EXEMPTION FROM STAMP DUTY ON FUND-FINANCED TRANSACTIONS
'(1) No stamp duty shall be payable on a conveyance or transfer of property made to the Trustees of the National Heritage Memorial Fund or on a conveyance or transfer to any body or institution where a grant or loan has been made to the body or instiution with respect to their acquisition of the property so conveyed or transferred.
(2) References in this section to conveyances or transfers include references to all occasions on which stamp duty would be chargeable but for the effects of this section.'.—[ Mr. Dalyell.]
Brought up, and read the First time.
r: With this we may take the following:
New clause 4— Exemption from capital transfer tax on gifts to the fund.
New clause 5— Exemption of tile Fund from all taxes and rates as a memorial.
New clause 9— Acceptance of property in satisfaction of income tax in certain circumstances.
I beg to move, That the clause be read a Second time.Both an amendment and a double-banking new clause were put forward during Committee and debated, and the discussion can be found in columns 210 to 216 of the Committee proceedings. The wording was defective, but the Minister correctly understood one aim, which was to exempt the recipient of grants and loans from the stamp duty that would otherwise be chargeable on conveyances and transfers of real property made with the aid of grants or loans from the fund. The Minister made it clear in Committee that relief from stamp duty is a matter for Treasury Ministers. It was heartening to hear what he said, and perhaps one can directly adduce from what he said that exemption will be forthcoming in the next Finance Bill. I wonder whether I intercept a nod and a wink from the Minister of State, Treasury. The hon. and learned Gentleman remains very silent and perhaps does not want to confirm that. Ah, good, I notice that he has nodded. The Minister also referred to the position of the trustees themselves, which led to a discussion on their future status not as a charity but as a body receiving the same reliefs as a charity, which brings us back to one of our old topics. The debate brought to light the extraordinary situation that will prevail if the trustees make an acquisition of real property. On that, they will pay 1 percent. stamp duty, assuming that they are granted status akin to that of a charity. They will rapidly part with that property and the recipients will also pay stamp duty, because, as the Minister made clear, even those in receipt of gifts pay stamp duty. Therefore, stamp duty will be payable twice, and it may total at least 2 per cent., if not 3 per cent., depending on the status of the recipient body. The first purpose of tabling the new clauses is to draw attention to the fact that, in spite of giving the trustees some relief, and in spite of the relief that recipient bodies may already have, at least 2 per cent. stamp duty may be paid in circumstances in which the trustees themselves make an acquisition and transfer it to a recipient. The second purpose is to draw attention to the need to extend the exemption asked for to those transfers and other transactions that also pay stamp duty, such as leases. Here it seems that the words in clause 11 give exemption to all such transactions in respect of property accepted in lieu of tax. It is to be hoped that the exemption for the activities of trustees will extend just as widely, and I put that in question form. It is ridiculous to vote extra money to Ministers who must then pay it to the trustees—incidentally, going through the barrier of public expenditure in the process—merely to provide the trustees with cash to pay back the money in the form of stamp duty. Will Treasury Ministers please bear that in mind and come to the sensible conclusion that total exemption should be given to the trustees from paying stamp duty, whatever they may do about recipient bodies? With regard to recipient bodies, the Minister pointed to the anomaly that may be created when stamp duty exemption is given on purchases assisted by grants or loans from the fund, in contrast to the situation when gifts are made to the same recipient bodies from outside, with stamp duties paid thereon. The best way of dealing with that anomaly would be totally to exempt not only the same by private treaty—be it assisted from the fund or otherwise—but also gifts made to bodies that are listed in paragraph 12 of schedule 6 to the Finance Act 1975. Stamp duty may only be 2 per cent.—1 per cent. in relation to charities—but surely it is rather petty to charge it on gifts for national purposes and on purchases made by august bodies. In that context, it is appropriate to look at the position of the various bodies that are listed in that paragraph of schedule 6. The position is not quite clear, but it seems that only the National Trust, the National Trust of Scotland and, strangely, the Department of the Environ- ment, including transport, escape paying stamp duty at the present time—be it at 2 per cent. or 1per cent. if the body is a charity. Even so, the exclusion of the two national trusts is significant. It must point the way towards total exemption being given to the fund as a body of comparable standing, at the very least. At this stage I should like to say to the Minister of State what a pity it is that we have not yet debated the Goodman report on charities. There are basic issues that should be discussed which are outside the immediate context of the heritage. New clause 4 also stands in my name. The subject of exemption from capital transfer tax of gifts to the fund was raised several times, both on Second Reading and during the Committee stage. One aspect has not been debated and gives rise to the probing new clause—that is, the inclusion of the name of the fund in the paragraph 12 list in schedule 6 to the Finance Act 1975. It carries with it the right to make private treaty purchases involving the inducement to the vendor of the so-called "douceur". That right is essential for the proper functioning of the fund. Without it, it will have difficulty in making acquisitions and may well have to pay more than would otherwise be the case. Apart from that aspect, it has to be said that the fund is not large enough. Clearly, it needs more capital and income. All that can be done to encourage the making of gifts to the fund should be carried out. That point was emphasised particularly by George Russell, the lawyer to the National Trust of Scotland. Donors are only human. To give money in the knowledge that they or their executors will have to pay CTT and any capital gains tax arising from the disposal that is inherent in the gift would be most damaging. It is urgent to put the fund into the paragraph 12 list in schedule 6. No firm undertaking has yet been given that the fund will be put into the list in the next Finance Bill. However, I know better than to ask the Minister of State to give clear undertakings about the nature of the Finance Bill before the Budget. Nevertheless, he may be in an expansive mood and may tell us something about that. Now that Treasury Ministers are permitted to speak, it seems appropriate to call for a direct and firm undertaking, although I should understand if that undertaking were vague. New clause 5 is grouped with my new clauses. It has my entire support. As hon. Members may know, I put up the amendment in Committee which may have sparked off the new clause, at least in relation to the reference to the recognition of the establishment of the fund as a memorial fund. I am glad to see that the pitfall of reference to Britain, as was the case with my amendment at Committee stage, has been avoided by using the words "United Kingdom". I hope that that will satisfy my hon. Friends, not least my hon. Friend on the Front Bench from Dunbartonshire, Central (Mr. McCartney). Whatever their secret thoughts may have been, I hope that Treasury Ministers will take the sentiments in the new clause about the fullest possible tax exemption to heart. I hope that they will come up with the necessary clauses in the Finance Bill without fail. New clause 9 is also of considerable interest and should be another guiding light for Treasury Ministers. The restriction to CTT and coincident capital gains tax, and now interest thereon, plus estate duty, is rather too restrictive. Income tax on the winding up of an estate by executors is just as destructive as the other taxes that refer to heritage properties. It does not matter which tax causes dispersal; it is the dispersal itself that matters. Here, dispersal should be taken in the wider sense of export, which could well be triggered by opposed to that prevented by acceptance in satisfaction of income tax on winding up. This is all a bit of a mouthful. However, I know that the Minister of State is used to dealing with mouthfuls, not least from me. I am sure that he will reply in some detail.
As new clause 5 touches on some similar points and stands in my name and that of two of my hon. Friends, I feel bound to say something, although little. There is a great deal of substance in what the hon. Member for West Lothian (Mr. Dalyell) has said. There is no point in my repeating it. I believe that there is a case for consideration.I am delighted that my hon. and learned Friend the Minister of State is taking part in the debate. We were all devastated when he was removed from the list of members of the Committee. A gloom fell over our deliberations on the first day following his absence, from which we never adequately recovered. Now he has a chance to tell us the exact position of the Government. I shall not delay him for a moment from doing so.
I should just like to put in a brief word. At this stage, in connection with new clause 9, is it not appropriate for the Minister or his colleague to comment on how the arguments would affect the taxation problems of the Seilern and Wernher collections? That is particularly so because these problems are now matters of considerable public knowledge.
:I rise to intervene with a certain diffidence. As my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) has pointed out, I did not take part in the debate in Committee.
We missed the hon. and learned Gentleman.
I am flattered. I took particular note of the kind remarks that were made. I cannot believe that my absence detracted from the quality of debate, judging from the Hansard report, which, of course, I read assiduously. I felt that my hon. Friend the Under-Secretary of State for the Environment—dare I say it in his presence—dealt with the points far more adequately than I could possibly have done. Anything that I can contribute on this occasion is only a gloss on the points that he made.
:Is that an invitation to send for the Under-Secretary during the Finance Bill when we have differences of opinion?
That is a matter of discretion for the hon. Gentleman. I notice that he said in one of his interventions that it was not his normal habit to send for Law Officers but that when he sent for them they came. Perhaps my hon. Friend the Under-Secretary is an honorary Law Officer henceforth on these matters. Perhaps that is not a status that he will accept with relish.I address myself to the central theme of the four new clauses—the tax status of the fund. Of course, it is the fund with which we are concerned rather than the trustees, because it is to be given corporate status. I shall give an undertaking to the House which I hope will allay many doubts and shorten the debate. It is our firm intention to introduce provisions in the next Finance Bill which will, for tax purposes, give the fund no less than the advantages of those who enjoy charitable status. I say advisedly that it will be no less than that status, because, in one aspect of my response to the hon. Member for West Lothian (Mr. Dalyell), it would be our intention to give them slightly more than that status. In other words, we believe, with him—indeed,it was the almost unanimous sentiment of the Committee—that it should be added to the list in paragraph 12 of schedule 6 to the Finance Act 1975 for the purposes of capital transfer tax. In other words, there will be total exemption for CTT purposes without limit. Of course, the House will appreciate that there are certain limits on normal disposals in favour of charities.
That is spendid news. I am sure that we are all delighted. However, will my hon. and learned Friend confirm that the Finance Act will make the provisions apply retrospectively—in other words, that they will apply from 1 April so long as the fund comes into being on that day?
I have addressed my mind to that point. I suspect that we are talking about a gap of only five or six days. I understand from my hon. Friend the Under-Secretary of State for the Environment that the fund will come into operation on 1 April. Of course, the financial year starts on 6 April.
Things can happen.
Anything can happen. I shall certainly take the point away with me to consider, but it would not be right to enmesh myself in points of such detail now. I hope that the House will bear in mind that we are probably talking about a gap of five days.It would not be appropriate to give the fund or the trustees charitable status as such, because that would involve a web of other obligations outside the fiscal field. I resist the temptation to debate the merits or demerits of the Goodman report with the hon. Member for West Lothian. If I did so, Mr. Deputy Speaker, you would no doubt rule me out of order. I notice a frown clouding the normally cheerful visage of the hon. Member for West Lothian. We propose that for fiscal purposes the fund should have no less than the advantages enjoyed by those with charitable status. However, there is a range of other obligations and liabilities, and if it were to receive charitable status it would become subjected to the attentions and supervision of the Charity Commissioners. That was not a matter for debate in Committee. I do not think that it is a matter for debate in the House. I hope that the hon. Gentleman will not look the gift horse that I have trotted into the Chamber—if I may describe it that way—in the mouth. I hope that he will realise, on reflection, that it is as good as it appeared to be a few minutes ago. New clause 3 deals with the fund and any bodies aided by the fund. I have certain reservations about such an extension. Many, but not all, of the bodies to which the fund might direct transfers are charities, as the hon. Gentleman pointed out. That would be widening unduly the ambit of the relief that I propose. There might be undesirable pressures on the trustees of the fund to make grants to various bodies to enable them to claim the exemption. I shall consider that, but I think that it would be tidier, cleaner and more appropriate if we concentrated on the fund itself. I take the point made by the hon. Member for West Lothian in regard to subsection (2) of new clause 3. I suspect, though, that there are certain obscurities. I am not certain whether it was drafted by his deft hand or by others. I understand that he wishes to cover leases, but I am not persuaded that leases will figure largely in the kind of transactions with which the fund is likely to be involved. Perhaps I am taking too narrow a view of the question and there might be situations where people wish to enter into such transactions and the fund may wish to grant long leases. That point can be considered when we draft the relief proposal in the next Finance Bill, but I suspect at the moment that new clause 3 is a little wide. I hope that I have dealt with new clause 4 to the satisfaction of the House. I hope that it is amply covered by the assurance I have given for CGT purposes. The fund would be in the same position as other bodies listed in paragraph 12 of schedule 6 to the Finance Act 1975. I turn now to new clause 5. Dare I say to my hon. Friends in whose name it stands that I feel that total exemption from all taxes is a little too wide? Curious situations could arise. Trustees may even be exempted from Customs duties. I cannot believe that that is in the mind of my hon. Friends. I hope that they will accept that the point will be adequately covered by the assurance that I have given.
My hon. and learned Friend will appreciate that this is a probing clause. We hoped to bring out precisely the points that he has made.
I thank my hon. Friend, and I shall not detain the House further on that point.I turn now to new clause 9, which stands in the name of my hon. Friend the Member for Eastleigh (Mr. Price). He is seeking—the point was also deployed by the hon. Member for West Lothian—to extend the acceptance of property in lieu of income tax. That is a substantial extension, and the clause is a little obscure. The acceptance of property in lieu of income tax is not simply limited to the income tax of the deceased, or even his estate. I am not certain why tax arising after death should be so exempt on the residue of the estate.
It should be so exempt. If it is not, in the case of the Simon collection some paintings may have to be sold to pay off outstanding tax debts and the collection will be thereby diminished.
:I hope that the hon. Gentleman will not think me ungracious if I say that it is a little inappropriate to debate the details of two particular cases. If he would like to write to me on that matter, I shall answer him in detail.
I am sorry to have to mention these particular cases, but they are of public knowledge. I am not raising matters improperly. The point is whether we should refer to specific cases.
My point is that it would be inappropriate for any hon. Member at this Dispatch Box to debate the facts of a particular case unless he is encouraged to do so by those directly affected. I am not privileged to have access to the files of any one taxpayer unless the taxpayer or his representative invites me to look at them. I take the hon. Gentleman's point; and, as I said, we shall certainly examine the general principle involved.
:Is there not a general point that it takes so long to settle estates? I am not accusing lawyers of having a Dickensian circumlocution on this matter. I know exactly what happens, and it is precisely for that reason that I hope that the hon. and learned Gentleman will give consideration to the length of time that it takes in practice, as opposed to in theory, to settle such matters.
:We are deeply conscious of that. The hon. Gentleman in one way and I in another way have certain connections with the law. We are as conscious as any hon. Member of the problem. There are cases where negotiations with the capital taxes office have played a part, but I do not think that general delays in matters should weigh with us too much when we are devising a system of relief from taxes in this particular area.
New clause 9 refers to
"income tax outstanding at or arising after death"
without any limitation. It could happen that if the residuary estate comprised a work of significant value, the income of the residuary estate, which had no relationship with the particular work of art, could be prayed in aid in relation to it. Many matters would need to be tied up. I do not think that any hon. Member is pressing the Government to accept new clause 9 in its present form, but we shall take on board the general point made. It is not comprised within the undertaking that I have given.
That is good enough for me.
It is not quite good enough for me. I am delighted that the hon. and learned Gentleman has given those undertakings, but he must examine the matter further. If he does not, there will be problems within a matter of months of the setting up of the fund.
I have made careful notes of the hon. Gentleman's points. In so far as it is proper for me to do so, I shall certainly look at the two cases mentioned. As I said, it may no the proper, unless I am invited to do so. I accept the general points made by the hon. Members for Warley, East (Mr. Faulds) and for West Lothian, but, as I said, at this stage I am not in a position to give any undertaking. I shall bear in mind the dire warnings that have been conveyed. We are all aiming at the same objective, and we must decide how widely we could and would extend this form of relief.I hope, however, that the general undertaking that I have given will satisfy the House. I also hope, notwithstanding my absence from the debates in Committee, that hon. Members will accept my remarks in the spirit in which they are offered and not press the new clauses to a Division.
I do not wish to look a gift horse in the mouth, and I understand the powerful point about the web of obligations. I shall seek to withdraw the new clause in the knowledge that, doubtless, some of these issues will be discussed in the sweaty and sultry atmosphere of Committee Room 10 in late June or early July—that is, if my hon. Friend the Member for Neath (Mr. Coleman) puts me on the Finance Bill Committee.I therefore beg to ask leave to withdraw the Motion.
Motion and clause, by leave, withdrawn.