§ (1)No stamp duty shall be chargeable on any instrument whereby property ceases to be comprised in a settlement if as a result of the property or part of it becoming comprised in another settlement (otherwise than by virtue of the instrument itself) there is by virtue of section 88(4)(d) or 89(1) above no charge to capital transfer tax by reference to the value of the property ceasing to be comprised in the settlement or a reduced charge to tax by virtue of section 89(3) above; but where only part of the property becomes comprised in the other settlement this subsection shall not affect the stamp duty chargeable on the instrument by reference to the other part.
§ (2) An instrument in respect of which stamp duty is not chargeable by virtue only of this section or in respect of which the duty chargeable is reduced by virtue of this section shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the Stamp Act 1891 with a stamp denoting that it is not chargeable with any duty or that it is duly stamped.—[Mr. Peter Rees.]
§ Brought up, and read the First time.
§ Mr. Peter Rees
I beg to move, That the clause be read a Second time.
The new clause deals with maintenance funds from the stamp duty aspect. I have tabled it in response to the point made with admirable lucidity and brevity by my hon. Friend the Member for More-cambe and Lonsdale (Mr. Lennox-Boyd) in the concluding stages of the Committee. He pointed out that relief is enshrined in the Finance Bill from capital transfer tax and capital gains tax where funds are taken out of one maintenance fund and resettled in another, or appointed into it from a discretionary settlement. He pointed out that there was a gap in the reliefs that we had offered because we had afforded relief from capital transfer tax and capital gains tax, but not from stamp duty.
In our debates in Committee on capital transfer tax and capital gains tax I made the point, which commanded assent from both sides of the Committee, that in many instances, because of the operation of the rule against perpetuities, maintenance 1530 funds would not be able to persist for more than 80 years. If those concerned were anxious that the funds should continue to enjoy the tax reliefs, and should continue to be applied to the maintenance of a certain heritage asset, they should be reappointed on fresh maintenance fund settlements. It was in that context that we felt it right to introduce a measure of capital transfer tax and capital gains tax relief. On the prompting of my hon. Friend the Member for Morecambe and Lonsdale, we feel that the same relief from stamp duty should also be afforded.
§ Mr. Dalyell
The whole issue of the rule of perpetuities is extremely complex. As we have said already, it is highly undesirable that we should ever have to discuss the matter again, either in Committee or on the Floor of the House.
Will it be possible to produce a document in 12 or 18 months monitoring the effect of this provision to show how it has progressed? There is a difficulty which applies not only to the Finance Bill but to a number of other matters with which we deal in the House. We spend a great deal of time passing legislation and far too little time examining within one, two or three years how it has worked out in practice. This is something of a test case. There could be a sober look at how the provision has worked out in practice, with a report being made to the House, preferably in written form.
I leave it at that, because there is much to be done during the next few hours. However, I wonder whether the Minister could give a favourable response in principle.
§ Mr. Patrick Cormack (Staffordshire, South-West)
I associate myself with the remarks of the hon. Member for West Lothian (Mr Dalyell). He has made a valuable point. It is obvious that over the last few years the rules governing maintenance funds have not really worked. Such funds have not been set up. 1531 Indeed, the perpetuities rule has bedevilled most of them. However, everyone concerned with the preservation of our heritage and historic buildings is deeply grateful to the Government for the moves that they have made during the passage of the Bill. I add my warm thanks to my hon. and learned Friend the Minister of State for his own personal endeavours in that regard.
I hope he can adopt the suggestion of the hon. Member for West Lothian. It would be extremely helpful to everyone if we monitored how the new system was working. If the desired aims, which I think are shared in all parts of the House, are not realised, perhaps we could have some fine tuning.
§ Mr. Peter Rees
I do not know whether I am disposed to commit this or any other Administration to fine tuning in this area, because I am not exactly certain whether I have a sufficiently sensitive ear. However, I take the point that has been made by both the hon. Member for West Lothian (Mr. Dalyell) and my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), who over the years have made an enduring contribution to the preservation of heritage assets. Indeed, they have also stimulated the awareness of our fellow countrymen to what is at stake.
I think that this and any Administration would be concerned to see how these measures work out. I am not certain whether we would be justified in laying a report before the House, because there are only three matters on which we must reassure ourselves. The first is how many maintenance funds will be set up in the light of the reliefs afforded in the Finance Act 1976 and in this Bill. Secondly, we shall want to know how the fiscal reliefs are operating, and whether there is any evidence of abuse or avoidance, which will obviously be a matter of concern.
The third reason is a matter of more general concern which is perhaps not even a matter for the Treasury or the Inland Revenue. It relates to the scale of destruction or disrepair of heritage assets which are not adequately preserved or maintained, either by the system of fiscal reliefs embodied in the maintenance fund legislation or a system of Gov 1532 ernment grants. That is a more general question to which I am sure the House will want to return from time to time.
On the narrower question of how many maintenance funds will be set up, it will be open to any hon. Member who is interested in these matters to table questions. I can assure hon. Members that we shall be concerned to ensure that the provisions are not abused. Indeed, I gave that assurance in Committee upstairs, where hon. Members were quick to observe, as I am sure the House will be, that we have embodied certain very stringent provisions which will operate if funds are taken out for the benefit of the individuals and not for the heritage itself, and if income is not applied for the benefit of the heritage but is taken out for the benefit of individuals. I do not say that there are penalties, but at any rate there is a fairly stringent and, I hope, adequate clawback of reliefs. I hope that that will reassure the House.
I turn to the more general question raised by the hon. Member for Gateshead, West (Mr. Horam). The cases provided for in the new clause are those which involve a distribution of assets made to an individual out of an existing discretionary trust or an existing heritage maintenance fund and their resettlement within 30 days in a new heritage maintenance fund. The new clause is designed to cover that narrow range of situations, which, broadly speaking, are covered by reliefs from capital transfer tax and capital gains tax.
I hope that the new clause will commend itself to the House.
§ Mr. Dalyell
The case for some kind of monitoring partly rests on the fact that the Treasury, quite properly, is not prepared to disclose the tax affairs of individuals where those tax affairs can be identified. No one quarrels with that as a matter of principle. However, there is a responsibility for giving some assurance that there is no abuse.
As it happens, I have the impression, which may be wrong, that there is very little, if any, abuse at present. A careful watch is kept by the Treasury and the Inland Revenue in respect of these matters. On the other hand, if the system is to be extended in any way, we should face the fact that as laws become more 1533 and more complex, and because there are extremely expert lawyers to advise people who have property, there is an argument for some kind of Government report such as that which the hon. Member for Staffordshire, South-West (Mr. Cormack) and others have asked for—
§ Mr. Deputy Speaker
Order. I must remind the hon. Gentleman that this is a Report stage and not a Committee stage. I took his remarks to be an intervention and not a speech.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.