§ The Solicitor-General
I beg to move amendment No. 122 in page 193, line 9, at end insert—'(c) in sub-paragraph (7) after the words "section 78" there shall be inserted the words "or 82(3)".'.
§ The Solicitor-General
These amendments provide the necessary rules relating to liability, accountability, the due date for payment of tax and interest on tax in relation to the special flat rate charge for tax that would apply in certain circumstances to national heritage property that has been acquired by trustees and discretionary trusts.
§ Mr. Tim Eggar (Enfield, North)
Amendment No. 135 is the Government's response to a debate in Committee when I proposed an amendment on behalf of the heritage lobby. The Government have accepted the point that was made, but I wish to raise the question of the magnitude of the charge that should be brought down on the recipient of heritage property distributed under what is known as conditional exemption by trustees if the recipient breaches his undertakings to maintain, repair, preserve and show the property to the public.
As the Bill is drafted, the full charge is exacted even though the charge conditionally exempted cannot be more than 30 per cent. of the full charge. In most cases, it will be much lower. The Government amendment reduces the charge to 30 per cent., or 60 per cent. of the full charge, or retains it as a full charge. Which of these is chosen depends on complex arrangements that I shall not discuss now. The approach that the Government have put forward is somewhat illogical. Because the charge increases with time, the taking of conditional exemption will be inhibited.
This is too blunt an instrument. It is a slightly disappointing response by the Government to the point made in Committee. I recognise that this is an extremely complex matter. I have already supplied the Solicitor-General with an amendment. I recognise that there is no chance that it can be introduced this year. I hope, however, that my hon. and learned Friend will consider it and possibly return to the matter next year.
§ The Solicitor-General
My hon. Friend suggests that the solution adopted in amendment No. 135 is a blunt instrument. He implies that the reductions to 30 per cent. and 60 per cent. of the full senior's rate are not sufficiently precise. I accept that the percentage reductions are deliberately simple. To attempt anything more elaborate runs the risk of considerable complications that would be difficult to justify on a comparatively narrow point. My hon. Friend has kindly given me a copy of suggested alternative provisions. I have had just long enough to look at them and take advice. My reference to possible complications is well illustrated by the alternative provisions. Although they have been prepared, I have no doubt, by knowledgeable experts, they are remarkably complicated and deficient in at least two respects, which I shall be happy to import to my hon. Friend afterwards.
In response to what my hon. Friend says, I am prepared to agree that the matter should be considered further. My hon. Friend is right that it is too late to do anything about it. I give the undertaking that the matter will be looked at further without any commitment as to the result. I suggest that the obvious course is for representatives of the lobby that put forward those points to enter into discussions immediately with the appropriate officials. Between us all, perhaps we can find the best answer.
§ Sir Ian Percival
I do not think that my hon. Friend is right in that proposition. However, if he is, of course that will be another matter to be considered. Meanwhile, I commend the amendments to the House.
§ Amendment agreed to.
Amendments made: No. 123, in page 193, line 22 at end insert—
'9A. In paragraph 12(4) of that Schedule after the words "section 78" there shall be inserted the words "or 82(3).".'.
No. 124, in page 193, line 38 at end insert—
'11A. In paragraph 19(1)(c) of that Schedule after the words "section 78" there shall be inserted the words "or 82(3)".'.
No. 125, in page 194, line 3 at end insert—
'14A. In paragraph 16(6) of that Schedule, for the words from the beginning to "settlement is" there shall be substituted the words "Where a benefit has become payable under a fund or scheme to which this paragraph applies, and the benefit becomes comprised in a settlement".'.
No. 126, in page 194, line 30 at end insert—
'16A. In paragraph 4 of Schedule 10 to that Act, for sub-paragraph (2) there shall be substituted—
(2) Sub-paragraph (1) above shall not apply where the chargeable transfer is made under Schedule 5 to this Act or under Chapter II of Part IV of the Finance Act 1982 and the gain accrues to the trustees of the settlement; but if in such a case any capital gains tax chargeable on the gain is borne by a person who becomes absolutely entitled to the settled property concerned, the amount of the tax so borne shall be treated as reducing the value transferred by the chargeable transfer".'.
No. 127, in page 194, line 31 leave out
'Schedule 10 to that Act'
and insert 'that Schedule'.
§ No. 128, in page 195, line 6 leave out '(7A)' and insert '(8)'.
No. 129, in page 195, line 7 at end insert—
'(9) Subsection (1)(b) above shall have effect subject to section 82A(6) and (7) below.'
No. 130, in page 195, line 29 leave out from beginning to end of line 32 and insert—
'(2) References in subsections (3) and (4) below and in sections 82, 82A and 83 below to a conditionally exempt occasion are to—
- (a) a transfer or event which by virtue of subsection (1) above does not constitute an occasion on which tax is chargeable under the Chapter there mentioned;
- (b) a conditionally exempt distribution (within the meaning given by this subsection as it had effect in relation to events before 9th March 1982).'.
No. 131, in page 196, line 48 at end insert—
'(3A) Tax shall not be charged under subsection (3) above in respect of property if, after the occasion and before the occurrence there mentioned, there has been a conditionally exempt occasion in respect of the property.'.
No. 132, in page 197, line 5 after 'quarters', insert
'(that is, periods of three months)'.
No. 133, in page 197, line 20 at end insert—
'(6A) The persons liable for tax in respect of a charge under subsection (3) above are—
- (a) the trustees of the settlement; and
- (b) any person for whose benefit any of the property or income from it is applied at or after the time of the event occasioning the charge.'.
No. 135, in page 198, line 31 at end insert—
'(6) If the last transaction regarding property before a chargeable event was a conditionally exempt occasion, and the relevant person died before 13th March 1975, section 79(1)(b)(ii) above shall (subject to subsection (7) below) be taken to read as follows:—
(ii) the rate or rates that would have applied to that amount ('the chargeable amount') under the appropriate Table in that section if the relevant person had died when the chargeable event occurred, the value transferred on his death had been equal to the amount on which estate duty was chargeable when he in fact died, and the chargeable amount had been added to that value and had formed the highest part of it.
(7) If the last transaction regarding property before a chargeable event was a conditionally exempt occasion, the rate (or each of the rates) mentioned in section 79(1)(b)(i) or (ii) above—
No. 136, in page 198, line 31, at end insert—
'22A. In section 83 of that Act, after subsection (3) there shall be inserted—
(3A) References in subsection (3) above to a conditionally exempt transfer of property include references to a conditionally exempt occasion in respect of property.".'.
No. 137, in page 198, line 31, at end insert—
'22A. For subsection (8) of section 114 of that Act there shall be substituted—
(8) This section shall apply to occasions on which tax is charegable under section 102 of the Finance Act 1982 in cases within paragraph 5 of Schedule 14 to that Act in the same way as it applies to transfers of value; and for this purpose references in this section to transfers made by the same person shall be construed as references to occasions relating to, or distribution payments made out of property comprised in, the same settlement.".'.
No. 138, in page 199, line 15, at end insert—
'25A. For paragraph 6 of that Schedule there shall be substituted—
6. Where tax is chargeable under paragraph 2 of Schedule (Capital transfer tax: maintenance funds) to the Finance Act 1982 on any occasion after a reduction and the rate at which it is charged falls to be determined under paragraph 8 of that Schedule by reference to a death which occurred before that reduction (or before that and one or more previous reductions) that paragraph shall apply as if the Tables in section 37(3) as substituted by that reduction had been in force at the time of the death.".'.—[The Solicitor-General.]