(Except Clauses 5, 14, 16, 17, 33 and 49)
STANDING COMMITTEE A
Thursday 6th February 1975
[Mr. Richard Crawshaw in the Chair]
Mrs. Margaret Thatcher
On a point of order, Mr. Crawshaw. We have had the benefit of looking at HANSARD for the first part of yesterday's proceedings and seeing in print the semi-statement which the Joel BarnettChief Secretary made. I do not think one could call it a full statement. Having looked at it word for word, we are still a little puzzled. As we have to debate today and next Tuesday exactly what it means, I should be grateful if the Chief Secretary could tell us when a full and detailed statement will be made so that we may know what it is about before we debate the relevant clauses next Tuesday.
The Chief Secretary to the Treasury (Mr. Joel Barnett)
I am happy to tell the right hon. Lady that I have circulated to the Committee the scale to which I referred yesterday. I hope that that will be of help. I am ensuring that it will be given in answer to a Question so that it will be available in HANSARD to all hon. Members. I am arranging also for a written statement to be prepared setting out in detail what I said in my speech yesterday, and that will be put in the Library. I hope that that will be of help to Members. If there is any other way in which I can help, I shall be only too pleased to try.
Mr. Jerry Wiggin
Further to that point of order, Mr. Crawshaw. I fully understand the Chief Secretary's dilemma and difficulty. There is always a problem when major changes are made during the passage of a Bill. I am sure that my right hon. Friend the Member for Crosby (Mr. Page) will recall that, when he was a Minister, he and I sat in Committee on a Private Member's Bill and we rewrote it several times during its passage. But it was nearly always necessary, after a major alteration, to adjourn the Committee. Without the new amendments on the Paper, and without the consideration that should be given to those amendments, it is difficult to know quite how to proceed.
At our sitting yesterday substantial [column 1020]alterations were made in the rates for small businesses and farms, in the conditions for bequests to charities, in the treatment of heritage property and forestry—all major points, which I suspect will be much welcomed. But that still does not make it easy for us to proceed today with the Bill.
If the Chief Secretary would tell us how far he thinks we might go today, that would be of great help. We need not make too much fuss about this, but if the right hon. Gentleman wants to deal with Clause 32 and the attendant schedules, I do not see how we can possibly go on.
Mr. Joel Barnett
Obviously, Mr. Crawshaw, I should be pleased to have the rest of the Bill this evening or by tomorrow morning, but I do not expect that we shall reach that happy stage. I hope that it will be possible to reach Clause 31 or Clause 32, but I am sure that we shall not get into a situation which will be unhelpful to the Committee. The scale that I referred to yesterday I have handed to the Committee in a note, and that is the amendment that will come on Report.
Mr. Nigel Lawson
To Clause 33?
To Clause 33. That is why I cannot do it in Committee. I have done what I can for the convenience of the Committee.
I think it will be helpful to the Committee if we know exactly what it is about. Yesterday, in referring to Clause 33, the Chief Secretary pointed out that we had debated on the Floor of the House reliefs under that clause. He said:
“I cannot agree with that method of providing relief” .
That, I believe, goes back to the phrase at the opening of the paragraph:
“The other form of relief that might be considered was mooted on the Floor of the House when we debated Clause 33—that there should be a substantial reduction in rates of tax.”
Over the page, in the first paragraph, the right hon. Gentleman is reported as saying:
“I am proposing a separate lifetime scale on a steeply progressive basis in order to help specifically small businesses and small farms.” —[OFFICIAL REPORT, Standing Committee A; 5th February 1975; cc. 774–5.]
Now we have this difficulty. We are told that we cannot have Clause 33 relief. We are told that the Chief Secretary is [column 1021]helping specifically small businesses and small farms. This scale resembles the Clause 33 scale for lifetime gifts—not only for small businesses and farms—applying to all gifts or charges to tax. We should like made quite clear to what the amendment refers.
Mr. Joel Barnett
May I reassure the right hon. Lady and the Committee? I think that if my speech were read in full, rather than one or two sentences out of context——
I have read it.
I am not trying to be difficult. I understand the problem. But if my speech were read in full, the reason for my seeking to help with this lifetime scale would be seen as helping small businesses and small farms, but in so doing, of course, it helps everyone else—at the lower levels particularly. I thought I had made clear that my main reason for proposing the amendment was that I did not think it right or fair—indeed, I am sure I said words to that effect—in equity as between taxpayers, to help one rather than another. Thus, the process of putting something on the Paper to help small businesses and small farms will help others, too. That is certainly true.
What I propose is an amendment to Clause 33 which would be a lifetime scale for everyone, not just small businessmen and small farmers. I hope that is clear.
Mr. Peter Rees
Further to that point of order, Mr. Crawshaw. I wonder whether the Chief Secretary can enlighten us on a material point, for our forthcoming debates. Is this to be an amendment just to Clause 33, or does it follow from what he said that he will introduce by a side wind the distinction which was very material for estate duty purposes between gifts inter vivos and the charge on death? Will there, for instance, be all the complex provisions which there used to be relating to Section 2(1)(c) of the Finance Act 1894, as to whether there was an absolute gift or a reservation of an interest or benefit, because that cannot be done by Clause 33?
Are we to expect a whole range of new provisions, and, if so, shall we debate them here or on Report? This is material to all the various matters that we shall be [column 1022]asked to debate for the rest of these proceedings.
May I answer that question immediately? I was talking about the major form of relief, which I hope will be helpful. I do not expect anything like as complex as the hon. and learned Gentleman has in mind. I referred only to a limited version of the seven-year rule which we are now considering.
Mr. Nicholas Ridley
Further to that point of order, Mr. Crawshaw. The Committee would, I am sure, like to emphasise that it is entirely in favour of these concessions and is extremely grateful to the Government for having responded to our pressures. However, it puts us in some difficulty because half the Bill has been debated and many of the points discussed would have been dealt with differently had we known that there was to be a different rate for lifetime gifts as opposed to gifts on death.
The other half of the Bill will be affected considerably, and we ought to see the precise form of the amendment which the Chief Secretary so rightly and kindly proposes to put down at a later stage. We shall not now have the benefit of seeing the exact details of his amendment to bring about the reduced rate for lifetime gifts. That will put the Committee in great difficulty in deciding on such matters as historic buildings, agricultural relief and the many parts of the Bill still to come with regard to settlements and trusts. We shall not know whether points for amendments will be right or wrong.
Effectively, therefore, we have negated a large part of our efforts in this Committee, both past and future. I do not suggest that we start the Committee stage again, although a scrupulous Opposition would wish to begin again at the beginning and look at the Bill again in the light of these many and welcome concessions. I am happy to do that, but I do not know whether hon. Members opposite are so keen on this new tax and would wish to do so.
It would be helpful if we could see the amendment quite soon in its precise form, even though the Chief Secretary cannot table it. We understand that we have passed Clause 33, but he might be able to find some way of putting it on a piece of paper so that the Committee would be [column 1023]aware of its precise and technical details from the point of view of its interaction with other parts of the Bill still to come.
This is getting complicated. We have had major concessions on forestry, historic buildings, on quick succession relief, and now on the rates themselves so that we are already dealing with a totally different Bill from the one printed and before the Committee. Although the Opposition will be as helpful as possible in trying to interpret this tangle, it would be much easier for us to proceed if as many of the amendments as possible, whether or not they can be placed on the Paper, were tabled in some form so that we could be aware of their detailed provisions.
As the night wore on yesterday, it became inceasingly difficult, under the barrage of large and major new concepts in many areas of the Bill, to understand just where we had got to and what we were trying to enact. Although each one of these shocks through the small hours of the night was welcome and greatly to the credit of the Government, one begins to wonder why they did not bring in a different Bill in the first place which would have saved us not only all these late nights but all the present trouble in trying to understand what is going on. The more information we can have from the Chief Secretary, the more grateful we shall all be.
Several hon. Members rose——
Order. We cannot continue this debate on points of order. To regularise the matter, if other hon. Gentlemen wish to take part, it would be appropriate to move a dilatory motion for the adjournment, to be withdrawn later. Do the Opposition wish to pursue this? I am not prepared to go on indefinitely taking points of order.
Mr. Peter Hordern
For my part, Mr. Crawshaw. I have only one small point to make. It is satisfactory that we should have a note in HANSARD about these arrangements in answer to a Question, but I wonder whether the leaving of a paper in the Library is satisfactory in relation to the considerable changes that are taking place. Also, would it not be possible for the Treasury to issue a comprehensive statement about the position which we have now reached? That would be very helpful to many outside [column 1024]this Committee who take a deep interest in our proceedings.
Mr. Joel Barnett
Perhaps I may immediately respond to that request. I shall certainly arrange for a statement along the lines he asks to be placed in the Library for the benefit of hon. Members. I hope the Committee appreciates that the scale is the important thing. I have handed copies of the scale to hon. Members, which I hope will be helpful. I shall be making a statement outside, too.
May I regularise the matter, Mr. Crawshaw?
I beg to move,
That further consideration of the Bill be now adjourned.
I shall seek to withdraw that motion so soon as is convenient.
Mr. Tony Newton
If it is possible to place a statement in the Library, as it is a matter of great importance it should be possible for copies to be posted to all members of the Committee so that we may look at it over the weekend. We are always anxious to be helpful as possible to the Chief Secretary, and the more homework we can do over the weekend the speedier will be our progress.
I am happy to comply with that request, too, and that I shall do.
This is a most important concession and, I think that it should go on record that, as a result of our unparalleled opposition in the House on Clauses 17 and 33 we have extracted at long last from the Government major concessions, which I welcome, on two points—on the rates as such and on the principle that there is a distinction between gifts inter vivos and transfers on death. This is proof that the opposition conducted has been worth while and produced results.
The Chief Secretary, in trying to wrap this up as a concession to small businesses, was not helpful yesterday. He was misleading and confusing, and I hope that he will not do that sort of thing again, and that he will go further in connection with small businesses.
There was one other confusion in his statement yesterday. He said:
“There is bound to be line drawing somewhere. But, for the purposes of my argument, I propose to use the figure of £250,000” . —[column 1025][Official Report, Standing Committee A, 5th February 1975; c. 774.]
Yet, according to the scale which has now been handed to us, the relief goes up to £300,000. I do not quarrel with that figure, but we should like to have clarification on the discrepancy. Incidentally, I assume that this applies to all estates of whatever size—that it is the first slice of any gift that we are discussing.
Mr. Russell Fairgrieve
The trouble here is that, until we see the suggested changes in the treatment of agriculture, of small business and of forestry in detail, we are discussing a new Bill without the relevant information.
Mr. David Howell
The Chief Secretary said quite rightly to my right hon. Friend that the change in the rates was of importance. I should like it to be absolutely clear that another matter of equal importance arises from the piece of paper he has handed around. The central principle around which almost all our debates on Part II have revolved is the principle inherent in the Government's proposal that there is no distinction between transfers inter vivos and transfers on death. Again and again, through the day and the night, this week and last week, and on the Floor of the House, we have had to shape our arguments and our amendments around that principle.
Now a piece of paper comes along which destroys that principle. It is removed from the Government's proposal. The central pivot upon which the CTT rested has been taken out and its shape changed. Indeed, it is questionable whether it has been put back at all. Clearly this will have implications not merely for any future clauses and amendments that may go down, and any new proposals that the Chief Secretary may bring forward, but for a great many—indeed, almost all—our debates so far on Part III of the Bill.
Therefore, in welcoming very warmly the important changes in the rates—clearly there are some details to clear up on that—we must point out, as my hon. Friend has just done, that the central principle, to which the Government gave such great emphasis and importance when they first brought forward the Bill, has now been removed. This affects almost all the arguments we have so far had and the [column 1026]way in which we have addressed ourselves to this Part of the Bill.
Mr. John Pardoe
I immediately welcome the quite astonishing concession that has been made by the Government. I do not want to be churlish about that at all. Having said that, however, I must emphasise that we are not just dealing with figures. We are dealing with a fundamental change in principle in the whole nature of the tax. Large parts of our deliberations, including a very large part of my own speech during the Committee stage on the Floor of the House on the amendment which sought to make it a donee tax rather than a donor tax, were concerned with the problem that the tax would encourage people to hold on to wealth rather than pass it on.
The rates on this bit of paper before us now change the whole basis of those calculations. Indeed, they make a large part of the deliberations that we have all spent our time on in this Committee totally wasted. This is legislative foolishness. While one does not wish to say that the Government should never bring in a major amendment of this kind, one must ask what kind of machinery of Government we have that can make changes of this kind—or find it necessary to make them, which is the real point—at this stage in our proceedings on a Bill.
I find it incredible that, after the introduction of a White Paper, then the Bill and then all our debates, at this late stage at last they have come to heel. Well, thank heaven for small mercies. But I must say to the Chief Secretary that we need a lot more information than this before we can continue our deliberations.
One of the important factors for the House and its Committee on any Bill that introduces a new tax is to assess the revenue that the Exchequer will gain from that tax in comparison with the costs involved. What effect will these new rates have on the total revenue? Let us have the figures. I am beginning to wonder whether this whole journey is really worth while. I hope that the Chief Secretary will not give me the same answer that he gave me last night, that it is impossible because I always ask him questions that he cannot answer. Of course, I do. That is the function of opposition. But it is also the function of Government to know the answers, and I hope that he knows the answer to this one. [column 1027]
It must have been calculated. Otherwise, how do we know that we are not just spending a great deal of time and legislative effort on passing a new tax that will raise peanuts for the Exchequer? What is the point of putting the whole country, as well as the House of Commons, to massive inconvenience if the revenue yield will be peanuts? I hope that we can have an answer on the effect this will have on the net yield of the tax.
In the interval since I last rose on a point of order, Mr. Crawshaw, I have been looking at some of the amendments we are due to debate today. I see that you have selected amendments to Clause 32, and new Clause 15, for example, which will put the Opposition in a difficulty. The Treasury has vast resources at its disposal, although I must say that the quality of some of the briefs yesterday was not quite up to the normal standard—but as we are quite rightly not allowed to blame those who write briefs but only those who deliver them, perhaps that is a wrong assumption.
New Clause 15 will be considerably affected by the new concessions. My name is on that new clause, but I may not wish it to stay on, and I may not wish to speak to it. The earlier items that on your selection, Mr. Crawshaw, perhaps will not be as affected as we had thought. I understand that there may be more concessions——
There is apparently to be a major concession on Clauses 29 and 30, which will mean that all the amendments which were designed for the clause as drafted may not be relevant to the new clause which has not yet come forward, which we cannot then amend if we wish.
Having in my capacity as a private Member sat on the other side trying to promote a Private Member's Bill, I understand the feeling that we may be appearing to be churlish. I hope the Chief Secretary will not take that view, because we genuinely welcome these concessions. It is essential that we deal with the Bill properly and we cannot do that if we do not receive notice. I make the friendly suggestion to the Chief Secretary that he would save a great deal of time and trouble, and give himself and his officials more time to draft the amendments, if we adjourned now. I am certain that we could make progress more rapidly when we [column 1028]meet next week because we and our advisers will then have an opportunity over the weekend to consider the large changes that have been made. I am, therefore, in favour of an adjournment.
May I put one point to you, Mr. Crawshaw, because we do not quite know how to proceed. It appears that we are being asked radically to alter the principle of a tax which was approved on Second Reading. I do not believe that in Committee on a Finance Bill amendments can be tabled which fundamentally alter the entire structure and principle of the tax without further reference to the House. It is an important constitutional point.
If we had known we were going to get here, we should not have started from where we were at the beginning of the Bill. If we continue like this, we shall need two sets of debates on each amendment, first on the sort of tax which the amendment is designed to change, and second on the sort of tax that we think it will be but do not quite know. Moreover, had we known we were to have this sort of tax, I think even the Joel BarnettChief Secretary's draftsmen would have said “We shall not do it this way; we shall do it by amending estate duty, or grafting it on to estate duty.”
There is a fundamental point, not only with the scale, because it is not just a straightforward change to Clause 33. The old scale in Clause 33 remains for transfers on death. This is a new scale for transfers during life. That is not the end of the matter, because a whole clutch of new clauses are involved with regard to the three-year period, which is slightly better than the seven-year period but which, again, alters the tax and takes us nearer to estate duty.
I do not know whether it is possible, if we could adjourn for a short time, to get some constitutional advice. The Opposition are puzzled. Had we been behind a Government Front Bench which did that, there would have been a great deal of trouble from back benchers. I should therefore be grateful for advice on this.
Mr. Joel Barnett
Perhaps I could help with a few brief words. I assume that the concessions are welcome to the Opposition, although it is not altogether easy to discern that from what has been said.
May I say that what the right hon. Lady said is not true. The central [column 1029]principle of the tax remains. There are two taxes quite different from estate duty. Two taxes remain, on life and at death. The only difference is that there is a different scale in life from that on death. But the system remains; the central principle of the tax remains. We have simply made a concession which I hope will meet in a considerable way many of the objections that have been made both inside and outside the Committee. But the central principle remains, that there is tax in life and a tax at death, as was originally envisaged.
With respect, I have the OFFICIAL REPORT of the Second Reading debate. The Chief Secretary said:
“The new tax will apply, subject to certain exemptions, to all transfers of wealth, whether made by way of gift during a person's lifetime or on death.” —[OFFICIAL REPORT, 17th December 1975; Vol. c. 1373.]
The estate duty was a tax on death, and one had to go back eventually seven years to deem events to have taken place on death. The capital transfer tax is a tax on all transfers, whether on life or on death, being treated the same. What we have now is something between the two but different from either, a new scheme introduced into this Bill by that little phrase at the bottom of the paper circulated to us referring to provision for three years.
With respect, what the right hon. Lady read out to the Committee proves my point. I should have thought that crystal clear. The tax remains on life and at death, but on life there is a different scale. I assumed that what I have done would be acceptable to the Committee. What more can I say? The central principle has not been altered.
But will the Chief Secretary kindly point out anything in the Bill as it stands, or in the White Paper, which indicated that there was to be a wholly different scale on lifetime gifts from that applying on death?
Again, with great respect to the right hon. Lady, she herself and her hon. Friends put amendments down for Committee stage on the Floor of the House which sought to do [column 1030]precisely that. I assume that if I had accepted that at the time, the right hon. Lady would not have sought to say, in view of the White Paper and the Bill, we were wrong to pass such an amendment. It was selected and it so happened that it was not taken at that time, but it was perfectly in order. I think that the right hon. Lady does not have a good point there. If she had had her way on the Floor, the Bill would have achieved a form similar to what I am proposing, so it does not affect the central principle of the Bill.
Several hon. Members rose——
Order. The right hon. Lady asked for a ruling. She is correct in saying that if the main principle of the Bill is altered it would be out of order. But when the House passed Clause 33 it was dealing merely with a rate of tax, although obviously the method of assessment and collection and so on is an important feature. It does not contravene anything that has taken place on the Floor of the House. If that were otherwise, many of the amendments I have selected could not have been selected. Therefore, I must rule that there is no contravention. I advise the Committee to draw this debate to a conclusion and to proceed with the Bill.
I accept your ruling, of course, Mr. Crawshaw. I am glad that the Opposition have succeeded in making major changes in the Bill, but the Chief Secretary has not answered my question about the £250,000 and £300,000. Could he make sure that the Treasury announcement giving the whole details will be sent to addresses at which we shall be staying over the weekend?
If the hon. Gentleman will tell me where he will be at the weekend, I shall try my best to be elsewhere, but I shall see that details are sent to him if he so wishes. I was under the impression that we were dealing not with the details of an eventual clause but with the matter in general on a motion to adjourn. I do not wish to go into the details—indeed, I should have thought that it would be out of order—but the scale is self-evident. I hope the hon. Gentleman has a copy.
Mr. John MacGregor
I shall be very brief in view of your request, Mr. Crawshaw. I welcome this change and share [column 1031]the view of the hon. Member for Cornwall, North (Mr. Pardoe) that it shows the value of the debates we have had both on the Floor of the House and here. Here is proof, if proof were ever needed, of the importance of rigorous examination of taxation proposals by a Committee such as this, so that arguments can be properly aired. But it is extraordinary that it needed a great outcry and the long process we have been through to bring about these and other changes when it should have been obvious, at least to the Chancellor of the Exchequer, that the Bill as drafted would produce exactly the dangerous results to which we had all drawn attention. It reinforces my belief that the Chancellor did not understand his own tax.
The change in the rates provided here will cause a number of us to alter a lot of our calculations on the agriculture provisions. I hope to be here for Schedule 7 and Clauses 29 and 30, but and it so happens that I am occupied during dinner this evening. I do not know whether we shall dispose of Clause 32 today or how I shall be able to rethink my attitude on agriculture. Would it be possible to hold Clause 32 over until next Tuesday to enable us to go into it over the weekend?
If we do not proceed, we shall not get it, even if we try.
Mr. Graham Page
The Chief Secretary has put us in considerable difficulty because this debate has really turned into a debate on a clause which the House resolved should be debated in the House—that is, Clause 33. The point of such a resolution, that certain clauses should be discussed on the Floor of the House, is that they should be fully considered before we go into Committee. They are the basic clauses of the Bill. Having decided them on the Floor of the House in Committee, are we now to go back to discuss Clause 33 before proceeding with the rest of the Bill?
We cannot discuss Clause 33 here, as such. It is not part of our proceedings. We cannot extract full information from the Chief Secretary about Clause 33, in order to proceed with other clauses, because we are not allowed to deal with it here. All we can have from the Chief Secretary is a statement. He has given one-tenth of a statement in the scale put before us today, [column 1032]but not the sort of amendment he hopes to make to Clause 33, or the rewriting of Clause 33 on Report.
This new concept means that it will never have a Committee stage unless it is recommitted to the Floor of the House. If it is the intention of the Chief Secretary eventually to recommit Clause 33 to the Floor of the House, I suggest that he does it now, before we go ahead with the rest of the clauses and become quite confused by having just a brief statement in front of us—not a statement that has been debated or a scale that has been debated.
The Chief Secretary is frowning and looking rather angry at my remarks, but he has put us in the difficulty that the Bill is divided in its Committee stage between the Committee here and the House itself. We are trying to understand what he will put before the House when we have finished the Committee stage here, debating something which has never been fully debated and which cannot be debated here, but assuming that it will be debated on the Floor of the House eventually.
The right course, if I may suggest it to the Chief Secretary, is to adjourn the Committee proceedings here until the new Clause 33 is recommitted on the Floor of the House.
What the right hon. Gentleman has said is perfectly right, but often before a Bill is committed to Committee clauses are debated in the Chamber and we discuss the schedules up here. It is within the power of the House to recommit a Bill either downstairs or up here, but it is unlikely that that time would be granted. We must proceed in the same way as we do when clauses are discussed downstairs and schedules are discussed in Standing Committee. I take note of what has been said and we shall manage our business in relation to that.
I was suggesting, Mr. Crawshaw, that the Chief Secretary might take the initiative, as he can from his position as a Treasury Minister, to put a motion before the House for Clause 33 to be recommitted to the House or recommitted to the Committee. It is quite possible for the House to decide, having dealt with one of these clauses by a previous resolution, to alter that resolution and have the clause recommitted. The most [column 1033]convenient thing would be for it to be recommitted to the Committee.
I cannot do it, but I am suggesting to the Chief Secretary that that is the right thing to do.
Mr. Joel Barnett
There is nothing very unusual here. If my suggestion had been proposed in a debate on a clause on the Floor of the House, exactly the same principle would apply. We could not have debated it again in Committee, and it could have been debated again only on Report. This situation has happened on innumerable occasions.
I tried my utmost, but apparently unavailingly, to help the Committee. I have given information that I hope will be helpful. I hope that the right hon. Gentleman will feel that I have done my best to enable us to proceed with the Bill.
We have made our case. The only time I have ever known a major change in a Bill such as this introduced in this way was on a Private Member's Bill which the Government were supporting. The Government sometimes take out practically all the clauses, redraft them, alter the structure and put them all back again. That is because there are not proper drafting facilities available to private Members. We are altering the structure here, but I hope that the Joel BarnettChief Secretary will take note of what has been said.
I think we shall be in acute difficulty next week when we come to further debates. We shall try to get as far as we can today, but we shall see what problems arise.
I am grateful to you, Mr. Crawshaw, for allowing us to make these observations. I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.[column 1041] Second extract
Mr. Wm. Ross
I beg to move Amendment No. 93, in page 90, line 18, at end insert:
“(k) members of the Royal Ulster Constabulary or any reserve thereof” .
This is a simple amendment to restore a relief formerly enjoyed by members of the RUC and the reserves in Northern Ireland. Exactly the same case can be made for these people as is made for members of the Armed Forces. They share the same dangers and they do the same job. In some respects the danger to the individual is greater than it is to members of the Armed Forces because members of the police and the reserve in Northern Ireland are there all the time. They do not serve a two- or three-month tour of duty; they live there. They have a police station but they do not have a barracks in which they are protected by other members of the force. They often have to return home in the evening or in the morning, and on their way to and from work they are in great danger. Some members of the police reserve have been killed while at work, and the same is true of members of the Ulster Defence regiment which is, of course, covered by the Army regulations.
It is a matter of regret to me and to the entire population of Northern Ireland that it has been necessary to table this amendment. I cannot see why the provision was not originally included in the Bill.
The Financial Secretary, and his right hon. Friend the Chancellor, referred to the Customs and Excise in Northern Ireland. Members of the Customs and Excise force have been killed during the present troubles in Northern Ireland. They are constantly at risk.
Why has this relief been left out? Even if the amendment is accepted it will not put the police and the reserves on the same [column 1042]footing as is enjoyed by the Army in Northern Ireland and elsewhere in the world where the British Army has been engaged in anti-terrorist activity.
Yesterday, when I was trying to get a provision extended to apply to civilians, the hon. Gentleman pointed out that the wife was safeguarded. He has made the same point today, that the wife did not need the safeguard in the original legislation. While the interests of the wife may be protected, the interests of the family are not. If a wife inherits her husband's wealth, she can pass on only £15,000 of it, whereas for a father the total passed on would be double, at £30,000. That is iniquitous, on top of the fact that the children have been orphaned and the family and the business placed in considerable difficulty due to the death of the father.
It is not true to say that policemen or police reservists would not have that amount of money. Possibly most policemen would not, but, on the other hand, many would. Many in the police reserve own businesses and farms, or a considerable amount of property, but they do not necessarily have liquid capital. If there is a compensation, it would be quite wrong to think that that payment—compensation for death—would have to go to pay the duty which would then fall due on the estate.
The hon. Gentleman and his hon. Friends have not considered this matter in depth and it needs to be considered, taking into account all the difficulties we encounter in Northern Ireland. The hon. Gentleman has spoken of the man killed on service not being able to arrange his affairs, and he said that that will now not be so important. No one expects to get killed. Most people who own property have tried to arrange their affairs, but not necessarily all of them. It sounds more like an excuse to say that a man should go out and arrange his affairs. Everybody should, and quite a lot of people have done so, but I should be surprised if even everyone in this room had his affairs properly arranged.
In Northern Ireland to date, 51 regular police have lost their lives. That is violence. The Army have lost 250 good men, and on top of that there are a number who are no more than human vegetables and can never be anything else. The IRA found out very early in this campaign that if a man is shot in the body while wearing a bullet-proof jacket he may very well survive, but a shot through the neck will [column 1043]probably kill or, failing that, the body will become paralysed. The bullet does not penetrate the nerve, but apparently even a high velocity bullet will glance off it and the result is body paralysis, leaving the victim able only to move his head, his mouth and his eyes.
There is no way in which the average soldier, or citizen, can guard against the terrorist. If a man sets out to kill someone, he will, in any society. The problem is not the act of committing the crime but getting away with it afterwards.
I bring these matters to the attention of the hon. Gentleman that he will bear them in mind, because, despite all the hopeful signs, I fear that we have not seen the end of troubles, danger and death, or an end to the hardships that arise for families in Ulster. In view of all there is involved—a great deal more than I have mentioned—I urge acceptance of the amendment.
I support the hon. Member for Londonderry (Mr. Ross). in this amendment. There are two merits in the argument, the first of which, basically, has to do with the Royal Ulster Constabulary.
From the purely military viewpoint there can be no doubt that, sadly, in this world today, the type of war we are faced with—I object to the enemy calling itself an army but that is another matter—may well increase. It is many years, fortunately, since there has been an action such as this on our own soil, but the police play a vital rôle in the de-escalation of a full military operation in Ulster, and anywhere else that a police-army operation may take place.
I have been to see our troops in Ulster a number of times, and on one occasion I took special care to meet a number of the RUC officers and men involved in working with the troops. Like the hon. Member for Londonderry (Mr. Ross), I hope that this conflict will soon be over, but however and whenever it is run down, there can be no doubt that the police will have to carry the burden of the day both at the time of the rundown and thereafter. It is absolutely right, therefore, that the Royal Ulster Constabulary should be included in the exemptions.
The hon. Gentleman touched on a vital matter that has perhaps escaped our notice, that in this type of guerrilla warfare—domestic conflict, call it what one will—there is an unusual opportunity for both husband and wife to be killed together. There must have been occasions, [column 1044]I fear, when cars have been blown up, houses blown down or savage raids made on individuals in their homes, when the couple died together. That event, of course, removes a substantial benefit as regards the capital transfer tax for the children, or anyone inheriting.
I appreciate that this is a special case—it cannot provide a loophole—and it covers only a few people. Could the Financial Secretary look at that aspect of the matter when he replies? As there are no specific amendments on it, however, Mr. Crawshaw, you would rule me out of order if I were to go too far into it.
The other matter concerns the question of the qualification. If the Royal Ulster Constabulary were to be involved, would it require to be
“on active service against an enemy” ,
as in subparagraph 2(a), or would it be considered
“on other service of a warlike nature or which in the opinion of the Treasury” —
not a good judge, I suspect, of the different elements of hostilities. How would the RUC qualify?
I think I am right in saying—my hon. Friend the Member for Guildford (Mr. Howell) will correct me if I am wrong—that our Forces in Ulster are not considered to be on active service as it is a United Kingdom posting, although to all intents and purposes they are on active service. This phrase is of great importance both to soldiers in their daily lives and in legislation of this nature.
I have one final query, knowing that the Territorial Army is represented in Ulster. I assume that the words
“the armed forces of the Crown”
cover the TAVR. I declare an interest here as a serving officer in the TAVR. There are great difficulties over compensation to territorials when they are not serving as a result of proclamation, when they are perhaps merely training, and so on.
Indeed, I could go further and say that this concession, albeit good, needs looking at in greater detail. I apologise to the Committee if I have missed one or two crucial points. We may have to return to it on Report. I am sure that the Treasury Ministers will not wish to be difficult about it. It is important that those who serve the country should not be penalised. If they give up their lives they should not be [column 1045]penalised by taxation. That is one thing the British public resent more than anything else.
Mr. Wm. Ross
As far as I know, in Northern Ireland when a member of the police reserve, Ulster Defence Regiment, Army or TAVR is killed by terrorists, it is always considered that they have been killed because they are members of one of those bodies and, as such, would qualify as a serving soldier.
I accept that, but if a member of the constabulary were killed on a rifle range, or as a result of an accident, he is just as dead and he has been operating in the service of the country. I appreciate that the amendment does not really go to this point, but I put a marker down because I believe that we shall have a look at this whole exemption to see whether it goes wide enough. It would be a serious thing to discourage anyone from joining our Services by allowing any tax law to have an unfortunate effect in the event of their death not only on active service but even in training. They are serving the nation, and we must not allow it.
First, I should express my gratitude to the Financial Secretary for accepting the previous amendment, which I omitted to do at that stage.
There is a distinction between civilians and the Armed Forces on active service, and I believe that it extends to the Royal Ulster Constabulary in the present special circumstances of Northern Ireland. I do not think that the distinction is absolute or complete, but it is relative, a matter of degree.
As civilians, we all risk our lives when we cross the road. We are all at risk from disease, as has just been made clear by the sneeze of the hon. Lady the Member for Welwyn and Hatfield (Mrs. Hayman)——
And lack of sleep.
—aggravated by lack of sleep, no doubt. Civilians in Northern Ireland are at greater risk because of the terrorist situation, as are Customs and Excise officials and others. The distinction is that the Armed Forces when on active service or in conditions of similar warlike nature are hired by the State on its behalf to kill and be killed. Of course, they try to avoid being killed, and to kill more than are killed on our side, but there is a distinction of degree. Those people take the burden on [column 1046]our behalf. They do it for us. Sometimes—not in the immediate circumstances—they do it under conscription, under compulsion. They go on behalf of the State to risk their lives in a direct manner.
That is quite different from a soldier being killed in a traffic accident, as anybody else may be. He may be serving in the Armed Forces at the time and be involved in a traffic accident—nothing to do with warlike operations. He is then in the same position as a civilian killed in a traffic accident in day-to-day life. He is just as dead, of course. But there is the distinction that in war and warlike circumstances, they are actually hired to kill and be killed.
The same applies to the Royal Ulster Constabulary, who are similarly in the front line of the terrorist operations, just as the Armed Forces are. This is a real though not absolute distinction.
I do not know what the intention of the House of Commons was in 1815. The Financial Secretary seems to think the intention was that money should be left to the widow. The intention was probably as much that provision should be made for the soldier's or sailor's family, because the children would be denied for the rest of their lives the support of their father both in helping to bring them up and in financial assistance.
That must have weighed as much as the provision for the widow referred to by the Financial Secretary earlier. There are special factors in this case. We should think not only of the widow but also of the children.
Mr. David Howell
I support the amendment moved by the hon. Member for Londonderry (Mr. Ross). I have given the matter considerable thought. I suspect that I have probably received the same kinds of argument and brief as the Financial Secretary has received from time to time on the difficulties of where to draw the line. I understand the difficulties and the problems of line-drawing when examples—often tragic and deeply moving—are brought forward to support a case on the margin. But in this case the distinction is valid, for two reasons.
The first is the reason touched on by the hon. Member for Londonderry, that in the peculiar and tragic circumstances of Ulster the Royal Ulster Constabulary and the Armed Forces are a declared target. There are occasionally blood-curdling statements that this or that person is going to be [column 1047]assassinated and so on, but during the whole of the tragic emergency in Northern Ireland it has been the consistent position of the terrorist forces, so far as it can be understood, that men in uniform—whether in the Army, any other branch of the Armed Services, or the RUC—are ready targets at any time, day or night, in the streets, the hills, the towns, and countryside, for the terrorist assassin's bullet. This gives both the Army and the RUC a peculiarly distinctive rôle that does not extend to the other categories that lie around the margins of this group. That is one reason, and in a way it is the lesser.
The stronger reason why a distinction can be made and why the amendment and the arguments behind it are valid rests on the concept of the security forces. “The security forces” is a recognised working concept which contains the Army, other branches of the Armed Forces and the Royal Ulster Constabulary. These are “the security forces” .
I shall give the Financial Secretary a graphic description of the time when I had experience of the operation of day-to-day security in Northern Ireland. Indeed, the day-to-day administration of the Province was run from a meeting that took place most mornings at Stormont Castle, at which security and civil security-related issues were discussed. Most of those morning meetings would be attended by senior representatives of the Army, that is to say, the GOC or C-in-C Land Forces, or both, and the chief constable or his deputy. They represented the security forces, and behind them was the shadow of the whole Armed Forces and the Royal Ulster Constabulary.
So, in the tragic context of Northern Ireland we are dealing with a unique, clearly definable and distinct group of forces who are police and Armed Forces in Northern Ireland. They operate together, they patrol together, their functions overlap—alas! We regret that. One of the aims of Northern Ireland policy has been to try and re-establish what was hopefully called “normal policing” in many areas where there had been persistent difficulties—in Belfast, Londonderry and other parts of the Province. But at every point the Army and the police have found themselves having to interchange duties, to carry out similar and closely-related functions day and night.
An incident arises, a killing takes place, a body is found. No one stands around saying “This is a police job, or a job for [column 1048]the Army” . The machine goes into operation. At times in the past there were differences. I recall that at the beginning of direct rule there were difficulties in co-ordination between the Army and the RUC, which had then been there for two or three years. Those difficulties were overcome and for the past few years the Army and the RUC have been operating as one machine, one group of people facing one set of appalling dangers of instant murder or maiming by boobytrap or assassin's bullet.
So for those reasons—and I assure the Financial Secretary that I recognise the difficulties of line-drawing and, having once drawn lines, of saying to those on the wrong side of the line that for all their tragedy and heroism they do not qualify—and seeing the agonies of having to make those rulings, I feel that there is a case for including the Royal Ulster Constabulary on the grounds that it is part of a group of people who work and operate as one in the Northern Ireland context—the security forces. For that reason, I strongly support the amendment.
Of course the hon. Member for Londonderry (Mr. Ross) and the hon. Member for Guildford (Mr. Howell) have far greater and closer knowledge of Northern Ireland than I have, or frankly, wish to have. I am grateful to them and to their hon. Friends for the moderation with which they have put their argument in this difficult and emotion-charged case.
I should make one thing clear. The hon. Member for Londonderry and the hon. Member for Guildford are well aware of this. The Revenue has for some time been operating an extra statutory concession that for estate duty has had the same effect as this amendment seeks to achieve for capital transfer tax, and there has been no intention at any time to restrict the concession when capital transfer tax came into effect. It was intended that it should continue to run in precisely the same way for the new tax as for the old.
We are not talking about whether a relief should exist, but whether it should be incorporated in statutory form, and I am glad to have recognition of that from hon. Members opposite. I am reluctant to incorporate a concession of this kind in statutory form. The problem exists but it is being taken care of. [column 1049]
One of the reasons for the difficulties mentioned by the hon. Member for Guildford is that of line-drawing. The result of incorporating this concession in statutory form would be that only one police force would be recognised for the purposes of this relief. We would hope that circumstances that give rise to the need for relief would be of a temporary nature. That is why the concession has been operated on a extrastatutory basis, and I hope there is no great difference between us. If, in the light of what I have said, the hon. Gentleman wishes to press his amendment, I shall be forthcoming with him and accept it. But I must say that I should prefer the concession to be operated on an extrastatutory basis. I am revealing my hand to him in advance. If he insists on pressing it, I will accept it. I think that, if necessary, we could cope with the consequential questions about incorporating further statutory concession for police forces and other bodies.
I do not care much for these statutory concessions, but I shall not seek to debate that now. I should like, as a matter of genuine interest and clarification, to know whether this same extrastatutory concession applies to members of police forces in the rest of the United Kingdom, who, at least in the circumstances prevailing in the month before Christmas, were often subject to the same dangers as those in Northern Ireland.
The answer to that question is no. Mercifully, the circumstances in Northern Ireland do not yet apply in this country, in that so far as I am aware, members of the police force have not yet been singled out for terrorist attacks. The hon. Gentleman asked me a factual question. I had taken advice in anticipation that I would be asked that question, and I can tell him that the answer is no.
Mr. Graham Page
The hon. Member has talked about the extrastatutory concession. Is it the custom when the danger has gone by to cease that concession, or can the Financial Secretary give any assurance that it would continue, so that the man who is injured during the dangerous time but who survives and dies some years later will still be covered by that extrastatutory concession although the danger is over?
If the event that led to his [column 1050]receiving the injury took place while the general emergency existed, the concession will continue to be operated. I think that that meets the hon. Gentleman's point.
I assure hon. Members opposite—and I am confident that they accept what I am saying here—that there is no intention of trying to restrict the relief or to be meanminded in any way. It is merely a question of whether an existing relief is incorporated in statutory form.
As I have said, I am prepared to leave it in the hands of the hon. Member for Londonderry if he wishes to press the matter, but it would certainly be my preference that it should remain an extra statutory rather than a statutory relief.
Mr. Wm. Ross
May I ask the Minister for clarification once again? Does the extrastatutory relief come into operation only during the period of an emergency? My right hon. Friend instanced the person injured during an emergency. But suppose the present situation changes and instead of regular assassinations or murders we have only very occasional ones—one every five years or something like that—which is quite possible in Ireland. Will the extrastatutory relief be applicable in that case?
The hon. Gentleman asks me a difficult question. I would imagine that if one had an incident of this kind only once every five years, it would be difficult to suggest that it was the result of terrorist activity as distinct from any other form of thuggery. The concession operates with respect to the very difficult circumstances now to be found in Northern Ireland. I do not think that there would be any intention on the part of the Revenue to clamp down with respect to the actual date on which an emergency was declared to exist or not to exist.
We are in some difficulty about this Amendment, and I understand why. We should all like to give as much support as we can to the Royal Ulster Constabulary in the extremely difficult job they have to do. It is a published extrastatutory concession, is it not?
It is going to be published.
This is just one of the difficulties. It is not yet a published extrastatutory concession. It exists, but it is not yet published.
A lot of people would like to know of its existence. When did it come into existence? [column 1051]I can see the problem that if it becomes a published concession, people will think that it will continue. One would expect it almost to have statutory force as a published concession, because it is very difficult to withdraw it. I can see that people may feel that it would be withdrawn in circumstances in which they would like it to continue.
I should be inclined to have this concession in statute if it is to be a published concession. But if there are any problems, we could leave the matter until Report for further consideration. Perhaps the John GilbertFinancial Secretary could give us some indication of how it will be published and whether it will receive reasonably wide publicity: I did not know of it previously.
I am much obliged to the right hon. Lady. I think that we are at one in this situation. The relief was extended last year. The police authorities in Northern Ireland have been informed of the concession and it is due to be published. We hope to publish the extrastatutory concession by the middle of this year, but I think that it is fairly widely known. Indeed, there was a question on the subject by the hon. Member for Londonderry on 9th December 1974. The hon. Member asked the Chancellor of the Exchequer whether,
“when members of the UDR, the RUC and the RUCR are killed, as a result of terrorist activity in Northern Ireland, their estates are free from estate duty in the same way as the estates of members of the Armed Forces.”
The Minister of State said: “Yes” .—[OFFICIAL REPORT, 9th December 1974; Vol. 882, c. 43.]
I should be surprised if this discussion were not fairly widely reported in Northern Ireland. I understand that the Northern Irish Law Society has drawn attention to the existence of this concession in a circular to its members.
Mr. Wm. Ross
I thank the hon. Member for his helpful remarks, and right hon. and hon. Members on this side of the Committee.
But the Financial Secretary said one thing we have to think about rather seriously. Whenever I asked whether the extrastatutory relief would apply in an isolated case of terrorism, his reply suggested that it would not. The whole point of terrorist activity is that it is carried on by a small number of people. Terrorism makes it possible to keep a whole countryside in turmoil by the [column 1052]occasional murder, the occasional bomb explosion and by the occasional abrupt outburst. It is that situation that I should like to see covered, as well as the main issue.
I understand the thrust of the hon. Gentleman's remarks. We agree that it is extremely unlikely that terrorist activity in Northern Ireland will come to an end until a political solution has been found. It is not for me to speculate the nature of that solution. Heaven knows, if any of us had any ideas we might be a lot closer to solving the terrible problem. I do not see an early end to the troubles that that part of the United Kingdom is suffering.
If the terrorist activity died away with or without a political solution, so that there was, for all practical purposes, no state of emergency, the relief would not be needed: one state follows fairly logically from the other. If there were a political solution, there would be no need for people to engage in terrorist activity of this sort. There may be an occasional anarchist who has nothing to do with this political situation, but that is not what we are trying to protect the RUC against.
May I help by asking one more question while my hon. William RossFriend makes up his mind about the amendment? Clearly, one can get an extrastatutory concession on the book without anyone knowing about it. Once it has been published, can it come off the book without anyone knowing about it, or does there have to be some notification? My hon. Friends might feel happier to have a chance to make representations before any published concession were withdrawn. Then they would be more adequately covered than now.
I am much obliged to the right hon. Lady for that helpful contribution. I am advised that the normal way in which an extrastatutory concession is withdrawn, if one is to be withdrawn, is that it is announced by an arranged Parliamentary Question, so there is plenty of notice.
The right hon. Lady asked whether there would be an opportunity to make representation. Normally, the Parliamentary Question would refer to a withdrawal in the future and would not say “as of the date of the Parliamentary Question” the concession would be withdrawn, so there [column 1053]would be plenty of time for representations to be made.
I hope that I have given the hon. Gentleman enough time to consider. He may wish to return to the subject on Report, but may we leave it at that?
Mr. Wm. Ross
In view of all that has been said by the hon. Gentleman, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.[column 1071] Third extract
Mr. Graham Page
I beg to move Amendment No. 781, in page 93, line 1, after “Man” insert:
“or is otherwise liable to tax by virtue only of section 40 of this Act.”
With this we are to take Amendment No. 478, in page 93, line 2, at end insert:
“(2) Section 40 of this Act does not apply for the purposes of this paragraph.”
This is an amendment to paragraph 5 which exempts as excluded property National Savings certificates and other savings held by persons who are domiciled in the Channel Islands or the Isle of Man. The amendment would extend this exemption to all non-United Kingdom domiciled persons who are treated as having United Kingdom domicile under Clause 40.
We must look ahead—it is not really looking ahead, because now we have reached Schedule 7 we can look back at Clause 40, although we have not yet dealt with it. However, we must look at the provisions of Clause 40 to understand where an amendment is needed to this paragraph.
Paragraph 5 states:
“Where the person beneficially entitled to the rights conferred by any of the”
several savings types of investment set out—
“is domiciled in the Channel Islands or the Isle of Man the rights” —that is, the rights to those savings— “are excluded property.”
The issue is confused by the fact that Clause 40 assumes a United Kingdom domicile for those who would, as the law stands without the Bill, acquire a domicile in the Channel Islands or the Isle of Man. But because of Clause 40 they would retain their domicile in this country.
This is recognised in paragraph 3 dealing with Government securities which are free of tax while in foreign ownership. Paragraph 3(1,3) clearly states:
“Section 40 of this Act does not apply for the purposes of this paragraph.”
We recognise that that should be clearly spelt out there. I am therefore endeavouring to spell it out in relation to the savings [column 1072]by persons domiciled in the Channel Islands or the Isle of Man in the same way as it is spelt out for Government securities free of tax while in foreign ownership.
It does not matter which amendment is accepted by the Government. Amendment No. 478 says the same thing as I have been saying another way round. It says that Section 40 will not apply so that actual domicile in the Channel Islands or the Isle of Man gives exemption and is not ousted by this fictitious domicile created by Clause 40.
Possibly Amendment No. 781 is a little neater, since it is in my name.
Amendment No. 478 is in my name, among others, and I wish to speak briefly in this debate. I do not wish to compete with my right hon. Friend the Member for Crosby (Mr. Page) as to which amendment is superior. On the last occasion I gracefully gave way. On this occasion this at least has the advantage of precedent, but it is an earlier part of the Bill.
I seek clarification of the position. My understanding is that under paragraph 5 where people are domiciled in the Channel Islands or the Isle of Man their rights in relation to the various properties mentioned are excluded. Under Clause 40, if they went to the Channel Islands in the next three years they would be regarded as United Kingdom citizens. But this has caused some confusion and it would therefore be helpful if the Financial Secretary could clarify the situation.
We have in this paragraph another example of the Government wanting things both ways, in this particular case as far as Channel Island residents are concerned in the future. They will not tax them through the capital transfer tax when they want their money but from now on—this is an entirely new provision in tax law—they will tax anyone who goes there when their money is applied to different purposes.
The slightly strange and curious situation is emerging that it is only when money is wanted for Government purposes and for objectives which the Government regard as desirable that it will be exempted from capital transfer tax, but a new tax will suddenly be put on all future Channel Island residents in all other cases.
Paragraph 5 of Schedule 7 [column 1073]has been correctly construed for the Committee by the hon. Member for Norfolk, South (Mr. MacGregor). It exempts, as excluded property, National Savings certificates and other forms of small savings held by persons
“domiciled in the Channel Islands or the Isle of Man.”
The effect of the amendments is identical; namely, to make the exemption available for people who had become domiciled in the islands since 12th November 1974 and had immediately before that been domiciled in the United Kingdom. The amendment addresses itself to the implications of Clause 40, as the right hon. Gentleman pointed out, and decisions about Clause 40 have yet to be taken by the Committee.
Logically, on the assumption that Clause 40 is carried, there would not appear to be any grounds of principle for taking the paragraph 5 exemption out of the scope of the deemed domicile. If domicile is to be effectively extended as proposed in Clause 40, there is no special case for extending the ambit of the special exemption provided by paragraph 5 for National Savings and other small savings.
That is the thrust of the argument that is headed “resist” on my brief, but I am in a generous mood and I propose to recommend my hon. Friends that they accept the amendment.
May I thank the John GilbertFinancial Secretary most warmly, above all for going against the advice of his staff. We are grateful. Perhaps it is an indication of what might happen on Clause 40. We hope so.
Mr. Graham Page
On condition that Amendment 478 will be called for Division, I beg to ask leave to withdraw Amendment No. 781.
Amendment, by leave, withdrawn.
Amendment made: No. 478, in page 93, line 2, et end insert:
(2) Section 40 of this Act does not apply for the purposes of this paragraph. —[Mrs. Thatcher.][column 1075] Fourth extract
I beg to move Amendment No. 479, in page 94, line 46, after first “tax” , insert—
“or is chargeable on or by reference to death or gifts inter vivos.”
In a sense this is a probing amendment. It is perhaps also designed to be helpful, to make clear the exact intention of paragraph 8 and to prevent arguments between the taxpayer and the Revenue as to the necessary similarities. [column 1076]
Paragraph 8 refers to a tax which
“is of a character similar to that of capital transfer tax.”
The amendment seeks to extend the definition to the event to which capital transfer tax applies, as well as to the description of the tax. We are saying that where the situation occurs by death or gift and a tax applies in another country as well as here, double tax should not be chargeable.
The amendment is justified because there could be grounds for argument as to what sort of tax was similar to a capital transfer tax. If one meant all other forms of estate duty and inheritance duty in other countries, as well as different forms of gift duties, the amendment would not be necessary. But it is probably a clarification to describe both the death and the gifts inter vivos situation and it would help to make clear to the taxpayer exactly what were his rights.
Paragraph 8 of Schedule 7 to which the amendment relates provides for unilateral relief, as the hon. Member has pointed out, from double taxation in the absence of an appropriate double taxation agreement. The Board of Inland Revenue is required by the paragraph to allow tax paid in another country which is attributable to a transfer of property situated in that country as a credit against any capital transfer payable here by reference to the same event and attributable to the same property.
An important point to bear in mind is that the foreign tax must be of a character similar to that of capital transfer tax, and the Board must be satisfied about its attribution to the property concerned before allowing relief. I am glad to see that I can carry the hon. Gentleman with me.
I imagine that what is concerning the hon. Gentleman is that in certain circumstances the nature of a tax abroad might not be deemed by the Inland Revenue to be on all fours with the capital transfer tax. I am grateful to him for acknowledging that. I can reassure him that such overseas taxes will rank as being similar character as capital transfer tax for the purposes of the paragraph, so I think that the hon. Gentleman's amendment is unnecessary.
But it goes a little further than that. I am sure this was not his intention, but the amendment as it stands would seem to bring into the scope of double taxation relief a tax like our stamp duty—being [column 1077]levied abroad, that is—which is charged on certain transfers of property regardless of whether they are gratuitous transfers. Therefore, for that reason, I have to advise hon. Members that we could not accept the amendment. However, the main thrust of the suggestion is taken care of, and the hon. Member can be reassured against the circumstances about which he is worried.
Mr. Graham Page
The Financial Secretary has raised a rather important point in the description of a tax similar to a capital transfer tax. He has talked about the stamp duty on voluntary dispositions. As I understand him, he was saying that in this country we would not include the stamp duty on a voluntary conveyance as a tax similar to capital transfer tax. But is it not true that this is a method of collecting capital transfer tax in other countries—the form of stamp duty which is used on a voluntary conveyance? I do not know, but I rather had that impression.
If I understand my hon. Friend's proposal in the amendment, it is simply to prevent arguments between the Inland Revenue and the potential taxpayer as to what he has to prove as the similarity between capital transfer tax and some form of estate duty tax, or voluntary conveyance tax overseas. Just to say in the paragraph, as it now says, something
“similar to that of capital transfer tax” .
and then for the Financial Secretary to say that there is no difficulty in deciding what is similar, that the Board knows and it will decide, is not very helpful to those who have to construe this provision at a later date.
As we all know, the statements by any Member in the Committee, be he a Government spokesman or backbencher, bear no weight whatever in the courts when the courts come to construe a provision. There is a potential dispute here between the Board and the potential taxpayer if this is not made much clearer.
After all, we are embarking on a tax that is new to this country. Going on to say “We are now talking about something which is similar to it in other countries” still leaves us vague.
We have tried to add a few words to avoid this dispute about the similarities which have to be proved by the potential taxpayer, and I should like the Financial [column 1078]Secretary, if he does not like the words suggested by my hon. Friend, to see whether better words can be found.
I am a little puzzled about this. The John GilbertFinancial Secretary does not like the words. As I understand the structure of Schedule 7, paragraphs 7 and 8, if there is a double taxation agreement affecting estate duty, one gets double taxation relief under that agreement under paragraph 7. But where there is not a double taxation agreement, one will get unilateral relief under paragraph 8.
What we have tried to ensure is that the conditions under which relief can be had in paragraph 7 are the same as the conditions under which one gets relief in paragraph 8. In paragraph 7 the words which the Financial Secretary complains would include stamp duty appear. Those selfsame words have been lifted to form the subject of this precise amendment. The words in paragraph 7 are:—
“or is chargeable on or by reference to death or gifts inter vivos” .
The words in this amendment to be lifted straight into paragraph 8 are:—
“or is chargeable on or by reference to death or gifts inter vivos” .
They are the identical words.
I was going to make the same point.
I suppose it is a fair cop! We will have a look at that. I am not sure that paragraph 7 is necessarily right and therefore it would be wrong to have these words in paragraph 8. Let us be clear about that. The question is whether those words should appear in either paragraph 7 or paragraph 8 but I accept the hon. Lady's premise that, if they are to be in one paragraph, they should be in the other. Could we leave it at that for now?
No. The hon. Gentleman must give relief according to the most generous scale.
The right hon. Lady is now pushing her luck a little. I come back to the point raised by her right hon. Friend. It is not the way in which the tax is collected—whether by executing a stamp or not—that is important; it is the nature of the tax and whether it attaches to the gratuitous transfers rather than to all transfers. That is the relief that we propose [column 1079]to extend under paragraph 7 and paragraph 8 with respect to countries where there are double taxation agreements or where there are not. If hon. Gentlemen opposite are trying to extend the relief beyond that——
I hope I have the assurance of the hon. Member for Norfolk, South (Mr. MacGregor)—I am not sure that I have the right hon. Lady's assurance—then we are at one. If hon. Gentlemen opposite are trying to extend the relief beyond that, I should have to advise my hon. Friends to resist such an extension.
We should like the Financial Secretary to bring paragraph 8 into line with paragraph 7 and not paragraph 7 into line with paragraph 8.
I echo what my right hon. Friend has said. When the omission was pointed out, the Financial Secretary said “It is a fair cop” , so I do not understand why he does not do what we ask, particularly since the only objection he has raised is the stamp duty. The words are
“on … death or gifts inter vivos” .
If a gift inter vivos in a foreign country attracts a stamp duty which, of course, it does not do in this country, it is on all fours to apply this tax: indeed, there should be this tax. However, if there is a stamp duty overseas payable not on gifts but on ordinary commercial transactions, it would not be covered by the words in paragraph 7. I do not see what the Minister's technical problem is. He should, having admitted that it is a fair cop, do the honourable thing.
I have not been ungenerous this evening, as I think hon. Members will agree.
I am grateful. There is a distinction. The hon. Member for Blaby (Mr. Lawson)—I hesitate to involve him in further debate—may not have appreciated that what we are not intending to give relief against is the type of tax which extends to all transfers whether they are gratuitous or not. Where there is a tax solely on gratuitous transfers, and identifiable as being tax on gratuitous transfers, we are trying to provide relief. Beyond that I could not advise my hon. Friends [column 1080]to go. I shall certainly see how we can bring paragraphs 7 and 8 into line in the context of my remarks.
The words in paragraph 7
“which is of a similar character or is chargeable on or by reference to death or gifts inter vivos” .
Therefore, it is dealing with gratuitous transfers. Bringing that wording into paragraph 8 cannot give rise to the sort of problems that the hon. Gentleman is suggesting might arise.
This is something to which we shall return on Report. It is one of those things on which we can have a fascinating debate. We shall be interested to see what action the Financial Secretary takes, but we shall return to it on Report.
I was a little puzzled at the Financial Secretary's reaction when he said he wanted to be careful he was not being more generous. I was not clear whether he meant that he did not know what he was doing under paragraph 7. In view of the debate, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. Schedule 7, as amended, agreed to.