Clause 28. — (Extension of Relief on Compulsory Acquisitions.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 27th June 1949.

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Motion made, and Question proposed, "That the Clause stand part of the Bill."

Photo of Mr Charles Williams Mr Charles Williams , Torquay

May I ask for some explanation of this Clause? This is a rather complicated matter which is becoming of more interest to a larger number of people. Would the Chancellor or some Member of the Treasury Bench kindly explain where we are under this Clause and what is the necessity for its being in the Bill?

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

This Clause extends the time during which relief can be granted from Estate Duty in the following circumstances. Supposing land was valued at a certain figure and was subsequently compulsorily acquired at a lesser sum, relief from payment of Estate Duty could be granted proportionately to the extent to which the compulsory acquisition price was less than the value which had been accepted for the purposes of Estate Duty. This Clause extends the period to the period which is provided for under the Town and Country Planning Act, namely to the end of 1953, during which, in order to eliminate scarcity value, a notional lease is assumed to exist.

Under the Town and Country Planning Act, 1947, current values were substituted for 1939 values, but in order that, for purposes of compulsory acquisition of land the State or the acquiring authority should not have to pay a scarcity value, it is deemed that the land is subject to a lease which is due to expire at the end of 1953. That is provided in order to reduce, by eliminating scarcity value, the value of the land which it is proposed to quire. This Clause extends the provisi for relief in the payment of Estate Duty to cover the period in which it is deemed, under the Town and Country Planning Act, a notional lease exists.

Photo of Mr Charles Williams Mr Charles Williams , Torquay

Under that Act certain people have to make a claim, and those claims have to be made by the end of this month. Those making the claim do not know what is the value of their land or whether the claim will be accepted. Does this Clause deal with that matter, or is it dealt with elsewhere in the Bill? I think that the right hon. and learned Gentleman is covering the point but it is one which should be made certain. How is the case of such people dealt with?

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

This Bill does not affect that matter at all. The claims which have to be made by the end of this month are claims against the £300 million, which is the global figure of compensation to be paid to owners in respect of the loss of development value of their land. I was speaking about the elimination of scarcity value for the purposes of compulsory acquisition. So that the acquiring authority does not have to pay a scarcity value in acquiring land this notional lease is assumed, under the 1947 Act, to exist. The development value and the claim which has to be in by the end of the month is a different matter because land can only be disposed of in future at existing use value and the owners have lost something in respect of which they should have compensation.

Photo of Mr William Brown Mr William Brown , Rugby

If the Solicitor-General has not covered the point which has just been made by the hon. Member for Torquay (Mr. C. Williams), will he say where it is covered? I ask him to envisage what might happen. Supposing a man dies in possession of a piece of property in regard to which he or his lawyer has staked a claim for development rights. It is true that that claim is one against the global sum of £300 million. It is also true that that claim has some value as part of the estate. On his death the estate has to be wound up, but it may be a long time before the sum is recoverable from the £300 million global fund, and what is recovered may bear no relation to the claim which has been made. The figure of that claim will presumably be the figure taken for the assessment of Death Duty at the time of death.

It might conceivably happen that a man has a piece of property with a development right which his lawyer assesses at £1,000. A claim is put in for that amount, and Death Duty is presumably levied on that figure as representing part of the estate, and yet two or three years later it may emerge that there will be paid from the central fund in respect of that property not £1,000 but perhaps £200 or £300. Plainly, something should be done about that. If that is not dealt with in this Clause, would the Solicitor-General tell us where in the Bill or elsewhere that point will be dealt with?

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

The position in regard to such a claim and the value to be put upon it is the same as that in regard to any other claim which forms part of the assets of the estate. Supposing the man has made a claim, that claim is valued to see what is a fair value to be put on it. The claim would be on the same footing as any other claim.

Photo of Mr William Brown Mr William Brown , Rugby

Except that in this case the State is the beneficiary under both heads. I cannot imagine that the Exchequer is entitled to charge the executors Death Duty on £1,000, which is paid to the State and subsequently for the State to pay only £250 in relation to that precise consideration. The right hon. and learned Gentleman would not rob the estate of £750 in that way, would he? Or would he?

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

The claim may turn out to be more or less in value than the figure at which it is valued, according to which the estate will benefit or otherwise.

Photo of Mr William Brown Mr William Brown , Rugby

Does the right hon. and learned Gentleman suppose that the State will give from the £300 million more than the claim which is advanced? I find that difficult to believe. Even if that were so would not the Government require from the estate additional Estate Duty in regard to the increased figure?

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

Cannot the Solicitor-General give the assurance, which is the fact, that when the amount of the claim is ascertained, and finally settled, the estate will be adjusted accordingly and the duty adjusted accordingly?

Photo of Mr Charles Williams Mr Charles Williams , Torquay

I feel that a large sum of money depends on this matter. It is a difficult point and is one which may never have occurred to the right hon. and learned Gentleman. I should be perfectly satisfied, as I think would my Friends on this side of the Committee, if we could be assured that the point will be thoroughly gone into because it will be most unfair if Death Duties are to be valued on the claim. It is an entirely new position affecting a large number of people. It looks as if no one knows what is the position in regard to such a claim. If we can have an assurance that between now and the Report stage this matter can be gone into so that the unfair position raised by the hon. Member for Rugby (Mr. W. J. Brown) shall not arise, that will meet the point about which I am worried. It is a very real point, as has now been seen.

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

I speak subject to correction, but I have drawn inspiration from the experts in the box, and if I understand the position, what happens is that the executors or administrators of the estate are informed that payment of Estate Duty in regard to the claim can be left outstanding until the claim is finally settled.

Photo of Mr Charles Williams Mr Charles Williams , Torquay

If that is really so one must accept it, but it is not a very happy position. Apparently there is no real certainty in the Treasury on this matter. I hope that we shall see that that point is made certain.

Clause ordered to stand part of the Bill.