REALISED DEVELOPMENT VALUE SUPPLEMENTARY PROVISIONS (Hansard, 24 June 1976)

§ Mr. Denzil Davies
I beg to move Amendment No. 125 in page 86, line 45 leave out 'base B or'.

§ Mr. Deputy Speaker
With this we may take Government Amendments Nos. 126 and 127.

§ Mr. Davies
These amendments are consequential upon relieving amendments moved in Committee. However, the consequences of these amendments were not all met in Committee, therefore this is a tidying up operation.

§ Mr. Denzil Davies
I beg to move Amendment No. 128, in page 90, line 12, after interest', insert 'but if section 6 of this Act did not apply on the disposal of the relevant interest it shall not apply on a subsequent disposal of the retained interest' This is not an amendment in consequence of any undertaking in Committee. It is to put right the fact that in the legislation, as drafted, it might have been possible under Schedule 2 for the taxpayer to get relief in relation to the whole asset on each part disposal. This amendment seeks to prevent relief on a disposal going on and on, with a taxpayer getting the same relief over and over again on each part disposal.

§ Mr. Graham Page
I beg to move Amendment No. 129, in page 97, line 28, at end insert 'but so that in no case shall the consideration be brought into account prior to the actual date of its receipt'. In the paragraph to which this is an amendment it says that for the purposes of this Act the consideration for a disposal shall be brought into account, and it sets out two occasions when that is done. But it does not say that in no case shall consideration be brought into account prior to the actual date of its receipt. This is a very important matter from the point of view of liability, and the payment of tax. I urge the Minister, having looked at the matter again, to accept this amendment.

§ Mr. Denzil Davies
The right hon. Member for Crosby (Mr. Page) will not be surprised to hear me say that I cannot accept it. We had a long debate in Committee on the whole subject of tax on receipts and tax when the right to consideration arises. There was a great deal of dispute on this matter because hon. Members opposite refused to accept that it is a fairly general rule that tax is charged on the right to receive instead of on the actual receipt. A subsidiary issue is the question of instalments and that takes us back to the capital gains tax legislation. This is a very big issue and the amendment is quite fundamental. I 1906 could not possibly accept it. The arguments against it are the same as those I deployed in Committee.

§ Mr. Graham Page
I agree that this is really fundamental, and I appreciate that this is only one item in the whole Bill in which we are including this fundamental principle. It would need a lot of amendments elsewhere and possibly even another Bill altogether if our principle were accepted. We put this amendment down merely to register our protest at the charging of tax on money which has not yet been received. Although the Minister says that this is done in other cases of taxation, there is no need to do it in this case. This is taxation on an increasing value which does not involve the receipt of any money.

§ Mr. Michael Spicer
Does this mean that our Front Bench is indicating that we fundamentally disapprove of this Bill, and may well consider its total repeal when we come to office?

§ Mr. Page
I do not think I should say that on this particular point. I will deal with it in the Third Reading debate when we get to it.

§ Mr. Denzil Davies
I beg to move Amendment No. 130, in page 97, line 33, at end insert— '(3) Where the relief obtainable under sub-paragraph (2) above requires a discharge or repayment of tax, it shall be given on a claim to the Board and such a claim may be made at any time'.

§ Mr. Deputy Speaker
With this we may take Government Amendment No. 131.

§ Mr. Davies
Once again these two amendments are in consequence of debates in Committee. The fear was expressed that there might not be a right of appeal. These two amendments put the matter beyond any doubt and assure the right of appeal to the commissioners, or the Board of Inland Revenue.

§ Mr. Graham Page
I beg to move Amendment No. 132, in page 99, line 42, leave out paragraph 30 and insert— '30. There shall be no part-disposal under subsection (2) of section 3 of this Act if the sum which is derived as mentioned in that subsection was received under a policy of insurance against the risk of any kind of damage to or loss of land or buildings'.

§ Mr. Deputy Speaker
With this we may take the following amendments:
No. 133, in page 99, line 42, leave out paragraph 30 and insert— '30. There shall be no part-disposal under subsection (2) of section 3 of this Act if the sum which is derived as mentioned in that subsection satisfies both the following conditions:—
(a) that it was received under a policy of insurance against the risk of any kind of damage to, or the loss of, an asset, and

(b) that it is expended on repairing, restoring, reinstating or replacing the asset within three years of receipt or within such longer period as the Board may by notice in writing allow.'
Government Amendments No. 134 to 136.
No. 137, in Schedule 2, page 99, line 46, at end insert 'or (ii) obtained under any enactment or the common law as compensation in respect of damage to or the loss of, land or building as a result of a riot of an unlawful assembly'.

§ Mr. Page
In these amendments we go back to a matter that we debated on other parts of the Bill, including our debates only yesterday, if I recollect correctly. They relate to the question whether the receipt of insurance money for the loss of property is a disposal of the property and whether it thus gives rise to development land tax. It seems that under Schedule 2, paragraph 30 it would be so treated. We want to be certain that it is not so treated, and that is the intention of Amendments Nos. 132 and 133.
Amendment No. 137 deals with the situation in which it is not insurance money that is received as a result of the destruction of the property, but compensation in respect of damage to or loss of land or buildings as a result of riot or unlawful assembly. The amendment seeks to provide that the same provisions shall apply so that the compensation shall not be treated as a disposal of the property giving rise to some assessment of 1908 realised development value and development land tax.
I cannot believe that when one's property is destroyed by riot and one is entitled to some payment out of the Police Fund if the Riot Act has been read, or if the money is received from an insurance company by virtue of a policy when the premises are burnt down, it can be treated as a disposal upon which one is taxed. I hope that the Minister will make it clear now that that is not so.

§ Mr. Denzil Davies
Amendments Nos. 132 and 133 seek an assurance that the receipt of insurance moneys as compensation would not give rise to taxation. Under the Bill the receipt of insurance moneys amounts to a part disposal. The actual moneys received are not taxed because the Bill provides that the sum received shall be equal to the value for DLT purposes, and that ensures that no DLT can arise on the receipt of the money itself.
There is, however, a trigger of part disposal, and since the insurance payment would rank as a part disposal, in theory deferred tax might become payable. However, the Bill provides that where the triggered disposal is a part disposal the amount of tax to be paid shall be determined by the Board of Inland Revenue or, on appeal, by the Special Commissioners in a just and reasonable manner. Where an owner wishes to reinstate or restore his property it is unlikely that the commissioners or the board would take the view that any deferred tax should be paid. In theory, the tax might have to be paid, but in practice the Special Commissioners would, on appeal, determine the matter on a just and reasonable basis.
Amendments Nos. 134 and 135 have been put down in response to the right hon. Gentleman's suggestion in Committee that the word "capital" might be too restrictive. The amendments omit the word "capital", and to that extent they are relieving amendments.
Amendment No. 136 seeks to apply to Northern Ireland the point that the right hon. Gentleman was making in Amendment No. 137. It excludes sums received under the Criminal Injuries Act (Northern Ireland) or any other enactment from the provisions of the Bill. I see no objection to Amendment No. 137 1909 which seeks to extend the provisions of Government Amendment No. 136 from Northern Ireland to other parts of the United Kingdom. I hope that the right hon. Gentleman does not anticipate any great difficulties in other parts of the United Kingdom. The principle is the same in both amendments and I could not possibly refuse to accept what the right hon. Gentleman is proposing. I cannot accept Amendments Nos. 132 and 133.