§ The Solicitor-General
I beg to move Amendment No. 292, in page 44, line 43, at the end to insert:and where the circumstances in which the exemption so applies in respect of any government securities were not brought about by the deceased subsection (2) above shall not apply so as by virtue of paragraph (b) of that subsection to make the personal representatives accountable for duty or to increase the amount of duty beyond what would have been due had there been no exemption".The purpose of this Amendment again is rather technical, but it should, I think, meet with the approval of both sides of the Committee because it is to prevent the Clause from operating against a person who is not a party to the avoidance device.
The main avoidance device countered by the Clause is one whereby a father who is life tenant of a settled fund com- 772 prising exempt securities assigns his life interest to a foreign company to hold until the time of his death, so that the securities qualify for the exemption, with the remainder then to his son. The Clause deals with this situation in two ways: in the case of securities issued since 1940, which are issued on the terms that the exemption will not stand against anti-avoidance legislation, the exemption is cancelled; in the case of securities issued before 1940 where the terms of issue include no reservation about anti-avoidance legislation, a sum equal to their value is included in the deceased's free estate.
This provision could go wrong if a father on his deathbed made use of a pur autre vie settlement. He could settle his securities and give himself an interest to terminate on the death of some stranger not expected to live for very long and then assign the life interest to a foreign company. The death on which the settled fund passes to the son would not be that of the father but that of the innocent stranger and, under the Clause as published, it would be the stranger's estate that would be charged with the notional sum.
The Amendment accordingly provides that the charge on the free estate operates only where the deceased himself was a party to the avoidance. In the case of pur autre vie settlements, the trustees and beneficiaries of the settled fund will be held accountable.
§ Mr. Patrick Jenkin
We welcome this Amendment. The Clause contains the strange conception of a notional sum to be charged with Estate Duty, and that it should be charged on the death of a person who had no interest in the securities or in the notional sum would be carrying the conception to an extreme length. We consider this to be an obviously necessary limitation on the operation of this Clause.
§ Amendment agreed to.
§ Mr. MacDermot
I beg to move, Amendment No. 293, in page 46, line 2, to leave out from "instance" to the third "of".
This is a purely drafting Amendment to clear up a possible ambiguity and I 773 shall be happy to explain it if any hon. Member wishes me to do so.
§ Amendment agreed to.
§ Clause, as amended, ordered to stand part of the Bill.
§ Clause 40 ordered to stand part of the Bill.