Schedule 15 - Charge to income tax on benefits received by former owner of property
Finance Bill
4:30 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
The Government considered the same point during the consultation. The sale and leaseback arrangements are entered into only to remove assets from someone's chargeable estate—that is, to remove assets from inheritance tax. In some cases, it is attractive for tax reasons to make capital payments, too, as that further diminishes the taxable estate. In the most ingenious schemes, the arrangements are constructed, so that payments under the lease are tax deductible.
We concluded that it was not appropriate to cater for those particular variations of the sale and leaseback device. In any case, the amendments might have a wider impact because they do not link the capital payments to the occupation, or the use of the asset in question. They might well enable occupiers to reduce the impact of, or to avoid all together, the new provisions by the simple expedient of making gifts to the owners. For those reasons, I ask Committee members not to support the amendment.
The schedule deals with arrangements that individual taxpayers enter into to avoid paying their inheritance tax charge or liability. I do not see why we should give them a tax-deductible expense to achieve that through the leaseback arrangements. If they do not seek to avoid the inheritance tax charge, and they have the normal leaseback arrangements, provisions exist in the tax system to allow for deductible expenses. That is absolutely appropriate, and we defend that part of tax legislation. However, we should not allow people to avoid tax and give them tax deductions for having done so.