HC Deb 27 October 1966 vol 734 cc1538-45
Mr. Skeffington

I beg to move Amendment No. 145, in page 109, line 44, at the end to insert: (3) Any reference in this Part of this Schedule to a previous disposition of the chargeable interest shall be construed as including a reference to any previous disposition which—

  1. (a) comprised the whole or part of the relevant land together with other land, and
  2. (b) would (apart from this sub-paragraph) have been a previous disposition of the chargeable interest if it had been limited to the relevant land.
I think that it would be convenient to discuss with it Amendment No. 172.

Mr. Speaker

Yes, if the House has no objection.

Mr. Skeffington

This is a rather long Amendment, but it is only a drafting one. In case anyone thinks that at this late hour I am trying to speed up the proceedings, perhaps I might explain that this is not so.

Schedule 5 is primarily concerned with base value derived from a consideration paid for previous disposition, and Schedule 7 contains the provisions which affect more than one of the other Schedules. These Amendments revise the arrangements in the Bill which deal with the situation where it is in the interests of the levy payer to have base value under Schedule 4 which relates to current use value for some parts of the land and base value under Schedule 5 to the other part. There is no new addition. It is merely a rearrangement very much in the interests of the levy-payer.

Amendment agreed to.

Further Amendments made; In page 110, line 41, leave out from second 'to' to 'if in line 42 and insert: 'such other provisions of the relevant Schedules as are applicable to this paragraph'.

In page 111, line 21, at end insert: (3) For the purpose of determining under the last preceding sub-paragraph what would have been the current use value of the relevant interest if ascertained as at the date of the last relevant disposition, where that disposition constituted a chargeable act or event falling within Case A, the reference in that sub-paragraph to the date of that disposition shall be construed as a reference to the time immediately after that disposition was made.—[Mr. Willey.]

Mr. Graham Page

I beg to move Amendment No. 230, in page 112, line 40, at the end to insert: 12.—(1) Where the conditions specified in sub-paragraph (3) of this paragraph are fulfilled, a disposition to which this paragraph applies shall be taken to have been a relevant disposition of the chargeable interest, notwithstanding that it does not fall within paragraph 3 of this Schedule. This Amendment adds a new paragraph to the Schedule. I admit that in drafting it I have stolen to a great extent the clothing of the Minister by taking the wording of paragraph 11 of the Schedule, because I seek to grant a certain relief to those who have been placed in difficulty by a sudden change in legislation. This is of considerable importance from the point of view of the size of the transaction with which it deals. I am told that there is certainly more than one transaction—I know of one, and I am told that there are several others—which would suffer severely if the Amendment were not accepted.

Some developers, having appreciated that if they started to develop before the appointed day they would not be caught by a Case C levy, made arrangements for a development project exceeding £50,000 but not exceeding £100,000. They chose those figures because such a project would be lawful under the Building Control Bill, as it then was. The House will remember that much publicity was given to this. A previous Minister of the Crown threatened that if builders did not observe what was laid down in the Bill at the time, even though the Bill was to die by the death of that Parliament they could expect to be penalised when he reintroduced the Bill.

There was much publicity of this sort, and it was, therefore, quite reasonable to say of developers that even before the Building Control Act, 1966, received the Royal Assent on 9th August, 1966, they knew quite well that they would require a licence for any development exceeding £100,000, and would be unlikely to obtain a licence.

In fact, this figure was mentioned in the Bill. I have it beside me. We were given to understand that the unlawful projects—those which were unlawful without a licence—were those which would exceed £100,000. On the very day that the Bill received the Royal Assent—and this is becoming the practice with legislation from this Government—the figure was reduced by Statutory Instrument No. 987 to £50,000, so that developers who had started to make arrangements for their developments after 25th September, 1965, for a development which did not exceed £100,000 but did exceed £50,000—the latter figure unknown to them at the time as having any importance—found that on and after 9th August, 1966, they could not proceed with that development.

They should undoubtedly be given some relief in this case. In an earlier discussion, the Minister mentioned the case of those who paid in the interim period, and who might well get caught on a double payment of tax—a payment of Capital Gains Tax and levy. He gave those people relief, because it is obvious from the Bill and from the expected provisions of the Finance Act, 1967, that they would suffer from an overlapping of Capital Gains Tax and levy.

The principle is the same here, concerning people who entered into arrangements perfectly innocently, not only without knowing that there would be an alteration in the law, but being led to believe that the law would be that licences would be required not for projects over £50,000, but for projects over £100,000, this being followed suddenly, out of the blue, on the very day that that Act received the Royal Assent, by an order reducing the figure.

Some of them—I say "some", but can prove one—have made arrangements for projects which they can no longer carry out. In these circumstances, when they eventually start to carry out that project—it will be after the appointed day—they will have to use their purchase price as the base value. In that, of course, they will have paid for development value, so they are using a wrong base, or a base which they would not have used because they would never have purchased at that time because they would have known that they could not have done the development.

It is the same sort of principle as occurs in subsection (11), in which the Minister has given relief, in those circumstances, to builders or developers on or after 1st August, 1966. It is a question of having been led into using the base value under these Schedules in a way which they would never have done if they had known that the law would have been changed against them on 9th August, 1966. This is a case justifying relief, in the same way that the Minister said that there was a case for relief. He introduced it in subsection (11) and I wish to introduce a similar relief in subsection (12) for those people who have been caught.

Notice taken that 40 Members were not present;

House counted, and, 40 Members being present

1.45 a.m.

Mr. Willey

The hon. Member for Crosby (Mr. Graham Page) fully deployed his argument for the Amendment, but I cannot accept it. It would be wrong to accept the proposal in respect of prospective developments.

Amendment negatived.

Amendments made: In page 113, line 27, leave out from second 'to' to 'if' in line 28 and insert: ' such other provisions of the relevant Schedules as are applicable to this paragraph'.—[Mr. Willey.]

In page 114, line 9, leave out from first 'to' to 'if and insert: 'such other provisions of the relevant Schedules as are applicable to this paragraph'.—[Mr. Willey.]

Mr. Skeffington

I beg to move Amendment No. 150, in page 115, line 7, to leave out 'granted or'.

Mr. Deputy Speaker

It might be convenient if, with that Amendment, the House were to also discuss the following Amendments: Amendment No. 152, Amendment No. 154, and Amendment No. 167.

When we come to Amendment No. 167 it will be open to the hon. Member for Lewisham, North (Mr. Moyle) to move his Amendment to that Amendment, in line 16, leave out from 'by' to 'in' in line 17 and insert: 'notice (whether given by the landlord or by the tenant) or has been terminated by the landlord otherwise than by notice, whether by reentry, forfeiture or in any other way, and (in any such case) has been so terminated'.

Mr. Skeffington

The first three Amendments are small, technical Amendments to Schedule 5, Part III—related tenancies. The disposition of the related tenancy may have been either the assignment of an existing tenancy or the grant of a new tenancy. Part III of the Schedule contains the operative provisions in the case of assignments of related tenancies. Provisions with the necessary modifications to deal with grants of related tenancies will be made in the "tenancies and reversions" regulations under Schedule 7(10). As Schedule 5 does not include them, these Amendments remove the existing references to dispositions granting a tenancy.

The fourth Amendment involves, effectively, the complete redrafting of Schedule 7(10), which gives power to make regulations containing the necessary exceptions, modifications and additional provisions for dealing with tenancies and reversions.

Amendment agreed to.

Mr. Willey

I beg to move Amendment No. 151, in line 7, to leave out 'in title'.

Mr. Deputy Speaker

I suggest that it would be convenient to discuss, at the same time, Amendment No. 153, in line 23, at end insert: (4) In this paragraph "predecessor" means a predecessor in title of the chargeable owner, not being a person from whom that owner or any other predecessor in title of his derived title under a disposition for valuable consideration.

Mr. Willey

That is convenient. The new sub-paragraph (4) inserts a definition of "predecessor" into Schedule 5, paragraph 22 of which delimits the cases to which the "related tenancies" provision of that Schedule apply. The first Amendment is a purely drafting one to pave the way for this definition.

As paragraph 22 is at present drafted, a disposition of a related tenancy qualifies if it was acquired by the chargeable owner and also if it was acquired by a predecessor in title of his. This means that a person can claim an allowance for what any predecessor paid for the tenancy, even though that tenancy had, by merger in the hands of his predecessor, ceased to exist before the chargeable interest came into his hands.

Amendment agreed to.

Further Amendments made: In line 9, leave out 'granted or'.

In line 23, at end insert: (4) In this paragraph "predecessor" means a predecessor in title of the chargeable owner, not being a person from whom that owner or any other predecessor in title of his derived title under a disposition for valuable consideration.

In line 25, leave out 'granting or'.—[Mr. Willey.]

Mr. Skeffington

I beg to move Amendment No. 155, in page 115, line 32, at the end to insert: Provided that paragraphs 4 and 5 of this Schedule shall have effect in relation to any disposition assigning a related tenancy, as if in those paragraphs any reference to the chargeable interest were a reference to that tenancy. Perhaps with this Amendment we could also take Amendment No. 175.

The effect of these two Amendments is to insert into Schedule 5, Part III, which deals with related tenancies, and the appropriate part of Schedule 8, dealing with compulsory purchase modifications, parallel provisions to Schedule 5(4) and (5), and Schedule 8(6). These concern the circumstances in which the consideration given for the last relevant disposition must be prevented from being used as base value on an occasion following a chargeable act or event when appropriate account will have been taken of it.

All of these are cases where any "unexpended" consideration from the last relevant disposition is taken care of by way of a credit under the proposed new Schedule, that is credit carried forward from previous chargeable act or event or where a project or material development has begun which is Schedule 5(4), or where the previous chargeable act or event was of Case D or Case E and where land had been acquired by an authority possessing compulsory purchase powers and the compensation included compensation for the injury to the owner's remaining land.

Schedule 5(4) and (5) and Schedule 8(6) contain the general provisions for extinguishing the Schedule 5 base.

Amendment agreed to.

Mr. Willey

I beg to move Amendment No. 156, in page 117, line 25, at the end to insert:

Related tenancy assigned on or after relevant date

32.—(1) The provisions of this paragraph shall have effect for the purpose of assessing levy in Case C where—

  1. (a) by a disposition made for valuable consideration on or after, but not more than six years after, the relevant date a tenancy which was subsisting on the relevant date is assigned to the chargeable owner and thereupon merges in the chargeable interest, and
  2. (b) that assignment constitutes a chargeable act or event which is notified in accordance with the provisions as to notification contained in Part III of this Act.

(2) Where the preceding sub-paragraph applies, paragraphs 25 and 29 of this Schedule shall apply as if the tenancy had been a related tenancy within the meaning of Part HI of this Schedule and the assignment of the tenancy had been the last relevant disposition of it for the purposes of that Part of this Schedule.

(3) If, in a case where sub-paragraph (1) of this paragraph applies, the assignment is notified after a notice of assessment of levy in Case C has been served and has resulted in an operative assessment of levy, any person who has paid, or would be liable to pay, levy payable in accordance with the assessment may make an application in writing to the Commission for relief; and the Commission, having regard to the preceding provisions of this paragraph, shall give by way of repayment or otherwise such relief as is appropriate in the circumstances.

(4) Subsections (3) to (5) of section 54 of this Act shall have effect in relation to any application under the last preceding subparagraph as they have effect in relation to an application under that section, as if in those subsections any reference to varying the notice of assessment of levy by reducing the principal amount of the levy included a reference to discharging that notice and giving such consequential directions as the Lands Tribunal may determine to be appropriate.

This paragraph concerns assessment of levy in Case C, that is, projects of material development. It is possible that at the relevant date for the purpose of assessment—the date when the project is begun—there may be a tenancy subsisting in part of the land which the developer has not bought out; he may have entered into a contract to buy it or, in an exceptional case, may not even have a contract, but have taken the risk that he will be able to acquire the outstanding tenancy before he is ready to enter on the part of the land in which it subsists or he may have expected the tenancy to have expired before he needed the land.

By virtue of Clause 32(4) of the Bill, a tenancy of part of the relevant land in these circumstances would not be an assessable interest and the effect of this is that the liability of the developer will be assessed disregarding the tenancy—he will be treated as if he had already got rid of the tenant.

Mr. Graham Page

This seems very fair as the Minister has explained it. I am not quite sure whether the developer has to have a reversion of the tenancy, whether he has to have a material interest in land or whether he is just a developer. It is a situation which frequently arises, where the developer is buying up a number of properties and gradually allowing them to fall into possession, the tenancies ending and so on. The fact that he can be dealt with in this way, without waiting for a complete clearance of the land is very good. Does he have to be the reversionary tenant and own the land in that way?

Mr. Willey

I said that he would be taking a risk.

Amendment agreed to.