HL Deb 17 December 1984 vol 458 cc447-51

House again in Committee.

Clause 4 agreed to.

Clause 5 [Functions of court prior to registration]:

The Lord Chancellor moved Amendment No. 4: Page 5, line 20, leave out from ("necessary") to end of line 8 on page 6 and insert (", before the instrument creating the power is registered, to exercise any power with respect to the power of attorney or the attorney appointed to act under it which would become exercisable under section 8(2) on its registration, the court may exercise that power under this section and may do so whether the attorney has or has not made an application to the court for the registration of the instrument.").

The noble and learned Lord said: If I may, I shall move Amendment No. 4 and speak also to Amendment No. 8, which is purely consequential upon it. Amendment No. 8: Schedule 3, page 18, line 26, leave out ("(2)").

My name appears to this amendment, and it is therefore a Government amendment, but we really owe it to the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Elwyn-Jones, who drew our attention to the weakness which this amendment is designed to cure. Therefore, I have to express gratitude to them, and I hope that the Committee will record its gratitude to them rather than to me because all that I did was to put the thing to the Government's draftsman, who has done it (I think in a slightly more elegant form, but with the same effect) as the noble Lord, Lord Mishcon, had originally proposed to do it.

The fact is that Clause 5(2) and Clause 8(2) give the Court of Protection identical powers, in the first case to be exercised prior to registration of the instrument and in the second case to be exercised in the case of a registered power. This involves an unnecessary duplication of drafting, and this is the way it is now proposed to remove the unnecessary duplication. Therefore, with due expressions of gratitude to the real source of the improvement, I beg to move.

Lord Elwyn-Jones

I am grateful to the noble and learned Lord for taking up the suggestions of the Law Society so clearly explained by my noble friend Lord Mishcon. This has at least enabled me to say something in the course of these proceedings. It may also be convenient to indicate that further amendments which purport also to be in my name will be moved by my noble friend.

On Question, amendment agreed to.

[Amendment No. 5 not moved.]

Clause 5, as amended, agreed to.

Clause 6 agreed to.

Clause 7 [Effect and proof of registration, etc.]:

Lord Mishcon moved Amendment No. 6: Page 7, line 42, leave out paragraph (b).

The noble Lord said: I move this amendment by asking one question. Has not disclaimer already been dealt with by Clause 2(12)? If that be so, should not this amendment be accepted? I beg to move.

The Lord Chancellor

I am grateful, again, to the noble Lord, Lord Mishcon. This amendment was proposed, I think, not because it was believed that the provision was objectionable in substance but precisely—and the noble Lord, Lord Mishcon, has confirmed it—because there was a similar provision in Clause 2(12) and it was believed, therefore, that Clause 7(1)(b) was repetitious and unnecessary. I think that this argument, for which I am grateful, overlooks, however, the differences between the provisions; and it also overlooks a third similar provision contained in Clause 4(6).

All three provisions are necessary. Each is slightly different from the other two. Each is logically correct where it appears. There are two distinct situations: where the donor is mentally capable, notice of the disclaimer has to be given to him; where he is mentally incapable, notice has to be given to the Court of Protection. Since Clause 2 deals with all the characteristics of an enduring power, subsection (12) deals with both these situations. It is, however, the only provision in the Bill requiring that notice has to be given to the donor when the latter is mentally capable. When the donor is, or is becoming, mentally incapable (so that notice has to be given to the Court of Protection) the situation is dealt with in two separate provisions; namely, Clause 4(6), which deals with disclaimers before registration, and Clause 7(1)(b) (which is the one currently under discussion), which deals with disclaimers after registration.

The proposed amendment is also technically defective in that a consequential amendment would be needed to Clause 8(4)(a). For these reasons, I am grateful to the noble Lord, Lord Mishcon, but I hope that I have given an adequate explanation.

Lord Mishcon

I am most grateful to the noble and learned Lord for the explanation that he has given. It was only because one was anxious to raise the principle as to whether there was not a repetition which was needless that the amendment was put down; and that is why—and I am sure that the noble and learned Lord realises this—it was not followed through, as it will be, of course, at a later stage in the Bill, if another fate had been accorded this amendment. In view of what the noble and learned Lord has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clause 8 agreed to.

Lord Mishcon moved Amendment No. 7: After Clause 8, insert the following new clause—

Tax returns

(". Notwithstanding the Tax returns provisions of section 72 of the Taxes Management Act 1972 when an instrument has been registered under section 6 of this Act the Inland Revenue shall recognise the attorney acting pursuant to such instrument as the duly authorised representative of the donor for the purpose of signing any tax returns.")

The noble Lord said: This is an amendment of some substance, and certainly of practical importance. As the Committee probably knows, there is a practice of the Revenue which prohibits an attorney from signing, for example, a tax return on behalf of the person appointing him as his attorney. One can well appreciate the reason for that. It is that there would be most likely every excuse for an attorney to say that he did not know of the person who had appointed him attorney, he did not know of that person's actual means, and that when he made the return he honestly believed it was true; whereas if the taxpayer himself makes the return he is deemed to know what he possesses and therefore if he says something which is inaccurate, or if he omits something, the Revenue want to have their rights and remedies against him. Therefore, that is the normal answer, the normal practice, normal procedure—and very understandable it is.

But now we are dealing with a very different type of case. Perhaps before saying that I ought to pay tribute to the Revenue and say that where a genuine case comes before them, where the taxpayer is very old or suffers from some physical disability, and they are satisfied in the circumstances that that procedure ought to be adopted, they will accept an attorney's signature. But now we are dealing with a very different situation under this Bill, because the Bill is meant to cover only those who, by reason of their mental state as from the date of the enforceability of the power of attorney, are to have no legal rights whatsoever. Indeed, they could not sign the return and make it a valid and proper return. It has to be done by the attorney.

4 p.m.

In the discussions which have taken place—and the noble and learned Lord the Lord Chancellor will correct me if my information is in any way inaccurate—the Lord Chancellor's Department was good enough to consult the Inland Revenue, and apparently what the Inland Revenue are saying is that they do not anticipate any difficulty because they would normally allow such a procedure to take place; namely, the tax return I have given as an example would be signed by the attorney and they would normally accept it.

But is that good enough since the attorney cannot require that acceptance? If the Revenue do not accept the attorney's signature to that tax return, what would happen would be this. The whole purpose of the Bill would be defeated and the family of the taxpayer would then not be able to rely at all upon its provisions and would have to go to the Court of Protection and go through the whole of the procedure in order to see that a proper tax return is rendered by a person who has the right and power to do so. That would, of course, be a defeat, as I said, of the whole purpose of the Bill. For the life of me I cannot see why there should not be in the Bill a clear provision that says that in a matter of this kind the Revenue shall accept the attorney who has not only been appointed by the donor but the attorney who, if I may put it this way, has been investigated by the Court of Protection and it is found that all the matters that are supposed to be there in protection of the donor have been carried through and everybody is satisfied that he is a proper and rightful attorney.

That may have some sort of reflection upon the provisions of Section 72 of the Taxes Management Act 1972. That is why, in what I hope is wording that is not too clumsy—and, frankly, it is my own wording—I have tried to say that: Notwithstanding the provisions of section 72 of the Taxes Management Act 1972 when an instrument has been registered under … this Act the Inland Revenue shall recognise the attorney acting pursuant to such instrument as the duly authorised representative of the donor for the purpose of signing any tax returns.

There was a method, if I may say so, behind my saying to the Committee that the wording of this amendment was entirely my own because I have mentioned in the past that these amendments have been initiated by the Law Society, and if there is any defect in the wording (and lam sure that the noble and learned Lord realises that it is really the principle which is involved here at Committee stage) I should not like the learned Law Society to be blamed for it. I beg to move.

Lord Davies of Leek

I just want to ask a simple question. Does the word "shall" mean, and is it semantically exactly the same as, "shall be obliged"?

Lord Mishcon

I cannot at the moment detect any difference between the two.

Lord Campbell of Alloway

May I very briefly support the substance and principle of this amendment and in doing so be allowed to pay a tribute not only to the Court of Protection, but also to the way in which the Revenue work in such circumstances, as I know from my own personal experiences, which were somewhat unfortunate in regard to my own family? But why should a normal concessionary practice stand? Really, it is not, it seems to me, apposite in the circumstances of this case; and although maybe the Court of Protection and no doubt the Revenue would operate the concessionary practice reasonably and fairly, this is not really a matter for concessionary practice within the recast framework of this Bill. For those reasons I support the principle, although the drafting may be a little beyond me.

The Lord Chancellor

Again, I am grateful to the noble Lord, Lord Mishcon. In this case, if I may, I should like more time to consider the matter, and if he will be good enough to withdraw this particular amendment, I would hope to see whether further discussions can find a satisfactory solution before the Bill leaves this House; indeed, I hope at the next stage. There is one error, but only one, that I have been told about, and I think it is either a misprint or a lapsus calarni. The Taxes Management Act referred to should be 1972, not 1970. Has it been changed? If so, then it has been changed since I last looked at the text, and I am very grateful. Apart from that, the situation is a genuine one and it has been explained by the noble Lord, Lord Mishcon. I hope it will ultimately result in an improvement to the Bill.

There is no doubt that, as the noble Lord, Lord Mishcon, urged, once the donor of the power is mentally incapacitated, it would be to the benefit of all concerned—that is to say, to the donor himself (by this time mentally incapacitated), his attorney, and the Inland Revenue—if correspondence relating to the donor's tax matters could be addressed to the attorney and if the attorney could sign tax returns on behalf of the donor. But there is one difficulty. In other circumstances, where one person has the direction, control or management of the property of an incapacitated person, Section 72 of the Taxes Management Act 1970—I got it the wrong way round in my first attempt, but now I have got it the right way round; it is 1970, not 1972—provides that the person having such, direction, control or management … shall be assessable and chargeable to income tax in like manner and to the like amount as the incapacitated person would be if he were not incapacitated.

In other words, if effect were given to this amendment, the unfortunate attorney would find himself liable personally for the return, and that might deter proposed attorneys from accepting the responsibilities of their office. The Inland Revenue, possibly understandably, are somewhat reluctant to make an exception in favour of attorneys under an enduring power which they would not make in other cases. But I hope that all this can be resolved by friendly discussion.

There may be, I am told, other difficulties, of which I should like the noble Lord, Lord Mishcon, and others to have notice, such as where the attorney is empowered to deal with only part of the donor's estate; that is a highly technical matter. If the noble Lord, Lord Mishcon, will withdraw his amendment now, I hope that discussions can go on and a favourable solution be arrived at.

Lord Mishcon

I am most grateful to the noble and learned Lord and I readily accept his suggestion. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clauses 9 to 14 shall stand part of the Bill?

The Lord Chancellor

I give notice that at the Report stage I may have to return to Clause 9. But subject to that, I naturally support the Question.

Clauses 9 to 14 agreed to.

Schedules 1 and 2 agreed to.

Schedule 3 [Joint and joint and several attorneys]:

The Lord Chancellor moved Amendment No. 8:

[Printed earlier: col. 447.]

The noble and learned Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Schedule 3, as amended, agreed to.

House resumed: Bill reported with amendments.