§ 2.38 p.m.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether it is true that executors of estates cannot get probate until they have paid duty and cannot pay duty until they have got probate, and if so, what action do they propose to take.]
§ THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)
My Lords, the law requires, as a necessary safeguard for the collection of Estate Duty, that executors shall pay the duty in respect of the deceased's own personal 243 property before they obtain probate. They need not, however, at that stage pay the duty on the deceased's real property. So long as the property is not sold the duty on real property is not payable until a year after the death and may, at the executors' option, be paid by instalments with interest over a period of eight years.
The duty the executors have to pay before probate is that in respect of the personal property of which the deceased was, to use the words of the Act, "competent to dispose;" that is, broadly speaking, his own personal estate. It does not normally include the duty payable on property passing under family settlements or on property given away by the deceased within five years of his death. Although the executors cannot, of course, dispose of the deceased's property until they have obtained probate they can in practice raise the money for the duty in a number of ways. I understand that what is often done is that money is lent to the executors on the security of the estate by a bank or other financial institution and that it is very exceptional for executors to meet serious difficulty in making these arrangements.
§ LORD AMULREE
My Lords, while thanking the noble Viscount for his long and full reply to my Question, may I ask whether Her Majesty's Government do not think it places rather a burden on the executors if they have to borrow money from the hank, for which they have to pay interest on a bank overdraft? It may sometimes take a little time for the estate to be settled and a substantial sum might be spent in that way. The second point I am not clear about is this. Suppose the bank were to refuse to grant the executors an overdraft, what would be the position if they found difficulty in raising the money in the manner suggested by the noble Viscount?
§ VISCOUNT HAILSHAM
My Lords, I understand that in practice little difficulty is found, and that the Revenue authorities are prepared to discuss particular cases should any difficulty arise. I must say that the law has been in existence, according to my recollection, since 1881, and therefore it is possible to exaggerate the extent of the grievance 244 which apparently has only just come to light.
§ LORD AMULREE
Yes; but that, I am afraid, does not answer my question, which is, do the Government propose to take steps to make it easier for executors not to be forced to pay large sums of money by way of interest for bank overdrafts? Furthermore, I gather that sometimes if the estate duty is not paid at the right time, the Estate Office charges interest, which puts a double burden on executors. Can the noble Viscount give me some hope that somebody might some day give consideration to that matter?
§ VISCOUNT HAILSHAM
My Lords, the natural life of Treasury spokesmen who seek to anticipate Budget proposals is nasty, brutish and short.
My Lords, may I draw this point to the attention of my noble friend: that executors are often put in another great difficulty through the method of calculating death duty, in that it is possible for a whole estate to have to pay duty at a higher rate by reason of a few pounds having been swept in at a late stage in the executorship?