Schedule 27 - Life polices, life annuities and capital redemption policies

Finance Bill – in a Public Bill Committee at 11:00 am on 8th May 2001.

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Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs 11:00 am, 8th May 2001

I beg to move amendment No. 43, in page 226, line 41, after `jointly', insert `or in common'.

This is the matter that my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) was about to raise in respect of clause 81. As the Minister said, the changes, especially section those in proposed new section 546A, are designed to align English and Scottish law when an insurance policy—

The Chairman's attention having been called to the fact that ten Members were not present, he suspended the proceedings; and other Members having come into the room and ten Members being present, the proceedings were resumed.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

As I was saying, section 546A in particular is designed to align English and Scottish law when insurance policies are held by more than one person. Subsection (1)(a) of the proposed new section refers to policies held jointly or in common, but subsection (1)(b) refers only to policies held jointly. The Law Society's opinion is that some words have been missed out of paragraph (b), which should similarly say ``jointly or in common''.

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

The amendment would not have any effect, as existing legislation has the desired result. As the hon. Gentleman said, the measure relates to the application of the complex principles of property law to life insurance policyholders. Some whole assignments will be deemed to be assignments of a part for tax purposes. It covers assignments and insurance contracts where, economically, only part of the contract is transferred. It is not necessary to deem something to be a part assignment when it is already a part assignment in law.

The amendment deals with the transfer of an insurance contract by tenants in common when not all the tenants dispose of their interest in law. This is an assignment of a precise part of the contract by each tenant to reduce his own interest in the contract. It does not therefore need to be deemed to be a part assignment for tax purposes. The amendment is unnecessary and I urge the Committee to reject it.

Mr. Burnett rose—

Photo of Dr Michael Clark Dr Michael Clark Conservative, Rayleigh

This will be a speech, not an intervention, I believe.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

It will, Dr. Clark, but the Committee will be relieved to hear that it will be a fairly short one.

I hope that I can remember my co-ownership rules from years past. If I remember correctly, in terms of legal ownership—equitable or beneficial ownership, as mentioned in the clause—only joint tenants or tenants in common are relevant. It is plainly defective not to allow for that, so I join my hon. Friend—as he kindly called me—the Member for Arundel and South Downs in supporting this important amendment. Without it, there will be confusion and unfairness when the transferee holds as a tenant in common.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 12.

Question accordingly negatived.

Schedule 27 agreed to.

Clause 82 ordered to stand part of the Bill.