Sixteenth Resolution read a Second time.
Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
May we have an explanation of this Resolution?
The Finance Act of, I think, 1938 dealt with a rather complicated system of Estate Duty evasion under which the normal incidence of that duty, when a policy of insurance is taken out for the benefit of widow or children, was avoided. The House will see that it was a somewhat artificial and complicated structure when I tell them that it involved a payment by way of gift or settlement of £100,000 to trustees, who then took up shares in a one man company and simultaneously, or about the same time, £90,000 was lent back to the man who had transferred it. In that Section there was an exception which was intended to see that it did not apply to what I may call bona fide transactions where money was parted or property was parted with for full consideration for money or money's worth. It has occurred to some ingenious person that an Estate Duty avoidance scheme of this kind can be brought within the exception by making the payment of the notional £100,000 to the company for shares, the shares then being settled instead of the original £100,000. That clearly, if it was allowed to operate, defeated the intention of the House in that Section. We do not desire, of course, to attack or to bring within the Section bona fide transactions which are perfectly proper, but we have evidence that it has occurred to somebody that use can be made of this exception for transactions for full consideration to preserve the tax avoidance structure of the scheme. It is a complicated matter which will be easier to understand to those who are industrious enough to understand it when the Clause is before the House.
Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.