PROVISIONAL COLLECTION OF TAXES (AMENDMENT) (Hansard, 10 May 1972)

§ Mr. George Cunningham (Islington, South-West)

I beg to move, That leave be given to bring in a Bill to extend the Provisional Collection of Taxes Act 1968 to apply to stamp duties. The Bill is relevant to changes in the rate of stamp duty that are made from time to time. I can best explain the purposes of the Bill by reference to the matter which has given rise to it. The House will recall that the Chancellor of the Exchequer announced the other week that he had decided to reduce stamp duties applying to the buying of houses. The result of that change, in brief, is that once the change has been made in law the stamp duty on a £10,000 house will fall from£100 to nil and there will be corresponding reductions above and below that level.

When the Chancellor announces changes in tax rates, the normal practice is that such changes come into effect immediately. In this case, however, the Chancellor has had to announce that the reduction will not come into effect until 1st August. This is because the Provisional Collection of Taxes Act, which allows tax rates to be changed by means of a Resolution of the House in anticipation of the passing of legislation, and subject to very strong safeguards, applies to income tax, to purchase tax and to customs and excise duties but does not apply to stamp duties.

I do not think there was or can be any ground in principle why stamp duties should be treated differently in this respect from other taxes. It is just one of those accidents which have happened over the years and from which the public unfortunately suffer.

The disadvantages of continuing the present arrangements are two. First, I am sure that the House will agree that it will be, to say the least, irritating for those house purchasers who expect to complete their purchase before the Chancellor's date of 1st August to be obliged to pay £100, more or less, in a duty which it has already been announced the Government do not wish to collect, and which it is completely certain that Parliament will allow them to re- 1326 duce and, in most cases, to abolish. Such people are doing what the Government and others have urged them to do. They are buying their homes. Yet they will find that this duty continues in the coming three months to be payable, not because the desirability of the change is being intensely debated or contested in Parliament but only because the reduction has to wait for the Finance Bill to be passed, and all the other provisions of the Finance Bill of a controversial nature will ensure, as always, that the Bill is not passed until the middle of July.

But there is another practical consideration. Solicitors find that, naturally, those who might have bought their houses in the months between the announcement of the reduction in the rate and the date upon which it takes effect want to delay the completion of the purchase until 1st August in order to save the duty.

This was the experience of solicitors on the two other occasions in this decade when stamp duties were reduced, in 1963 and in 1967. The result of this is that solicitors try to time their work, the various searches they have to make, and so on, in order to bring them to maturity early in August. As all solicitors are doing the same, the result is a build-up of work in land charge registries and the like, and that means greater uncertainty about just how long any search will take. If the solicitor guesses wrongly, he can find himself with a clearance certificate which is invalid for completion in August because it is dated more than 15 days before the end of July. So he has either to commission another search, with extra expense for his client, or tell his client that despite his endeavours, he has managed to complete his work at a time when the duty is, unfortunately, still payable. That was the experience in 1963 and 1967.

The consequences are all the more serious this year, because the fast rate of inflation in house prices means that accepting any delay involves a far greater risk of gazumping than in previous years. This is a situation which there is no need for us to impose upon the public for a moment longer.

The Bill I seek to introduce will correct the anomaly by allowing the Government, if they so wish, to use in respect 1327 of stamp duty changes the procedure which we always use in respect of other tax changes. The Bill would not in itself make any change in the rates of duty, nor would it oblige the Government to employ the Resolution procedure. It will only give the Government a legal opportunity which they will take the decision of using or not using. It will be up to the Government whether to do so.

If the House allows the Bill to be introduced, I would hope that it might also, given the very uncontroversial and safe nature of the change proposed—as the effect of it is entirely in Government hands—be disposed to accord the Measure an early passage, so that in the next few months, if the Government were willing, house buyers would be relieved of a duty upon which sentence of death has been passed but has not yet been carried out.