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New Clause—(Relief From Estate Duty On Bearer Securities Compulsorily Registered)

Volume 440: debated on Wednesday 16 July 1947

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Where, in consequence of the restrictions imposed by the Defence (Finance) Regulations, 1939, or the Exchange Control Act, 1947, on the issue of coupons representing dividends or interest, bearer securities situate outside the United Kingdom have been or are converted into or exchanged for registered securities situate in Great Britain, then for the purposes of any claim for estate duty in respect of the passing of the registered securities on a death occurring after the thirty-first day of March, nineteen hundred and forty-seven, they shall be treated as situate outside Great Britain:

Provided that this Section shall apply only if, between the conversion or exchange and the death (or, in a case where the securities pass by reason of a gift inter vivos or of the disposition or determination of an interest limited to cease on the death, between the conversion or exchange and the gift, disposition or determination), the securities neither have been disposed of nor have passed on the death of a person competent to dispose thereof.—[ Mr Glenvil Hall.]

Brought up, and read the First time

4.25 p.m.

I beg to move, "That the Clause be read a Second time."

This Clause deals with liability for Estate Duty consequent on enforced conversion, as an exchange control measure, of bearer securities held abroad. As a wartime measure, it became an obligation, under the Defence Regulations, for bearer securities to be registered in this country, and that being so, it affected very materially the liability for Estate Duty if the owner of the securities happened to be a person who was domiciled abroad. Normally, under the law, the obligation and liability to pay Estate Duty follows on the situation of the securities concerned, and if the securities were situate here they would normally have been liable to pay Estate Duty, although they were owned by someone whose domicile was overseas.

In order to be just to those concerned it was decided that if it could be shown that the person who owned the securities at the time of his death was the same person as owned them at the time they were registered, and transferred from abroad, Estate Duty would not be payable in respect of those registered securities. It was accepted by most people that when the Defence Regulations came to an end—the Regulation in this case is Regulation 3B—that would be dropped, and people would be entitled to have their securities retransferred into bearer. Under the Exchange Control Act, the holding of bearer securities will not be allowed, and what the Chancellor does here is to continue the wartime concession so that under the new Act, which will take the place of Regulation 3B, people in the position I have described will still have the advantage of the wartime concession, which, by general agreement in all parts of the House, was granted at that time.

I found it necessary, a little earlier, to speak in somewhat critical language of the Financial Secretary's speech when commending to us a Clause dealing with Co-operative societies. It is, therefore, with all the greater pleasure that I commend him now for the admirable manner in which he has introduced a Clause which, I think, will be generally acceptable to the House. This is a matter of great complexity, and one over which many people could wonder for hours. The difficulty of the mechanics of collecting Estate Duty on various securities has troubled many professional men for many years, and the Government are to be congratulated on putting this matter right in this new Clause. I cannot employ the language of the hon. Member for West Ealing (Mr. J. Hudson), and say that this should be supported on the grounds of the social uplift which it will bring us. This is a more mundane matter; here, we are keeping our feet on the ground, and this technical matter is now being adjusted. The confident manner in which the right hon. Gentleman has just moved this new Clause shows how different he is, when pleading a just case, from the less comfortable attitude in which he found himself when moving the earlier Clause.

Can my right hon. Friend explain the proviso to the new Clause? I am not clear whether this restricts holders of scrip who are still holders on the date of their death.

I thought I had covered that point—I agree briefly, because I did not want to waste the time of the House. The answer to the question, if I understand it aright, is that if the executors of a person who dies can show that he owned those securities in bearer form, and was the owner at the time when they were compulsorily transferred into registered securities, he would have the benefit of this particular concession, provided, of course, that he fulfilled the other obligation which falls upon that estate, that the domicile would be abroad, and so on.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.