§ Amendment made: In page 122, line 35, leave out 'to (6)' and insert 'and (5)'.—[Mr. Willey.]
§ Mr. Skeffington
I beg to move Amendment No. 159, in page 123, line 4, to leave out'The preceding sub-paragraphs do' and insert 'Sub-paragraph (1) of this paragraph shall have effect for the purpose of calculating the value of anything which in accordance with sub-paragraph (a) or sub-paragraph (e) of paragraph 1 of this Schedule is to be taken into account in determining the amount of the consideration given or to be given for a disposition, as it has effect for the purpose of calculating the value of an interest in land; but, with that exception, sub-paragraph (11 of this paragraph does'.This is a minor Amendment which will effect this change. Where land is acquired the consideration may include, or may be effected by a number of elements other than money. For example, the purchaser undertakes to become responsible for some debt of the vendor. Paragraph 1 of Schedule 7 is concerned to set out what part of the Schedule achieves that.
§ Mr. Graham Page
The wording here is rather peculiar. I am not quite certain what can be taken into account in these calculations. It is very right and proper that if the purchaser takes over certain debts of the vendor they should be taken into account as being consideration passing from the purchaser to the vendor. But the Amendment seems to go a lot wider than that by saying:'Sub-paragraph (1) of this paragraph shall have effect for the purpose of calculating the value of anything which in accordance…is to be taken into account in determining the amount of the consideration given or to be given for a disposition…That word "anything" seems to be very wide. It might mean services as well as some material consideration passing between the two. It does not seem to be a word of art to use in legislation.
§ Mr. Skeffington
I understand the point made by the hon. Gentleman. I was a little surprised myself, but I think that it is the only word that can be used for making provision for all the unquatified elements in consideration. If taken into consideration it seems fair that they should be allowed, and this is the only way in which the draftsman has been able to do it.
§ Amendment agreed to.1547
§ Further Amendments made: In page 123, line 9, leave out from beginning to 'as' in line 10 and insert 'the relevant Schedules';
|5. Where for the purposes of any of paragraphs 22 to 25 of Schedule 4 to this Act, or for the purposes of paragraph 1(c) of this Schedule, account has to be taken of the capital value of a right to receive a rent or other periodical payment, that value shall be calculated by reference to the price which that right might reasonably be or have been expected to fetch on a sale in the open market at the time by reference to which the value falls to be calculated.|
§ This is a technical Amendment.
§ Question proposed, That those words be there inserted in the Bill.
§ Mr. Allason
I beg to move, as an Amendment to the proposed Amendment, to leave out lines 5 and 6 and to insert:'offered for sale in the open market by the owner, taking into account his liability for taxation on the rent received'.This Amendment states that the right to receive rent shall be calculated by what it could fetch on the open market. I am very glad that this has been brought into the open. We discussed it in passing in Committee, but here it is in all its horror in black and white.
There will be individuals or institutions not subject to tax at all, or subject to reduced rates of tax. They will certainly be prepared to bid in those circumstances and, if bidding against each other, they will bid up to the limit, so that for them the value of the right to receive £500 a year for seven years would be £3,500. It is a bit far outside anything any ordinary taxpayer could consider bidding, but this would be the open market price because it would be possible to get that with keen competition among willing buyers.
A company distributing 50 per cent. of profits as dividend pays, I calculate, 52⅜ per cent. tax, which means that if the company has any rent it receives 47⅝ per cent. of the rent. The Surtax payer may pay as much as 91¼ per cent. tax, and on an investment in rent he would receive 8¾ per cent. of that rent. Yet the levy will be charged on the betterment element in the rent at the open market value, which may be 100 per cent. of the value of the right to receive the rent. In those circumstances, taking the element in rent which is concerned with betterment, a company, instead of receiving 47⅝ per cent. rent, 1548 In page 123, leave out lines 18 and 19.—[Mr. Willey.]
§ Mr. Willey
I beg to move Amendment No. 162, in page 123, line 19, at the end to insert:
will be reduced to receiving 7⅝ per cent. rent. A surtax payer will pay 131¼ per cent. tax and levy combined on the betterment element of his rent.
I cannot believe that it is the intention even of a Socialist Government to indulge in—I must not say taxation, because the Minister will not have it that the levy is taxation, but the removal of income from individuals or companies and its transfer to the Treasury by way of tax or levy. This is a very unfair way of carrying out a valuation of this type. It may have been the custom of valuers in the past.
Here again we are up against a very special condition. Usually when valuations are made, it is a matter of a transaction between a willing buyer and a willing seller. We would all agree that the Surtax payer in the circumstances I have described or the company in the circumstances I have described would certainly not be a willing seller. Therefore, it is unreasonable to invoke the willing buyer who is a person or corporation or a charity required to pay no tax at all. This is a very unfair provision.
§ Mr. Willey
I am sorry to appear so unsympathetic at this early hour of the morning. I must resist the Amendment. The hon. Gentleman anticipated my resisting it. It is necessary that the test should be the open market value, not the particular value to one person. In determining what the right to receive the rent might be expected to fetch, the valuer, and, in the event of appeal, the Lands Tribunal, must be left to take such, if any, account of tax as the market generally would do.
§ Amendment to the proposed Amendment negatived.1549
§ Proposed words there inserted in the Bill.
§ Amendment made: In page 125, line 40, leave out 'and (3)' and insert to (4)'.
§ Mr. Skeffington
I beg to move Amendment No. 164, in page 125, line 45, to leave out from the beginning to first 'paragraph' in line 48 and to insert:9.—(1) For the purpose of assessing levy in Case A or Case B, where there is a tenancy of the relevant land together with other land and that tenancy, in so far as it subsists in the relevant land, constitutes (in Case A) the relevant interest or (in Case B) the chargeable interest.With the agreement of the House, perhaps we could discuss Amendment No. 165 with this Amendment.
§ Mr. Skeffington
In our discussions on 4th August I gave an undertaking—hon. Members will see this in column 923 of HANSARD—in response to an Opposition Amendment to our Amendment that, if the Opposition would withdraw their Amendment, which was a very tricky drafting point, we would endeavour to table a further Amendment to meet the substance of their Amendment. This my right hon. Friend has now done.
§ Amendment agreed to
Amendment made: In page 126, line 3, leave out from beginning to 'paragraph' in line 5 and insert:
(2) For the purpose of assessing levy in Case C, where there is a tenancy of the whole or part of the relevant land together with other land and that tenancy, in so far as it subsists in the relevant land, constitutes the relevant interest.—[Mr. Skeffington.]
§ Mr. Willey
I beg to move Amendment No. 166, in page 126, line 8, at the end, to insert:10. Regulations may provide that development of any description specified in the regulations, which does not constitute material development in accordance with section 94(2) of this Act, shall be treated as material development for the purposes of paragraphs 3. 10. 20(5), 27 and 36(2) of Schedule 4 to this Act, and for the purposes of paragraph 8(2) of this Schedule.The Amendment arises from the need, in some circumstances, to exclude from current use value values which might otherwise be present because of the obligation to assume in the calculation of current 1550 use value that planning permission would be given for any development that was not material development.
§ Mr. Graham Page
The Minister did not read from his brief very well. I do not think that he knew what he was talking about any more than I did. I have read the Amendment and I am very frightened by it. In Clause 94(2) we go to great pains to define by regulation what is meant by material development and then tucked away in Schedule 7, like the town clerk's divorce tucked away in a Clause of a Private Bill, is this Clause about regulations which can materially alter the definition, not just for Schedule 7 but for Schedule 4. Paragraph 3 of Schedule 4 is one of the most vital in the the calculation of net development value for the purpose of the levy, and is the Bible, as it were, of Schedule 4, under the heading of "Base value". There are four paragraphs there which we have been gradually learning by heart.
Now we are told that the regulations can alter a material development for the purpose of that paragraph as well as for paragraphs 10, 25, 27 and 36(2) of Schedule 4. Therefore we shall have different definitions of material development throughout the Bill. I cannot see the need for that. Whoever drafted this and put the brief in the Minister's hand has some good cause for doing it, but I can see no reason for it at present. By means of a paragraph in the Schedule, it gives the Minister power to alter the Schedules and the way the levy is calculated, and to allow that calculation to proceed on an entirely different basis from the material development basis set out in the rest of the Bill, under regulations under Section 94(2).
Even at this early hour of the morning, I have an open mind and am willing to be convinced that this is the right thing to do, but on the face of it it seems dead wrong.
§ Mr. Willey
I readily respond to the hon. Gentleman's invitation. I thought that I had caught him nodding.
§ Mr. Willey
It must obviously be wishful thinking. The circumstances that we have in mind are where statutory undertakers, local authorities and other bodies, 1551 such as pipeline operators under the Pipelines Act, 1962, buy or lease land or take easements or wayleaves over it, either voluntarily or compulsorily, for the purpose of laying pipes or cables and so on. All such development will be excluded from the definition of material development, some of it because it falls within the General Development Order or because we propose to exempt it under regulations to be made under Clause 94(2)(c), such as the laying of pipes by pipeline operators. Such development is exempted from the definition of material development because it would be impossible to value, it cannot really be said to release development value for the benefit of the developer, and die Commission will not want to be bothered with innumerable notices of intention to start laying pipes and cables over the country.
However, where a body acquires land or rights over land to carry out such development it may pay very large sums of money because the development may substantially reduce or sterilise the development value of the land for other purposes. An example in an extreme case would be putting an electricity cable over land, making it impossible to build houses there. It could be argued that the compensation paid for this depreciation of value is, however, value given by the proposal to put the pipe or cable on the land and in that case, although the disposal to the authority was notified under Case A, B, E or F as appropriate, the current use value would equal the
|5||'paragraph may provide that any provisions of the relevant Schedules specified in the regulations shall have effect subject to such exceptions and modifications, and together with any such additional provisions, as may be so specified for the purpose of assessing levy in respect of a chargeable act or event where—|
|(a) the relevant interest (or, in Case B, the interest of the grantor) is a tenancy or a reversion, or|
|10||(b) any disposition of which account has to be taken in accordance with Schedule 5 to this Act (other than a disposition which constitutes the chargeable act or event) is or was a disposition assigning a tenancy, or is or was a disposition of a reversion, or|
|15||(c) there has been a disposition granting, or a disposition renewing, extending or otherwise varying, a tenancy, in such circumstances that, in accordance with Schedule 5 to this Act, account would have been taken of that disposition if it had been a disposition assigning that tenancy, or|
|20||(d) a tenancy for a term of years certain has been terminated by the landlord, whether by notice, re-entry, forfeiture or otherwise, in such circumstances that in accordance with Schedule 5 to this Act, account would have been taken of that termination if it had been a surrender of the tenancy to the landlord for valuable consideration.'—[Mr. Willey.]|
§ compensation paid, and no levy could be collected. This would obviously be wrong.
§ The regulations will, therefore, stipulate that value due to this sort of development is not to appear in current use value. It is impossible to set out in the Bill the sort of cases we have in mind, and for this reason we have to depend on the making of regulations.
§ Mr. Graham Page
I entirely disagree with this method of doing it. When I have been able to read the Minister's words in HANSARD, I shall, perhaps, be able to advise those in another place what to do about it.
§ Mr. Allason
This is a most unsatisfactory situation. The Minister has taken powers to himself to change the whole concept of the Bill as regards material development, though he says that he intends to deal only with the case of statutory undertakers. Would it not be very much better to say so? It is very odd to tuck it away so very obscurely here, changing the definition of material development in Clause 94. It is a bit hot. Will the right hon. Gentleman consider a manuscript Amendment—even if it is a torn one—in order to confine this to statutory undertakers and clearly limit it to the small range of items which he told us he intends to cover?
§ Amendment agreed to.
§ Amendment proposed: In page 126, line 10, leave out from 'this' to end of line 22 and insert:1553
§ Question, That the words proposed to be left out stand part of the Bill, put and negatived.
§ Question proposed, That the proposed words be there inserted in the Bill.
Amendment proposed to the proposed Amendment: In line 16, to 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 re-entry, forfeiture or in any other way, and (in any such case) has been so terminated'.—[Mr. Moyle.]
§ Amendment to the proposed Amendment agreed to.
§ Proposed words, as amended, there inserted in the Bill.
§ Further Amendments made: In page 126, line 33, leave out from 'land' to 'and' in line 34.
§ In line 41, leave out '(a)'.
In line 42, leave out from "Schedules" to end of line 13 on page 127, and insert:
'to be taken'—
(2) For the purposes of the application of paragraph 25 or paragraph 28 of Schedule 5 to this Act to a related tenancy which was a tenancy of the whole or part of the relevant land together with other land—
(3) The preceding sub-paragraphs shall have effect without prejudice to any apportionment which, for the purpose of assessing levy in
respect of any chargeable act or event, is required by reason that an interest subsisting in the whole or part of the relevant land together with other land constitutes the relevant interest (or in Case B, the chargeable interest) only in so far as it subsists in the relevant land.
(4) In this paragraph 'apportioned' means apportioned as between the relevant land or part of it and other land and 'apportionment' shall be construed accordingly, and 'other land' means land not comprised in the relevant land.
13. Where any apportionment is required by paragraph 11 or paragraph 12 of this Schedule, or is required for any such reason as is mentioned in paragraph 12(3) of this Schedule, the apportionment shall be made in such manner as may be appropriate in the circumstances.'
§ In page 128, line 18, at end insert:
Modification of Schedule 5, paragraph 9, in relation to certain projects of material development
14. Where paragraph 9 of Schedule 5 to this Act has effect for the purpose of assessing levy in Case C, and the circumstances of the relevant project are such that paragraph 27(3) of Schedule 4 to this Act has effect in ascertaining the current use value of the relevant interest, the comparison to be made under sub-paragraph (2) of the said paragraph 9 shall be between—
In line 21, leave out paragraph 14 and insert:
14.—(1) The provisions of this paragraph shall have effect for the purpose of assessing levy in respect of a chargeable act or event where—
(2) In the circumstances specified in the preceding sub-paragraph, the base value of the relevant interest (or, in Case B, the base value realised by the disposition which constitutes the chargeable act or event) shall be ascertained in two ways, that is to say, it shall first
be ascertained apart from the provisions of this paragraph, and it shall then be ascertained separately—
(3) If in those circumstances, otherwise than in Case B, the aggregate of the base values as so ascertained separately is greater than the base value as first ascertained, that aggregate (instead of the base value as first ascertained) shall for the purpose mentioned in sub-paragraph (1) of this paragraph be taken to be the base value of the relevant interest.
(4) If in those circumstances, in Case B, the aggregate of the base values realised by the disposition which constitutes the chargeable act or event, when ascertained separately as mentioned in the last preceding sub-paragraph, is greater than the base value so realised as first ascertained, that aggregate (instead of the base value realised as first ascertained) shall for the purpose mentioned in sub-paragraph (1) of this paragraph be taken to be the base value realised by the disposition.
(5) In this paragraph 'the chargeable unit', except in Case C, means the relevant land, and in Case C means so much of the relevant land as is land in which the relevant interest subsists.—[Mr. Willey.]