'(1) For section 24(11) of the Finance Act 1965 (deeds of family arrangement, etc) there shall be substituted—
(11) Subject to subsections (12) and (13) of this section, where within the period of two years after a person's death any of the
dispositions (whether effected by will, under the law relating to intestacy or otherwise) of the property of which he was competent to dispose are varied, or the benefit conferred by any of those dispositions is disclaimed, by an instrument in writing made by the persons or any of the persons who benefit or would benefit under the dispositions—
(12) Subsection (11) of this section does not apply to a variation unless the person or persons making the instrument so elect by written notice given to the Board within six months after the date of the instrument or such longer time as the Board may allow.
(13) Subsection (11) of this section does not apply to a variation or disclaimer made for any consideration in money or money's worth other than consideration consisting of the making of a variation or disclaimer in respect of another of the dispositions.
(14) Subsection (11) of this section applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.
§ (2) This section applies in relation to any variation or disclaimer made after the passing of this Act.'.—[Mr. Denzil Davies.]
§ Brought up, and read the First time.
§ Mr. Denzil Davies
I beg to move, That the clause be read a Second time.
It is concerned with what were originally called deeds of family arrangement which are now called alterations of dispositions taking effect on death. I do not know whether that is an improvement, but in terms of practicality it probably is. That is dealt with in clause 56, which deals with capital transfer tax. It was supported in Standing Committee by the hon. and learned Member for Dover and Deal (Mr. Rees) and the right hon. Member for Crosby (Mr. Page). They requested that this change in the law should be extended to capital gains tax.
The new clause meets the commitment that I gave in Committee that we would extend to capital gains tax the treatment that is provided in clause 56 in respect of capital transfer tax. That is reasonable and logical.
§ Mr. Peter Rees
I must immodestly claim to have had some part in this my- 608 self. I cannot on this occasion bring into this issue my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin.) I was not privileged to move a new clause on this matter, but I drew it to the Minister of State's attention and I congratulate him on his generosity and logic.
However, I must draw the attention of the House to two points. First, the clause is supposed to come into effect only after the passing of the Act. The Minister of State has effectively disposed of my point in relation to new clause No. 28 and he explained why that should be dated back to 5th April 1978. I take that point, and I recognise that that argument would not apply to new clause No. 32, but I draw attention to the fact that the parallel capital transfer tax relief under clause 56 which prompted me to suggest to the Minister of State that the relief should be extended to capital gains tax is expressed to apply from 11th April this year. If that be so, I do not see—if I may adopt the right hon. Gentleman's phrase—why in logic the relief from capital gains tax also should not apply from 11th April this year.
I do not want to look this gift horse too closely in the mouth, and it may be a little late to amend it, due to the pressure under which we are having to examine the Bill on report. I do not wish to inject a partisan note, but if we had been able to give slightly more leisurely examination to the Government's new clause we might have put down an amendment.
I do not know whether the Minister of State can offer an extra-statutory concession so that any deeds of family arrangement taking effect after 5th April should have the relief. I know that that affronts the sensitive soul of the Financial Secretary, who, like me, deprecates extra-statutory concessions, but there are always special situations.
Second, I draw attention to the provision which makes it necessary for a person to claim the relief within six months after the date of the instrument. We had certain exchanges in Standing Committee when we pressed the Government on why it was necessary in so many cases for the taxpayer to claim the relief, especially where it was almost inevitable that it would be to his advantage to do so. It seems to me that this is an added burden on both taxpayer and Revenue, and, to take up the point so ably made by the 609 Minister of State earlier, if we can relieve the taxpayer and the Revenue of unnecessary burdens, we should seek to do so.
I wonder whether the right hon. Gentleman can explain why it is necessary in this case for the taxpayer to make such a claim. It seems to me that there will inevitably be virtually 100 per cent. take-up, save on the part of those who may not have observed what may be available to them.
Subject to those two criticisms, we give this new clause an unreserved welcome. We hope that the Minister of State will recall—I do not say the "assurance"—the indication which he gave that he would consider whether relief in respect of the same type of instrument could be extended to stamp duty. As the House knows, this kind of deed is subject to ad valorem stamp duty. If we can relieve the taxpayer in such cases from capital gains tax and capital transfer tax, then, to adopt the Minister of State's phraseology, in logic we should go further and consider relieving him of the ad valorem stamp duty as well.
§ Mr. Graham Page (Crosby)
I thank the Minister for producing this clause on Report, and I thank him also for his kind words when introducing it. I wish to press the two points which my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) has raised, particularly on the question of the length of time for claims. We are dealing here with estates administered in the normal way, and it is a burden on those administering such estates to have to put claims in within six months.
The difficulty is the greater when one has to deal with different dates here—namely, the date when the new clause is to take effect and the date on which clause 56 takes effect. I hope that there will be some flexibility in the application of the clause, whether by extra-statutory provision or not. It seems peculiar that we should have the two different dates applicable to capital gains tax and capital transfer tax relief in the case of what the Minister of State said were alterations of dispositions taking effect on death.
§ Mr. Denzil Davies
I take first the question regarding the effective date being that of Royal Assent and not 11th April. 610 In practice, the Inland Revenue will give relief from capital gains tax for the period between 11th April and Royal Assent. Whether that is an extra-statutory concession or it is a relief given in practice —whichever is the better way of describing it—I do not know.
Second, I take the question why the taxpayer has to make a claim. I understand that, in the extensive consultations with the Law Societies which preceded the tabling of the clause, one of the requests made by the Law Societies was that the taxpayer should have an option to claim or not to claim this relief. Since the taxpayer has an option, he has to make his claim.
I take the point made by the right hon. Member for Crosby (Mr. Page) that six months could be a short time in relation to the administration of many estates. Of course, there is a discretion for the board to allow a longer time in which to make the claim. No doubt the right hon. Gentleman's remarks will be borne in mind, as well as the difficulty of making a claim in a complicated administration.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.