§ Dr. GilbertI beg to move Amendment No. 90, in page 70, line 54, leave out '£2,500' and insert '£5,000'.
§ Dr. GilbertThe amendments will raise the exemption limit on small rents earned by someone on a first letting charge from £2,500 to £5,000.
§ Amendment agreed to.
Mr. Deputy SpeakerI will now put the Question on all the amendments on page 145 of the amendment paper.
§ Amendments made:
§
No. 160, in page 71, line 2, at end insert—
'For the purposes of this and the following sub-paragraph a relevant person who on any date occupies not less than 90 per cent. of the floor area of the relevant chargeable building shall be deemed to occupy on that date the whole of so much of the relevant land as is then subject to his interest (and references to occupation in this and the following subparagraph shall be construed accordingly)'.
§ No. 91, in line 12, leave out '£2,500' and insert '£5,000'.
1235§ No. 92, in line 20, leave out '£2,500' and insert '£5,000'.
§
No. 161, in line 21, at end insert
'or, if this sub-paragraph would to any extent apply to a relevant person's interest on the last-mentioned date but for his occupation on that date of not less than 90 per cent. of the floor area of the relevant chargeable building, the date (if any) within the five-year period on which he first occupies less than 90 per cent. of that floor area'.
§ Dr. GilbertI have No. 160 next, at the top of page 145.
Mr. Deputy SpeakerI put the question on it, but I must give the Minister the opportunity to speak. I must be fair; I know that it is very difficult—
§ Mr. Graham PageOn a point of order. I am perfectly happy that No. 160 has gone through on the nod. We have already done that; it was a very welcome amendment. But I should like No. 118 to be called, so that I can speak to my two amendments to that amendment.
§ Dr. GilbertIt may help the right hon. Member for Crosby (Mr. Page) if I say that I am prepared to accept his Amendment No. 226.
§ Mr. HigginsOn a point of order. We are all for rapid progress and we are happy that amendments should be moved formally if they have already been discussed. But if an amendment is totally new, we do not want the Financial Secretary simply to move it formally. I think that we are now on Amendment No. 118, on which my right hon. Friend 1236 the Member for Crosby (Mr. Page) wants to say something.
§ Dr. GilbertThere has been a misunderstanding, for which no doubt I am responsible.
I beg to move Amendment No. 118, in page 73, line 6, at end insert—
'(5) Where—The amendment allows an individual to claim that the first letting charge on him shall be deferred until a day on which the rent in question can be increased. It may help the right hon. Member for Crosby (Mr. Page) to know that I intend to advise my hon. Friends to accept his amendment to the amendment.
- (a) the preceding sub-paragraph would apply to a person's interest in the relevant land but for the fact that the rent or aggregate of the rents there mentioned can be made to reflect the value or part of the value of the relevant development; but
- (b) that rent or the aggregate of those rents cannot be made to reflect that value (or part of it) until a date as from which the rent or one or more of the rents in question could be increased under provisions for the review of the rent contained in any relevant lease or agreement, then, if that person makes a claim under this sub-paragraph, subsection (1) of the principal section shall in the case of that interest apply as if the last reference therein to the material date were a reference to the date mentioned in paragraph (b) of this sub-paragraph.'.
§ Question proposed that the proposed words be there inserted in the Bill.
§ Mr. Graham PageI beg to move, as an amendment to the proposed amendment, Amendment (a), in line 17, after 'interest', insert
'or, if in the rent or rents which can be increased as mentioned in paragraph (b) above extend to part only of a person's interest that part of his interest'.Perhaps we can discuss at the same time Amendment (b), at end add'and where the rent or rents which can be increased at that date extend to part only of a person's interest, as if his interest in the relevant land were limited to that part'.
§ Dr. GilbertThey are incorporated in Amendment No. 226, as I understand it.
§ Mr. PageI do not think that they are called Amendment No. 226. They are simply amendments to Amendment No. 118.
1237 While hon. Members are looking for them, perhaps I could explain that the object of the amendments is to provide that where there are two or more leases comprised in a person's interest, the reaching of the rent review date for the first would not precipitate a tax charge in relation to them all but would only precipitate a tax charge to the extent that it related to that lease.
§ Amendment to the proposed amendment agreed to.
§
Amendment to the proposed amendment made: At end add
'and where the rent or rents which can be increased at that date extend to part only of a person's interest, as if his interest in the relevant land were limited to that part'.—[Mr. Graham Page.]
§ Proposed words there inserted in the Bill.
§
Amendment made: No. 162, in page 74, line 50, at end insert—
'(4) For the purposes of this paragraph a person who on any date occupies not less than 90 per cent. of the floor area of the relevant chargeable building shall be deemed to occupy on that date the whole, and not to have ceased on that date to occupy any part, of so much of the relevant land as is then subject to his interest and references to occupation and ceasing to occupy shall be construed accordingly) '.—[Dr. Gilbert.]
§ 12.30 a.m.
§ Dr. GilbertI beg to move, Amendment No. 99, in page 75, line 12, leave out 'two' and insert 'three'.
Mr. Deputy SpeakerWith this we are to take Amendment No. 186, in page 75, line 12, leave out 'two' and insert 'five'.
§ Dr. GilbertThis amendment increases the period during which the exemption from a first letting charge applies if a interest in the property, originally from two years to a period of three years. Amendment No. 186, in the name of the hon. Member for Kingston-upon-Thames (Mr. Lamont), seeks to extend the same period from two years to five years. This is simply an exercise in line drawing. I cannot advise my right hon. and hon. Friends to go beyond three years but I hope that the hon. Member for Kingston-upon-Thames will concede that we have moved some distance to try to meet his case.
§ Mr. Norman LamontI am grateful to the Financial Secretary for at least moving some way along the line that we 1238 have suggested. As he says, this is an exercise in line drawing, and it is obviously difficult to know how far to go. The reason we suggested going as far as five years from two years was the whole question whether one ought to raise the tax on a building which was subsequently sold for less than it was valued at and where there was a loss.
The Financial Secretary will remember from the Standing Committee that great objections were raised against an amendment which I put forward which would have made it obligatory for the Inland Revenue to refund tax where a building was subsequently sold for less than it had been assessed to tax on a deemed letting. I saw the argument which the hon. Gentleman put against that but, at the same time, he fell back on the other provision of extending two years to three years as an alternative, arguing that a three-year period, where one would measure an actual sale against a deemed disposal, would iron out the fluctuations in the property market. I see his argument as an alternative to the more far-reaching amendment we put forward in Standing Committee. Nevertheless, I feel that a five-year period, from the point of view of the other amendment plus this amendment, would have met the point more satisfactorily.
§ Dr. GilbertThere is obviously a division of view between the hon. Gentleman and myself. I am grateful to him for recognising that we have gone some way to meeting him. He will agree that on a rising market the difference is not very significant. It is a question which arises in a situation in which property values are falling. As I am sure the hon. Gentleman will recognise, in general neither income nor capital losses can be carried back to earlier years, and to do so by means of his amendment would be to introduce totally new provisions in the taxation system with regard to the first letting charge. I cannot advise my right hon. and hon. Friends to go further than I have gone.
§ Amendment agreed to.
§ Dr. GilbertI beg to move, Amendment No. 153, in page 75, line 34, leave out 'two' and insert 'three'.
§ Mr. Deputy Speaker (Mr. Oscar Murton)With this we are to take 1239 Amendment No. 187, in page 75, line 34, after 'years' insert:
'or such longer period as the Board in writing may allow'.
§ Dr. GilbertAs the Bill stands, paragraph 9 of Schedule 9 extends the occupation exemption to any part of the property which the holder of the interest intends to occupy provided he goes into occupation within two years of the date of first letting. He is then deemed to have been in occupation throughout the period, and if he remains in occupation during the balance of the five-year period he will not be charged in respect of the part of the building he has occupied. This amendment increases the period in which the property must be occupied from two to three years. It is essentially a relieving amendment.
Amendment No. 187, in the name of the hon. Member for Kingston-upon-Thames (Mr. Lamont) seeks to give a degree of discretion to the board in circumstances of this sort by adding the phrase
or such longer period as the Board in writing may allow".This is one of the circumstances in which the board itself resists the discretion because it feels it not to be the sort of situation in which discretion should be given to the board in excess of the care and maintenance provisions it already has under the Taxes Management Act.I hope that the hon. Member will again concede that we have gone in the direction in which he would wish us to go and, I should think, in a great many cases have gone even further than he had in mind.
§ Amendment agreed to.
§ Dr. GilbertI beg to move Amendment No. 123, in page 75, line 48, after '10', insert '(1)'.
§ Mr. Deputy Speaker (Mr. Oscar Murton)With this amendment it is proposed to take Government Amendment Nos. 124 and 125.
§ Dr. GilbertThis group of Government amendments amends the transitional provisions contained in paragraph 10 of the schedule which excluded a reversioner from the first letting charge if before 18th December 1973 he has granted a lease or 1240 entered into an agreement to grant a lease for a rent or a premium which did not depend wholly or mainly on the value of the completed building.
These amendments effect two changes. First, they provide that the rules in paragraph 10 shall apply only when a taxpayer has made a claim that they shall apply. Secondly, they bring this transitional rule into line with paragraph 4 of Schedule 4 in that it now covers arrangements which fall short of binding contracts. In other words, they cover the gentleman's agreement type of situation.
§ Amendment agreed to.
§
Amendments made: No. 124, in page 75, line 50, after 'land, insert:
'on his making a claim'.
§
No. 125, in line 61, at end insert:
(2) Where, in the case of a relevant chargeable building, a person having an interest in the relevant land had before 18th December 1973 arranged (without entering into a binding contract)—
and—
§ Dr. GilbertI beg to move Amendment No. 88, in page 77, line 30, after 'and', insert:
'subject to the following sub-paragraph'.
§ Mr. Deputy SpeakerWith this amendment, Government Amendment No. 89 is to be discussed.
§ Dr. GilbertThese amendments are needed to put right a defect in the provisions of paragraph 14 of Schedule 9 in relation to part disposals. As the House will be aware, we have provided for an eight-year spreading of the tax liability on the first letting charge. Under 1241 the Bill as it stands, any subsequent disposal extinguishes the right to the spreading provision. The effect of these amendments is a relieving one which will be roughly to pro-rate the extinction of those rights so that they are not wholly lost on a part disposal.
§ Amendment agreed to.
§
Amendment made: No. 89, in line 35, at end insert:
(3A) Where a subsequentdisposal such as is described in the preceding sub-paragraph is a part-disposal of the interest in land deemed to have been disposed of as aforesaid, a fraction only of the tax for the time being unpaid shall, with interest to the date of payment, become due and payable forthwith, and that fraction shall be the fraction of the sums mentioned in the following sub-paragraph which is allowable as a deduction in computing under Schedule 6 to the Finance Act 1965 the amount of the gain accruing on the part disposal.
(3A) The sums referred to in the preceding sub-paragraph are the sums which, if so much of the interest in land there mentioned as immediately before the time of the part disposal in question remained undisposed of had been disposed of at that time, would be allowable by virtue of paragraph 4(1)(a) and (b) of the said Schedule 6 as a deduction in computing under that Schedule the gain accruing on that disposal of that much of that interest.—[Dr. Gilbert.]