Clause 28.—(PRIVATE RESIDENCES.) (Hansard, 7 July 1965)

§ Mr. Deputy-Speaker (Dr. Horace King)
The next Amendment selected is No. 61. Amendment No. 60, in page 30, line 20, at the end to insert: or except for any time during which he has been unable to occupy the residence solely by 1740 reason of the terms and conditions of his employment is not selected, but may be discussed with Amendment No. 61.

§ Mr. MacDermot
I beg to move Amendment No. 61, in page 30, line 30, to leave out subsection (4) and to insert: (4) For the purposes of subsections (2) and (3) of this section—

(a) a period of absence not exceeding three years (or periods of absence which together did not exceed three years), and in addition

(b)any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the United Kingdom, and in addition

(c) any period of absence not exceeding four years (or periods of absence which together did not exceed four years) throughout which the individual was prevented from residing in the dwelling-house or part of the dwelling-house in consequence of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties,

shall be treated as if in that period of absence the dwelling-house or the part of the dwelling-house was the individual's only or main residence if both before and after the period there was a time when the dwelling-house was the individuals only or main residence. In this subsection "period of absence" means a period during which the dwelling-house or the part of the dwelling-house was not the individual's only or main residence and throughout which he had no residence or main residence eligible for relief under this section. This Amendment honours an undertaking given in a debate raised in Committee by an Amendment put down by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman). It extends the period for which a person may be absent from his residence and still enjoy exemption from liability to Capital Gains Tax in respect of that residence. The Amendment falls into two parts. The first deals with the case of the person absent abroad by reason of employment abroad, and the second deals with the person absent by reason of employment in some other part of the United Kingdom.
The Amendment has a threefold effect. First, it proposes that there shall be ignored in determining whether or not the house has been occupied throughout as a principal private residence any period or periods of absence not exceeding three years in total, without any conditions at 1741 all. That reproduces what is already in the Bill. Second, and in addition, it proposes to ignore any period of absence throughout which the individual worked in an employment or office of which all the duties were performed outside the United Kingdom. Third, and also in addition, it proposes similarly to ignore any period of absence not exceeding four years, that is, four years on top of the basic three and whether at one time or as a total of separate years, during which the individual could not live in his house either because of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to live elsewhere, that condition being one reasonably imposed in order to secure that the individual could effectively discharge the duties of the employment.
All these periods of absence are subject to one general condition, that before the period of absence and after it the house in question has to be occupied by the individual as his principle private residence. The conditions are aimed generally at trying to provide for the genuine case of the person who has bought a house as his own residence but, because of the nature of his employment, has not been able to live in it for quite prolonged periods, but they are framed in such a way as not to open the door to widespread abuse of what, I think, has been recognised to be an extremely favourable exemption given to the householder.

§ Mr. Chapman
I do not understand the condition of having to reside in the house before and after. The whole point is that he will not reside in it afterwards. He will have decided to sell the house. If a man is a resident keeper of a children's home and he has to live on the premises, keeping his own house for a while and then deciding to sell it, there will be no afterwards in which he goes back to live there. So the concession is meaningless for him.

§ Mr. MacDermot
The man must decide in this situation. If he takes an employment which will lead to his permanently wanting to give up the house, then he can sell the house at that stage and enjoy the benefit of the exemption. But if he intends to return to live in it, he can be 1742 away from it for periods of years in total and still enjoy the exemption.
With regard to the case of the man who goes overseas, I have taken advice on the point raised in an Amendment tabled by the hon. Member for Barkston Ash (Mr. Alison), and it may save time if I tell him at this stage that we are advised that the terms of the new subsection (4, b) are wide enough to cover any period during which such an individual may visit this country either on leave or for purposes incidental to his employment, and he will still be entitled to the benefit of the exemption even though during those periods he does not occupy the house which he owns.

§ Mr. Maxwell-Hyslop
I am doubtful about the accuracy of what the hon. and learned Gentleman says because of the words: all the duties of which are performed outside the United Kingdom". If the man returns to this country on duty for a meeting, by definition all the duties are not being performed outside the United Kingdom. Would not paragraph (b) then fall?

§ Mr. MacDermot
I am assured that the same point arises under the Income Tax Acts under Schedule E where it is necessary to determine whether the duties of an office or employment are performed outside the United Kingdom, and it has been determined for that purpose that visits of the kind that I have indicated are not regarded as being the perfomance of duties within the United Kingdom, and the same construction and interpretation will be applied to the Amendment.

§ Mr. Maxwell-Hyslop
But the hon. and learned Gentleman quoted from the Income Tax law the phrase "the duties", not "all the duties". I am questioning the drafting of the Amendment—"all the duties". "All" is totally embracing. One cannot have an exception to "all" and still include the word "all".

Hon. Members
Answer.

§ Mr. Deputy-Speaker
Is the hon. and learned Gentleman proposing to reply to the hon. Member for Tiverton (Mr. Maxwell-Hyslop)?

§ Mr. MacDermot
The hon. Member for Ormskirk (Sir D. Glover) rose and I thought I might answer the two hon. Gentlemen together later.

§ Sir D. Glover
I should like to put a question to the hon. and learned Gentleman on the point raised by the hon. Member for Birmingham, Northfield (Mr. Chapman) about the occupation of the residence on the person's return. I understand that if he comes home and decides then to take a job and sells his house, it is all right. But suppose that he decides when he is overseas that he will take a job and decides before he comes home to sell the house. Is the man covered by this provision? I do not think he is.

§ Mr. Chapman
Yes, he is.

§ Mr. Alison
I thank the Financial Secretary for his reassurance on my Amendment to the Chancellor's proposed Amendment. Mine was meant to be a probing Amendment. It is satisfactory if we can understand that the temporary termination of a period of absence does not imply termination of the period of absence in the full legal sense. On that assurance, I shall not press my Amendment.
With regard to our Amendment No. 60 in respect of extending this general principle of definition to the appropriate place in the original Bill, it simply seeks to reinterpret the concept of the period of the ownership or residence of the house which entitles one to escape Capital Gains Tax. It seeks to reinterpret it within the principle of a period of absence which is now held under the Amendment to be co-terminous with a period of ownership. I hope, therefore, that he would be happy to accept that Amendment. May I ask his views on that?

§ Mr. Maxwell-Hyslop
On a point of order. I was under the impression that I intervened in the Financial Secretary's speech. Are we now at liberty to catch your eye, Mr. Deputy-Speaker, while we are waiting for the hon. and learned Gentleman to continue his speech?

§ Mr. Deputy-Speaker
I was at first under the same impression as the hon. Member, but what the hon. Member did was to intervene at the end of the 1744 Financial Secretary's speech and, unfortunately, he forfeited his right to speak, because an hon. Member may speak only once to a Question on Report, unless he gets the leave of the House to speak again. It is possible the hon. Member may get the leave of the House. I do not know.

§ Sir D. Glover
On a point of order. I think it will be in the recollection of the House that the Financial Secretary said he was going to wait to reply to all the points, and that he did not indicate that he had terminated his speech.

§ Mr. Deputy-Speaker
That was my impression, too, but I must judge by what actually happened, and the Financial Secretary made no attempt to continue his speech, so that since then we have had two speeches, interventions.

§ Mr. Chapman
My hon. and learned Friend very kindly said he was moving the Amendment in response to one I moved in Committee. I should simply like to thank him very much indeed for trying to meet the points I raised at that time. Although the situation is extremely complicated, especially when we are trying to revoke a very complicated subsection and to substitute for it another very complicated one, the net effect, as I understand it, of the whole complication comes to this, that practically all the cases I raised in Committee are now satisfactorily dealt with, or will be when this Amendment is made to this Clause. So although I cannot follow in precise detail every one of the satisfactions which have, apparently, by this Amendment, been accorded to me, I nevertheless express my thanks, and I shall try in the years to come to understand how this is so. I am very grateful to my hon. and learned Friend.

§ Mr. Maxwell-Hyslop
May I ask leave to put a further point?

§ Mr. Deputy-Speaker
If leave is given by the House.

Hon. Members
Go on.

§ Mr. Maxwell-Hyslop
The second point which I wanted to raise is, what would happen in the case where somebody comes back from abroad and wants to reoccupy the house but cannot do so because, by reason of congestion in the 1745 courts, the decision giving recovery of access and ability to occupy the house is delayed so long that it comes outside the sever-year period? This is a very real point. The hon. and learned Gentleman the Financial Secretary will know far better than I of the delays in the county courts or the High Court to which it may be necessary to go in the near future, and it may well be that a person coming back from abroad cannot reoccupy his own house within the seven-year period because of the delays which are not due to defective intent on his part or lack of good faith on his part but just to the queue in the process of the courts. We should be most grateful if we could have a specific answer to that, and also to my earlier point.
I do not see how it can be claimed that paragraph (b) in the proposed new subsection meets it. It says specifically all the duties of which were performed outside the United Kingdom. If some of the duties are performed inside the United Kingdom, my reading of it, as a non-lawyer—and, funnily enough, the courts interpret the law as a non-lawyer would interpret it, that is to say, as it actually reads, more often than lawyers in this House do—is that by visiting the United Kingdom once on duty one immediately deprives oneself of the benefit of paragraph (b). We would be grateful if the hon. and learned Gentleman would advise us on these points.

§ Sir Edward Brown (Bath)
I should like to congratulate the Chancellor upon the Amendment because it does a great deal to relieve problems in my constituency, wherein I have a number of Admiralty servants who from time to time go overseas.
I come back to the point about the word "all," because when these Admiralty people return from overseas they will not necessarily come back to the base. They will probably be posted somewhere else for three or four months before they come back to the home base. The inclusion of the word "all" seems to make all the difference in the world, and I should like the hon. and learned Gentleman to reconsider the position, because under the terms of the Amendment a man will suffer a disqualification if on returning from Africa he is posted to, say, 1746 Portsmouth for three or four months instead of returning direct to his home base.
I go on to the point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) about obtaining possession of the house, and the danger of the seven-year period. The Minister of Housing and Local Government has recently introduced a Bill which cuts right across this Amendment. I therefore ask the Financial Secretary to refer the Amendment to his right hon. Friend so that he can make some regulations covering the people to whom I have referred.

§ Mr. MacDermot
With your leave, Mr. Deputy-Speaker, and that of the House, I should like to answer the questions which have been put to me. My answer to the hon. Member for Tiverton (Mr. Maxwell-Hyslop) remains the same as before. The only reason why I delayed answering was that the hon. Gentleman asked me the same question twice within a minute or two, so I thought that I would seek further advice before repeating the answer which I had already given. I am in a position to inform the House that the word "all" makes no difference. The simple reason is that if the courts construe the words duties performed outside the United Kingdom to include a visit to this country, a visit on leave from service abroad, or a visit for the purposes of that employment, a temporary visit back to the head office, or something of that kind, the word "all" makes no difference because those continue to be embraced in the words duties performed outside the United Kingdom". The second point which the hon. Gentleman raised, and it was also raised by the hon. Member for Bath (Sir E. Brown), concerned the position of the person who goes abroad and then, for one reason or another, there is some delay when he returns before he gets possession of his house. One suggestion was that there might be delay in getting possession through the county court, and the other was that he might be posted to some other place for a few months. I think that hon. Gentlemen have failed to realise that in the case of the person who serves abroad there is no time limit. The seven-year period does not apply to him. It does not 1747 matter how long he is away, provided that it is the result of the visit abroad. There is a provision in the Bill covering that.
In the case of a person who is away from his own home in connection with employment in some other part of the United Kingdom where the seven-year period applies, my answer is that when an owner wants to recover possession for his own occupation he does so under the terms of the Rent Act. I am assured, and I think that the assurance has been given to the House, that the Lord Chancellor is taking steps to see that the delays which have been occurring in the county courts are shortened and that the procedure is speeded up.
A person who is seeking to take advantage of the provisions of the Bill and who is intending to recover possession must take the necessary steps to set in motion proceedings for recovery so as to recover possession within that period, and, knowing county court judges, I should have thought that the factor that he was required to recover possession within the seven-year period would be borne very much in mind in deciding whether or not it was reasonable to grant an order for possession.

§ Mr. Graham Page
This is a very real point. I was going to interrupt the Financial Secretary on it, but now that he has sat down I ought to make the point by way of a short speech. There is a grave possibility of delay, perhaps just at the end of the seven-year period. The Financial Secretary said that his noble Friend the Lord Chancellor had seen to this, but there has been six months since the Protection from Eviction Act, when we were promised that something would be done about remedying the delays in the courts, and nothing has yet been done. Now, the information that we are receiving from the county courts is that even when expedition is applied it is taking three or four weeks to get matters before the court. It may be just at the end of this seven years that a man is delayed for two or three months in getting possession.
In the Amendment the only delay that is taken into account is that which arises by reason of a person's work, or some requirement of his employment. There is no provision for the unfortunate man 1748 who is delayed in getting possession of his dwelling. This matter should be dealt with, either by taking some real steps, which the Government have not yet taken, to hasten possession proceedings in the courts, or else by eventually amending the Clause.
The Government may well have dealt with this matter had they accepted an anticipatory possession summons form of procedure, but they have discarded this in connection with another Measure. It would have been a help if it had been laid down in this Bill. I hope that the hon. and learned Member will reconsider the question.

§ Mr. Deputy-Speaker
Order. The hon. Member has addressed the House on Report. He has exhausted his right to speak unless he can get leave of the House to speak again.

§ Mr. John Harvey (Walthamstow, East)
I do not want to detain the House on what may be a technicality. I want to revert to the word "all". My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was right in saying that the courts sometimes tend to take the simplest views of these matters. Let us suppose that a manager working abroad for a British firm comes home periodically to report on the job he is doing. If we turned the argument upside down, and this manager for some reason or other wanted to prove that he had performed some duty in this country by coming here to report, I would think that he would probably be able to do that. If the Financial Secretary says that this form of words has been quite acceptable up to now in Income Tax law we can accept it, but it might still not be a bad thing if the hon. and learned Gentleman were to ask the Treasury Solicitor to look at the form of words to see whether, to safeguard all concerned, it should be tightened up a little. We should try to make these things mean what they say when they leave this House.

§ Mr. Alison
If I may speak again, with the leave of the House—

Hon Members
No.

§ Mr. Deputy-Speaker
The hon. Member has not the leave of the House.

§ Mr. Hirst
I am not very clear about this. I apologise to the hon. and learned Member; I admit that this Clause is not one of the parts of the Bill that I understand very clearly—some of which I have studied most carefully—but I cannot understand the point that he made in his speech. It may be that the seven-years' period does not apply in the case of anyone who has been on duty abroad, but I should be grateful to have some elucidation of the position, because I am not alone on these benches in feeling that there is some lack of clarity on the matter.

§ Sir D. Glover
I do not know whether I have any right to speak again, but when I spoke before I thought that I was intervening—

§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
No, you have not.

§ Mr. Deputy-Speaker
Order. There is only room in the House for one Chairman—

Hon. Members
Hear, hear.

§ Mr. Deputy-Speaker
Order. I am afraid that the hon. Member for Ormskirk (Sir D. Glover) has addressed the House. I think he thought that he was making an intervention. I was a little doubtful myself at the time. If he can get leave of the House, he can speak again.

§ Sir D. Glover
If I may have leave of the House—

Hon. Members
No.

§ Sir D. Glover
I only want one minute—

Hon. Members
No.

§ Mr. Deputy-Speaker
Order. I hope that the hon. Gentleman would have leave of the House. This was a clear misunderstanding.

§ Sir D. Glover
Thank you for your ruling, Mr. Deputy-Speaker, and I thank the House for its courtesy.
I want—with the leave from the House—to refer once again to the word "all". I understand what the hon. and learned Gentleman said about someone 1750 who is stationed overseas for a term and comes home on the duty of his responsibility overseas. In other words, as soon as he comes back to this country on a buying mission for the subsidiary overseas, this could generally be said to be part of his service overseas, and he is therefore, performing his duties overseas. But suppose that he was called home by the firm because they had a new process and he therefore spent three months in this country learning the process. There might have been a new invention in the firm and he might have been called home to learn about it. I do not think that the courts would rule that this was part of his service overseas. It would be part of his continuing service with that firm, which might be 25 years' service in this country and four years' service overseas.
The hon. and learned Gentleman ought to have another look at this, because I am not sure that the inclusion of the word "all" does not mean that there are loopholes.

§ Mr. MacDermot
If I have your leave, Mr. Deputy-Speaker, and that of the House, I will answer—for, I think, the third time—precisely the same point. All I can do is repeat the assurance given. We are at the Report stage and nothing can be done now by way of further Amendment. Either the House wishes to accept the Amendment or it wishes to reject it. Having had many questions fired at me on detailed points of interpretation, I have given what I hope is a satisfactory general assurance. If hon. Members want any particular points of construction dealt with in any detail, I must ask them to write to me and allow me to get advice after the matters have been considered with the detailed consideration which would be required. All that I can do at this stage is to state general principles.
The one on which the Revenue will act is that where a person who qualifies under the Amendment and who is serving abroad comes to this country for a visit which is incidental to his employment that will not debar him from relief. Whether or not that would apply to a training course, I would imagine—though it is not for me to decide—that if this course is to enable him to do his job properly overseas that would be treated 1751 as being incidental. That is the kind of detailed point on which I should be glad to write to hon. Members—

§ Mr. MacDermot
Hon. Members need have no fears on this score. I think that I have misled the House about the courts in saying that this interpretation was given by the courts. This is the interpretation given by the Revenue in construing the similar point which arises under Schedule E. I am not aware of its having led to any court cases and I hope that the same would apply here, that the Revenue would approach this in a reasonable spirit.

§ Sir E. Brown
The point which I was trying to elucidate was the question of a man posted to Africa for service, who spent a considerable time—two or 2½ years—there and was posted back to this country but not back to the base. He spent six months in this country, returned to the other post and finally came back to the base. I am certain that the Income Tax authorities would say that his service had been broken and he was resident in this country and working here for that six months before he came back to the home base. This is the real point.

§ Mr. MacDermot
The hon. Member need have no fears. All these periods are cumulative. He can go off overseas for as long as he likes and that will not affect his rights. He can have his basic three years in this country, for whatever purpose. In addition, he may have four years within this country connected with his employment. With all the combinations of circumstances which the hon. Member envisages, he would still be covered. I hope that the House will accept the Amendment.