LORD ORANMORE AND BROWNE
My Lords, I rise to ask His Majesty's Government whether the Commissioners of Inland Revenue levy Reversion Duty on the determination of a lease of land or buildings when the lease has been granted 1446 for public or charitable purposes at a nominal rent, thus directly discouraging owners of land from granting such leases for the benefit of the public, and whether if Reversion Duty is levied under these circumstances His Majesty's Government will take steps to amend the law.
I will, in a few words, explain to the House the circumstances which have led me to ask this Question. The lease of certain school buildings in Ireland expired and the buildings reverted to their owner, by whose predecessor they had been built. There was no other school in the village, and the Commissioners of National Education were anxious to renew the lease, which the owner was ready to grant, and after some correspondence it was agreed that a lease for thirty-five years should be granted at a nominal rent of a penny a year. The lease was signed, but with it was sent an Increment Value Duty paper which was also to be signed by the owner. The owner declined to sign it, and a lengthy correspondence ensued with which I will not trouble your Lordships; but I think I must read the last letter from the Assistant Secretary and Comptroller of the Inland Revenue in Dublin on the subject. It is dated December 24, 1912, and is addressed to the Secretary of the Board of National Education, Marlborough-street, Dublin, and runs as follows—With reference to your letter of the 21st instant, I beg to inform you that it is the duty of the lessor on the occasion of the granting of a lease of land for a term exceeding fourteen years to deliver to the Commissioners of Inland Revenue reasonable particulars' of the lease for the purpose of the assessment of Increment Value Duty. See Section 4 (2) of the Act. In the case of the lease referred to in your letter no Increment Value Duty will be payable as the rent reserved is only 1d. per year. Reversion Duty may, however, apparently be payable by the lessor at the time of the determination of the lease in question, and the provisions relating to the ascertainment of such Duty will be found in Section 13 (1) and (2) of the Act.I would point out that if the owner of the premises were to ask the full rack rent of the buildings which he proposes to let for school purposes it is probable that no Reversion Duty would be payable at the expiry of the lease, unless the value of the land in the village had increased very largely during the time of the lease; but, as it is, he or his successors will be heavily mulcted because he is public spirited and instead of getting the full rent which he might get for the land is willing to let it 1447 for the benefit of the public, as I have said, at a nominal rent of a penny a year. I do not think that this could have been the intention of His Majesty's Government when they passed the Finance Act of 1909–10, and I hope to hear from the noble Earl who will reply to me that, now that the attention of the Government has been called to this, they will take means to remove the grievance in the course of the present year.
§ THE EARL OF GRANARD
My Lords, so far as the law at present stands there is no question about it that so long as the premises in question are used for charitable purposes no Reversion Duty is payable whatsoever. All charities, so long as they are used for charitable purposes, are exempt, and as your Lordships are aware short leases and terms under twenty-one years are also exempt. The only leases that pay are leases for over twenty-one years. Of course, it really in a sense is only the application of the general law, which is this, that when an owner enters into possession of a property at the termination of a lease, whether it is let for charitable purposes or otherwise, he has to pay Reversion Duty. The noble Lord has raised the question with regard to his own case, which I understand is a personal one. He has let his property for thirty-five years, as I follow him, on lease, and if he had continued the original lease he could have charged any rack rent he liked.
LORD ORANMORE AND BROWNE
My point is that if school buildings are now let at the rack rent which they would fetch no Reversion Duty would be payable at the expiry of the lease, whereas if they were let at a nominal rent of, say, 1d. a year, there would be a very large Reversion Duty payable.
§ THE EARL OF GRANARD
I misunderstood the noble Lord. What he says now is absolutely correct. I think the question is, if I may say so, one that requires some revision, and if the noble Lord will allow the matter to stand over until next session I will take an opportunity of speaking to the Chancellor of the Exchequer about it; and if the noble Lord will put the Question down again then, I hope I shall be able to give him a more satisfactory answer than I have given this evening.
§ LORD JOICEY
This is not only a personal question, because in the North of England to my knowledge very many properties are let for charitable purposes at merely peppercorn rents, quite nominal rents. I feel sure if it is known that Reversion Duty is to be paid on the termination of the lease these peppercorn rents will cease and much higher rents will be asked. I hope that my noble friend, in mentioning the question to the Chancellor of the Exchequer, will bring these cases before him.