ESTATE DUTY. (Hansard, 13 June 1899)

*THE CHAIRMAN OF COMMITTEES (THE EARL OF MORLEY),
who had upon the Paper the following notice: To call attention to the fact that, on the succession to an estate registered in the Land Registry, the title of the successor, though he has paid all the estate duties due from him, is for all tune endorsed with a notice that the estate is still subject to an indefinite liability for estate duty; and to the effect which such an endorsement has on registered titles; said: My Lords, I think I should explain that when I placed this notice upon the Paper of your Lordships' House I did so under a misapprehension. Latterly new rules have been introduced by my noble and learned friend on the Woolsack with regard to the registration of land, which really render my notice to a very large extent unnecessary; but as it has been on the Paper for several days I think it is desirable that I should say a few words in explanation of the reason why I gave notice to call attention to this matter. It was quite by accident that I became aware of the mode in which indefinite liability for estate duty is, or has been up to quite recently, endorsed on registered titles. I found myself in the somewhat unusual position of succeeding to a property which had been registered in the Land Registry, and when I had produced to the Registrar the receipts from Somerset House showing that all the duties on the land which were then ascertainable had been paid, I assumed that my title would be a clear one, and that I would have all the advantages which are supposed to result from a registered title. I was somewhat surprised to find that, although I was registered with absolute title, and although I had paid all the duties then ascertainable, the following entry was inserted at the end of my title: The land is subject to such liability as may affect the same in respect of the estate duty on the decease of the owner. This, it seems to me, is a very important matter, because it defeats the main object 998 of registering titles, which is to give the owner of the land a clear title, and to facilitate a transfer. I inquired at once as to when this notice would be taken off, and was informed that it would never be taken off. I then made further inquiries as to the reason why it was placed on a registered title, and the explanation I received was this, that the Succession Duty Act of 1883 and the Finance Act of 1894 are so framed that they leave land charged in certain cases for estate duty over an unlimited period, and that that liability may very often arise, not from the will which creates the succession, but from extraneous circumstances which could never have entered into the head either of the testator or the successor, amongst other things the falling in of long leases or any increment to the deceased person's estate which may have come from sources which could not have been imagined at the time when the succession was created. Of course, this liability is increased by the fact that under the Finance Act of 1894 any such increment might affect the aggregation and consequently the rate of duty which would be paid upon the estate, and I was informed that no lapse of time whatever could free the holder of the title from this liability. The actual liability does not merely affect registered land, but it also affects unregistered land. Though this is a much wider question than the one to which I am calling the attention of your Lordships, which is confined entirely to registered titles, I ventured to suggest whether, from the point of view of public policy, there ought not to be some period at which an estate which has paid all ascertainable duties should be free from any further liability. I doubt very much whether the gain to the Exchequer is in any way commensurate with the vexation which a continuing liability causes, and the interference with the free and easy transfer of land which such a liability must inevitably produce. Although this is, as I have said, a much wider question, still I venture to call the attention of the noble and learned Lord On the Woolsack to it. I think it is a question which undoubtedly deserves consideration, from a public point of view, for the policy of Parliament now is to render land transfer as easy and as cheap as possible. For my own part, I attach very great importance to facilitating transfer, for I believe by this means we shall accomplish what seems to me, and what, I think, Parliament has admitted 999 would be, a very useful object—we should by this means make a larger distribution of land possible. This is prevented at the present moment more by the expense, trouble, and delays consequent upon small transfers than by any other cause. This does not apply so much to large building estates, in respect of which it is generally easy to draw up a simple printed form of title and to convey the land cheaply and easily but in the case of rural estates; the owner, who would often be glad to sell an acre or two of land round a village or large town, for the convenience of the people living in it, is debarred from doing so owing to the expense, trouble, and delay which he is put to being quite in-commensurate with the amount of money he would receive for the land. I venture to think this is a question which is well worthy of the consideration of your Lordships. With regard to registered land, the notice I have quoted to the House, which is endorsed on the titles, to the effect that the estate is still subject to an indefinite liability for estate duty, must obviously cast a taint on the title. At any rate, you do not get what you bargain for—namely, an absolutely clean title. Since I put the notice upon the Paper I have had a communication with the Registrar of the Land Registry, who has informed me that the Rules have been largely changed during the last year, and that amongst the new Rules which came into effect on the 1st January last the following finds a place: Where a notice of liability has been entered on the Register, it may be cancelled on the production of any such evidence as is mentioned in the preceding Rule. The evidence mentioned in the preceding Rule is proof to the satisfaction of the Registrar that all duty payable in respect of such land by reason of the death of the proprietor has been paid and satisfied. That to a large extent satisfies me, and if I had known that the Rule existed I should not have troubled the House with this notice. But there is one point to which I should like to call the attention of the noble and learned Lord on the Woolsack. I put it to him whether the words "may be cancelled" ought not to be "shall be cancelled." At present it is no one's duty to cancel the notice. I cannot help thinking it should be the duty of the Registrar to cancel the notice after satisfactory evidence has been produced to him, showing that all the ascer- 1000 tainable duties had been paid. That, at least, would be fair to owners of registered land, and would place them in the same position, so far as liability for duty goes, as the owners of unregistered land. If the Government can see their way to freeing all land, whether registered or not, from liability to duty after the efflux of a given period, of course that would solve the question to my mind in the most satisfactory way. I almost hope that if, as I believe, the Exchequer would lose a very trifling amount of money by so doing, that reform may be carried out. Failing that, however, such a small amendment as I have proposed in the Rules which have been so recently issued would meet the point I have in my mind, and I should be glad if the noble and learned Lord on the Woolsack would give me some encouragement to believe that that amendment will be adopted.

*LORD STANLEY OF ALDERLEY
My Lords, I desire to support the noble Earl in the action he has taken, and the views he has expressed. I would remind the noble and learned Lord on the Woolsack that one of his arguments in favour of the Bill establishing the Land Registry was that it would make land more saleable, but such will not be the case if, as the noble Earl has pointed out, on the succession to an estate registered in the Land Registry the title of the successor, though he has paid all the estate duties, is for all time endorsed with a notice that the property is still subject to an indefinite liability for duty. There is another danger, that of having to pay estate duties again if the receipts are lost, in this endorsement of a presumption that the estate is still liable. I have at this moment a dispute pending with the taxing authorities because with respect to a farm, the land tax of which had been redeemed in 1799, the land tax of 8s. 8d. on the tithe had, in 1860, been transferred to the farm, and since the Act of 1896, through the neglect of Somerset House to send lists of redeemed lands with their circular to the Land Tax Commissioners, the tax has been increased to £2 6s. 5d. in 1898, and to £1 19s. 6d. in 1899, and the Inland Revenue have refused to return it.

§ THE LORD CHANCELLOR (The EARL of HALSBURY)
My Lords, my noble friend the Chairman of Committees has explained to your Lordships that the 1001 notice was placed on the Paper under a misapprehension; and I ought to say, in justice to my noble friend, that he was really himself the author of the Rule which removed his objection, because some time ago my noble friend, who sat with me considerable period on a Committee which went into the subject of the Land Register, was good enough to point out to me that, if what was called the Inland Revenue clause was insisted upon in its entirety, the result would be to stamp every transaction in the Land Registry with an unknown liability that would warn off everybody from dealing with the Registry. I have had some communication with my right hon. friend the Chancellor of the Exchequer, the result of which is the Rule my noble friend has read, and which seems to me to be enough, at all events for the present, to get rid of the difficulty. While the Inland Revenue were reluctant to release their hold over land out of which some profit might accrue, they were, however, reasonable enough to agree to this Rule. My noble friend the Chairman of Committees has taken the occasion to point out a defect I cannot deny. I agree with my noble friend that instead of leaving it in the discretion of the Registrar to erase the mark from the register, it would be better that it should be an obligation upon him. Certainly the Rule is meant to provide that it should be an obligation upon him. I cannot say that I disagree with my noble friend as to the policy of not insisting on the extreme rights of the Revenue, when the great importance of freeing the transfer of land is taken into consideration. I think it is very desirable that there should be some period of time at which it would be possible to remove absolutely any liability from land of which a purchaser for value, without notice, had become the possessor. That is only my own individual view, and I must not be understood to be committing my colleagues in any way on the subject. I can only say that in any future version of these Rules which I may be called upon to make I shall be very glad to see that the true intent and meaning of the Rule referred to shall be properly expressed, and shall not be left open to the criticism my noble friend has been good enough to pass upon it.