§ (2) No person may by any will, settlement or other dispositions dispose of any property in such manner that the income thereof shall be wholly or partially accumulated for any longer period than one of the following, that is to say—
- (a) the life of the grantor; or
- (b) a term of twenty-one years from the death of the grantor; or
- (c) the duration of the minority or respective minorities of any person or persons living or in utero at the death of the grantor; or
- (d) the duration of the minority or respective minorities of any person or persons who, under the terms of the will, settlement or other disposition directing the accumulation, would for the time being, if of full age, be entitled to the income directed to be accumulated.
§ (3) In every case where any accumulation is directed otherwise than as aforesaid, the direction shall, save as hereinafter provided, be void, and the income directed to be accumulated shall, so long as the same is directed to be accumulated contrary to this section, go to and be received by the person or persons who would have been entitled thereto if such accumulation had not been directed.
§ (4) For avoidance of doubt it is hereby declared that, in the case of a settlement or other disposition inter vivos, a direction to accumulate income during a period specified in paragraph (d) of subsection (2) of this section shall not be void, nor shall the accumulation of the income be contrary to this section, solely by reason of the fact that the period begins during the life of the grantor and ends after his death.
§ (5) The restrictions imposed by this section apply to wills, settlements and other dispositions made on or after the twenty-eighth day of July, eighteen hundred, but, in the case of wills, only where the testator was living and of testamentary capacity after the end of one year from that date.
§ (6) In this section "minority" in relation to any person means the period beginning with the birth of the person and ending with his attainment of the age of twenty-one years, and "grantor" includes settlor and, in relation to a will, the testator.—[The Lord Advocate.]
§ Brought up, and read the First time.1409
§ 10.57 p.m.
§ The Lord Advocate (Mr. William Grant)
I beg to move, That the Clause be read a Second time.
The Clause gives effect to an undertaking which I gave slightly halfheartedly in the Committee stage. It is tied up with a later Amendment to delete Clause 5.
During the Committee stage the then hon. and learned Member for Paisley, Mr. D. Johnston, suggested that the provisions of the Accumulations Act, 1800, should be re-written in the Bill and not merely referred to. That was done in England about 35 years ago. On consideration, I felt that it would be easier for those who have to use this Bill when it becomes an Act that we should write out in modern language what the Accumulations Act, 1800, says and put in in Subsection (4) what really is a simpler and clearer statement than what we have in Clause 5 at present. I shall not now deal with Subsection (4) because we dealt with the substance of it in Committee.
§ Mr. Thomas Fraser (Hamilton)
I am very grateful to the Lord Advocate for bringing forward the new Clause.
I think that I should correct his memory. He said that in Committee the Amendment was moved by Mr. Douglas Johnston, as he then was, the Member of Parliament for Paisley. His memory is at fault. I had the honour of moving it because by that time Mr. Johnston had become Lord Johnston and was a judge of the Court of Session.
§ Mr. Fraser
Mr. Johnston, as he then was, raised the matter in the debate in relation to the principle of the Bill. I hope that I made clear during the Committee stage that the long Amendment which I moved was not the child of my poor little brain but the child of the brain of the then hon. Member for Paisley which I had merely adopted when its parent was disabled from continuing in membership of this House.
The effect of the Clause, as I understand it, is to incorporate in the Bill the words that were used in the English Act of 1925 and so enable us to get rid once and for all in Scotland of the Accumulations Act, 1800, which was repealed for England some 36 years ago 1410 and which can now be repealed for Scotland by making this Amendment. It will thus be certain that persons in Scotland who become liable for Estate Duty are in an equally favourable position as people similarly placed in England, so that Scottish people might get the same benefits from tax avoidance as English people.
The net effect of the new Clause will be to reduce the amount of money collected by the Chancellor of the Exchequer in Estate Duty and, goodness knows, if we carry this process much further we shall have abolished Estate Duty altogether.
§ Question put and agreed to.
§ Clause read a Second time and added to the Bill.