DEVOLUTION ON DEATH (Hansard, 24 June 1976)

§ Mr. Michael Spicer
I beg to move Amendment No. 27, in page 13, line 18, at end insert— '(4) The acquisition of an interest in land by a person as legatee shall not be treated as a disposal by the personal representatives nor as an acquisition by the legatee, but for the purposes of this Act, anything done by the deceased or by the person representatives shall be treated as having been done (at the time 1859 it was in fact done) by the person representatives and accordingly—
(a) the acquisition by the deceased shall be treated as if it had been the acquisition by the legatee; and

(b) any expenditure incurred by the deceased or the personal representatives shall be treated as having been incurred by the personal representatives.
(5) If not more than two years after a death any of the dispositions of the property of which the deceased was competent to dispose, whether effected by will, or under the law relating to intestacies, or otherwise, are varied by a deed of family arrangement or similar instrument, this section shall apply as if the variations made by the deed or other instrument were effected by the deceased, and no disposition made by the deed or other instrument shall constitute a disposal for the purposes of this Act.'. We seem to be on a good streak at the moment. I am confident that, in view of the acceptance of the previous amendment by this able and honourable Minister of State—

§ Mr. Denzil Davies
Flattery will not get the hon. Gentleman anywhere.

§ Mr. Spicer
It did not get me anywhere in Committee, but I shall use it to begin with in this instance. In Committee certain assurances were given on this matter, to which I shall return.
We are trying to do an interesting thing—namely, to ensure that legatees, in a situation in which death has occurred, receive the same benefits under Clause 9 as the pesonal representatives of the deceased.
Some believe that death is not only a happy escape from all our afflictions but a conscious attempt on the part of the deceased to avoid taxation, but let us take a less extreme view and assume that it takes place without the conscious interest of the deceased. If that view is taken, we must accept that legislation should not presume that the deceased was trying to get out of paying taxes.
If that is the position, surely every ounce of justification, logic and fairness, which I hope the Minister will have much of as we progress, would demand that we treat the legatees of the deceased, as regards the various exemptions that are under consideration, in the same way as the personal representative. In the context of the Bill, that would include the £10,000 slice, the personal residence exemption and, above all, the special 1860 addition—namely, the computation of the tax.
I move the amendment with great assurance that I shall have the same success as my hon. Friend the Member for Hitchin (Mr. Stewart) in presenting the previous amendment. I take that view for the specific reason that when we debated this issue in Committee a strong assurance was given by the Financial Secretary, when he popped in to see us on the one occasion—

§ Mr. Tim Sainsbury (Hove)
The hon. Gentleman popped in on several occasions.

§ Mr. Spicer
May be he did pop in on several occasions. I think it is fair to use the words "pop in". As we have said time and time again, the Minister of State has carried this Bill almost entirely by himself. For that he carries our admiration, if not our good wishes as to the intentions of the Bill.
I am glad that it was the Financial Secretary and not the Minister who gave this particular assurance, because the Minister may well find himself personally less committed to having to defend this aspect of the Financial Secretary's contribution. However, it was the Financial Secretary who said on 27th April, in the context of a discussion on legatees and their rights, I have undertaken to look at the particular parts of sub-section (5)"— which referred to this issue— which would result in a person becoming entitled to land under a deed which could be, as I said, brought about under some sort of family arrangement. In such a case, the person could take on the deceased's acquisition costs, the improvement expenditure, and so on, as if it were his own, and the dispositions of the deed are not treated as disposal for development land tax. In this part of the amendment the hon. Member for Worcestershire, South (Mr. Spicer) and the right hon. Gentleman have made a useful point"— that was very kind of the Financial Secretary— which certainly needs to be looked at again."—[Official Report Standing Committee J. 27th April 1976; c. 641.] One of the features pointed out by my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) of the conduct of this entire Bill has been the constant offering by 1861 the Government of nice words and of assurances.
However, the path to a good DLT is not paved merely with good intentions. As I have said on several occasions, I do not think that that path actually exists. Good intentions are not good enough. They are particularly to be criticised by Opposition Members when they result in nothing. We have come across many occasions in our discussions in Committee on which assurances of some sort have been given. With due diligence we have noted these assurances in great detail. However, we found that when it came to the Bill as amended in Committee, very few of those assurances had been written into the revised Bill.
Therefore, despite our admiration for the Minister and his competence and despite our new feelings of warmth towards him as an honourable man, in view of the policy he announced in respect of the Third Reading, I must say that it gives us some cause for concern that an assurance such as this, with respect to this important issue of the rights of the legatee, has not been enshrined in the Bill as amended.
I plead with the Minister to look at this matter again. In this situation there is a very strong reason why the Minister is right to have given himself time between Report and Third Reading to consider whether to introduce some of these amendments, particularly those on which, as on this, he has given a firm assurance. I beg the Minister to accept the amendment.

§ Mr. Denzil Davies
The hon. Gentleman did not deploy his case with his characteristic accuracy. He talked about an assurance being given. As he will recognise, on this corresponding amendment two matters were debated in Committee. The first was the more major matter—if I could put it that way—of whether the special addition could continue after death for the benefit of the legatee, or, indeed, beneficiaries. That was the main part of the amendment put forward in Committee.
My hon. Friend the Financial Secretary made it clear that we did not accept that case. He made it clear—as I have tried on a previous amendment, although I have a stronger case here—that once the 1862 property passed for no consideration, be it on death or be it by gift, from the original purchaser, special addition should stop, because a death ends taxation, in some ways. It does not end in respect of capital gains tax or estate duty, but it brings taxation to an end. It also brings costs to an end, and special addition is meant as a contribution towards cost. We made it clear in Committee that we cannot allow special addition to run beyond a disposal for no consideration.
The second subsidiary point raised in Committee was the problem arising in situations in which there might be a deed of family arrangement. That is the case to which the hon. Gentleman addressed himself and that is what he was concerned about when he said that my hon. Friend gave an undertaking to look at this matter. The hon. Gentleman quoted from that part of the Committee proceedings where my hon. Friend said that we would look at the point, or words to that effect.
With regard to the problem of deeds of family arrangement, the right hon. Member for Crosby (Mr. Page) raised the same point. We have looked at the matter again and in the context of the capital gains tax legislation where provisions are made in respect of a deed of family arrangement. But, having considered it, we do not think it necessary to include in the Bill the same kind of provision as exists for capital gains tax, because DLT proceeds on a different basis.
Under Clause 9 the disposal of an interest in land to personal representatives is disregarded and the transfer to the legatees is a disposal for no consideration to which Clause 10 applies. There is in consequence no provision in the Bill which corresponds to the capital gains tax legislation, so we do not think that matters such as the capital gains tax problem or deeds of family arrangement will apply.
Perhaps I may read a short paragraph from my brief. It is important and relevant to our consideration. It might be said that provision is needed to cover the following type of case. A testator leaves Blackacre to A and Whiteacre to B. A and B agree to exchange legacies and they would each then be treated A having disposed of and acquired for market value, and so become liable to development land tax on any 1863 development value. This would be pretty unusual and in practice we understand things do not happen like that. The deed would probably recite that A and B are together absolutely entitled to Blackacre and Whiteacre … There would thus be no exchange and no Development Land Tax. My note goes on to say that the right hon. Member for Crosby appeared to recognise that in the submission that he made. Perhaps that is not right, but that is the impression he gave.
It does not follow from the fact that it is necessary to have provision for a deed of family arrangement for capital gains tax purposes that it is necessary to have the same provision in this legislation, because the treatment of gifts and the taxing of assets on death are different.
This matter was looked at very carefully. Advice was taken upon it. The conclusion of our researches is that it is not necessary to deal with the point in relation to deeds of family arrangement. That is the point that my hon. Friend the Financial Secretary promised to look at, not the general point in regard to special addition once property is given away by will or deed.

§ Mr. Michael Spicer
Time is short and we shall obviously disagree. With that protest and note of sadness, I simply note that the Minister said that he would look at this matter very carefully. He seems to have looked at it carefully.