Financial Resolutions. - Resolution No. 18—Estate Duty.

I move:—

(1) That, subject to the subsequent provisions of this Resolution, where an interest in property limited to cease on a death has, after it has become an interest in possession, been disposed of or has determined (whether by surrender, assurance, divesting, forfeiture, or any other means except the expiration of a fixed period at the expiration whereof such interest was limited to cease) either wholly or partly and either for valuable consideration or otherwise, whichever of the following provisions is applicable shall apply and have effect, that is to say:—

(a) if in the absence of such disposition or determination the whole of the said property would, by virtue of Section 1 of the Finance Act, 1894, have passed on the said death on which it was limited to cease, then and in such case the whole of the said property shall be deemed by virtue of this Resolution to be included in the property passing on the said death, or

(b) if in the absence of such disposition or determination the said property would, by virtue of paragraph (b) of sub-section (1) of Section (2) of the Finance Act, 1894, have passed to a particular or limited extent on the said death on which it was limited to cease, then and in such case the said property shall be deemed by virtue of this Resolution to be included to that particular or limited extent in the property passing on the said death.

(2) That the foregoing paragraph of this Resolution shall not apply or have effect if the disposition or determination mentioned in that paragraph was bona fide effected or suffered for public or charitable purposes one year or more before the death or was bona fide effected or suffered for any other purpose three years or more before the death and either—

(a) bona fide possession and enjoyment of the property in which the interest the subject of such disposition or determination subsisted was, immediately after such disposition or determination, assumed by the person who become entitled thereto by virtue of or upon such disposition or determination and was thenceforward retained by that person to the entire exclusion of the person previously entitled to the said interest and the exclusion of any benefit to him by contract or otherwise, or

(b) the said disposition or determination was only partial and the provisions of the next preceding sub-paragraph are not fully complied with by reason only of the retention by the said person previously entitled to the said interest of some part of the property or some benefit by virtue of the instrument creating or conferring on him the said interest.

(3) That nothing contained in the next preceding paragraph of this Resolution shall prejudice or affect any charge of estate duty arising otherwise than by virtue of paragraph (1) of this Resolution.

(4) That in the application of paragraph (1) of this Resolution to a case in which an incumbrance on the property in which the interest mentioned in that paragraph subsisted has been created by associated operations which included a disposition of the said interest, the following provisions shall have effect, that is to say:—

(a) where such incumbrance was created for consideration in money or money's worth which was applied wholly or partly for purposes calculated to maintain or increase the value of the said property, references in the said paragraph (1) to the said property shall be construed as referring to that property with and subject to the said incumbrance to the extent to which the consideration therefor was so applied;

(b) save as provided by the foregoing sub-paragraph, references in the said paragraph (1) to the said property shall be construed as referring to that property free from the said incumbrance.

(5) That in sub-section (3) of Section 59 of the Finance (1909-10) Act, 1910, the words "property taken under such a disposition or affected by such a surrender, assurance, divesting or disposition as aforesaid" shall be construed as including property affected by any such disposition or determination as is mentioned in paragraph (1) of this Resolution, and the said words shall have effect accordingly and the subsequent words "disposition, surrender, assurance, or divesting" in the said sub-section shall be construed as including any such disposition or determination as is mentioned in the said paragraph (1), and the words "this section" shall be construed as including the statutory enactment giving effect to this Resolution.

(6) That this Resolution shall not operate in respect of any such surrender, assurance, divesting, or disposition as is mentioned in paragraph (c) of the proviso to Section 14 of the Finance Act, 1914, so as to make any estate duty payable which would not have been payable but for that section.

(7) That this Resolution shall have effect only in relation to a person dying after the 7th day of May, 1941.

(8) That in this Resolution—

the expression "associated operations" means operations (whether effected by the same person or by different persons and whether connected otherwise than as hereinafter mentioned or not so connected and whether contemporaneous or not contemporaneous) which are—

(a) operations affecting the same property, or

(b) operations one of which affects some property and the other or others of which affect property representing (directly or indirectly) that property or income arising from that property or accumulations of such income, or

(c) two operations of which one is effected with reference to the other or with a view to enabling such other to be effected or to facilitating the effecting of such other and any third operation having a like relation to either of the said two operations, and any fourth operation having a like relation to any of those three operations, and so on,

the word "disposition" includes any trust, covenant, agreement, or arrangement, whether made by a single operation or associated operations,

the expression "an interest in property limited to cease on a death" includes an interest subject to a limitation (in whatsoever form) having the effect of providing in the alternative for the cesser of such interest on a death or on the occurrence of some event before such death.

Question put and agreed to.