DEFERRED LIABILITY FOR DEVELOPMENT LAND TAX (Hansard, 24 June 1976)

§ Mr. Graham Page
I beg to move Amendment No. 249, in page 47, line 10, at end insert, 'except that where the value of the interest which is the subject matter of the operative disposal is less than 25 per cent. of the value of the interest which was the subject matter 1885 of the deemed disposal and there are no other part disposals of the interest which was the subject matter of the deemed disposal in the same year, there shall be no liability arising under subsection (2) above'. Clause 27 deals with the deferral of liability for development tax in the case where liability for the tax on a realised development has accrued to any person on the deemed disposal of an interest in land and is deferred till the occasion of a subsequent disposal of the interest which was the subject-matter of the deemed disposal. That means that, for this period, the payment of the tax is deferred, but that, when certain events happen, it triggers off the payment of the tax. One of those occasions is set out in subsection (4) which says that, if the operative disposal is only a part disposal of the interest, that appears to trigger off the payment of tax on the whole.
The purpose of the amendment is to prevent the triggering off of the payment of the tax—the cutting off of the deferral of the tax—if the part disposal is not of a substantial amount. The amendment proposes a figure of 25 per cent.
I hope that the Minister will be able to accept this amendment and that, having granted the deferral of the tax in the circumstances set out earlier in Clause 27, he will say that it is not to be triggered off and that the person is not to become liable to the payment of tax by merely disposing of a small part of his interest in the land—a small part of his interest or a small part of the land. For this purpose I have considered a small part to be 25 per cent. If that amount is disposed of, the tax should not immediately become payable, and the person should still have the benefit of deferring payment.

§ Mr. Denzil Davies
The right hon. Gentleman seeks some kind of de minimis provision in relation to the triggering off provisions in the legislation. He said that 25 per cent. was not a significant amount. I thought that we had returned to our debates on "significant amount". It could be a significant amount It depends what is the total sum of which the amendment proposes 25 per cent.
One reason why I cannot accept the amendment is that, in some cases, it could cover the deferment of tax on certain deemed disposals into an outright exemption. 1886 All that would be needed would be the disposal of the developed land piecemeal over a period of four years—25 per cent. this year, 25 per cent. next year, and so on—which, over a four-year period, would avoid the liability completely. That is the main reason why I cannot accept the amendment.

§ Mr. Graham Page
If I may correct the Minister, the amendment says 25 per cent. of the first interest with which we are dealing—the interest in which we are concerned about the deferral of the tax. Once 25 per cent. of that has gone, subsection (4) will operate. It is not intended to be a process of 25 per cent. at a time.

§ Mr. Fairbairn
I pay tribute to the many qualities of the Minister and to the wise course that he has adopted today. However, I must correct his mathematics. It is not possible to get rid of 25 per cent. this year, 25 per cent. next year, 25 per cent. the year after, 25 per cent. the year after that, and dispose of the whole. Once the first quarter is disposed of, it leaves three-quarters. That means that in the first year 25 per cent. of the whole is disposed of, in the second year 25 per cent. of the remaining three-quarters is disposed of, and so on. The hon. Gentleman's argument does not seem to be valid in this case.

§ Mr. Denzil Davies
I was concerned about 25 per cent. of the original asset. I appreciate that the right hon. Gentleman did not intend the effect which I suggested could happen, but, as we know, in fiscal legislation intentions and results are not always the same.