, 31st May, 1960; Vol. 624, c. 1289.] I hope that by raising this matter now my hon. Friend has had time to think it over and perhaps to see how far it does go beyond the scope of the Clause and whether it could not be usefully included within the scope of the Clause.

To most members of the legal profession it would seem reasonable to treat all parts of an estate for the purposes of Estate Duty on the same basis and not to make this differentiation between one part of the estate and the accumulated income which forms part of it. As the hon. and learned Member for Kettering (Mr. Mitchison) pointed out, it appears that any Amendments drafted by members of the accountancy profession have much chance of commending themselves to the Government. I am not a member of that profession but my hon. Friend the Member for Langstone is, and so in that hope I commend this Amendment to the House.

Sir E. Boyle

As my hon. Friend the Member for Walsall, South (Sir H. d'Avigdar-Goldsmid) has said, this matter was raised during the Committee stage discussions by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). On that occasion I said that I would look at the point. It seems to me to go rather beyond the scope of the Clause. I am sorry to break the entente which existed so happily between myself and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) on Clause 40, and also the entente which I hope we shall have on another Clause which appears later on the Notice Paper.

On this occasion I feel bound to adhere to the view expressed in Committee that this proposed Amendment goes beyond the scope of the Clause and, quite frankly, I cannot advise the Committee to accept it. In the first place, the drafting of the Amendment seems to have gone rather awry. If we look at subsection (1) we find that it works by looking at the length of time between the relevant event—for example, the making of the gift—and the death of the donor. Subsection (2) gives a list of relevant dispositions and events.

This Amendment is tied to that list but, as drafted, it would mean that the relevant date would be the date of the death of the testator, so obviously no time would elapse between the relevant event and the death of the testator. For that reason it is not satisfactory as it stands, but, apart from the drafting, I adhere to the view that this Amendment goes beyond the scope of what we are trying to do in this Clause.

Of course, whenever any new relief is introduced in our Estate Duty law, a number of people will find that they have arranged their affairs in the past in a way which does not now afford them the benefit of the relief. I should have thought this is an inevitable risk and one has to be careful about mitigating the hardship by a special and artificial relief. I also think that there would be something anomalous in allowing the relief when the period of accumulation is five years and the settlor dies after three years, but not when the period of accumulation is ten or fifteen years and the settlor dies after three years.

For all these reasons, the unsatisfactory drafting, the fact that I think it goes beyond the scope of the Clause, and I feel the principle would be doubtful anyway as I think the case is outside the scope of the Clause, this is not an Amendment which my right hon. Friend could accept this year.

Mr. Powell

I feel that the point my hon. Friend the Financial Secretary has made on the drafting of this Amendment must, of course, be immediately admitted. I also submit to the Committee that he is probably on strong ground in saying that in order to meet this point fully and logically one would have to go beyond the scope of the present Clause. He referred, for example, to accumulations over a longer period than five years. Nevertheless, I put this to him. Here is something which he himself in Committee described as a fair point and I did not understand him this evening to disagree with my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) in his contention that these accumulated sums added to the estate were part of the estate and should be treated in the same way.

One appreciates the virtual impossibility, especially in view of the somewhat wider scope of the Amendment, of dealing with it now at this stage of the Bill, but I venture to hope that before we part with it my hon. Friend may indicate that this is something which, prima facie, needs correction and will be borne in mind for a future Finance Bill.

Sir E. Boyle

I wish to add that I said, I agree, in Committee, that this is certainly a fair point for consideration. So indeed it is, but I could not this evening give any undertaking about acceptance of this principle for a future year or go beyond what I have said, although of course my right hon. Friend will take note of the strong feelings which exist in this matter.

10.0 p.m.

Mr. Glenvil Hall

Are there strong feelings on this matter? I should have thought that the concessions made in this Bill were pretty good, that we ought to accept them for what they are, and then see from experience what happens during the coming year. I hope that the Financial Secretary will not make any promises for further Amendments next year or in the foreseeable future. Let us see how we get on. The concessions already made by the Chancellor of the Exchequer are pretty far-reaching, and I think we ought to accept them in that spirit, and, having got three-quarters of the cake, not ask for the whole.

Sir H. d'Avigdor-Goldsmid

In view of the views that have been expressed, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.