sc1611506.297-303

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.A.
297

House of Commons

Thursday 15th June 2006

Standing Committee Proceedings

Standing Committee A

Finance (No. 2) Bill

(except Clauses 13 to 15, 26, 61, 91 and 106, Schedule 14, and new Clauses relating to the effect

of provisions of the Bill on section 18 of the Inheritance Tax Act 1984)

[Eighteenth and nineteenth Sittings]

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  275

Schedule  20,  page  114  [Vol II],  leave out lines 10 to 14 and insert—

  ‘For section 71(1) of IHTA 1984 substitute—

“(1)
Subject to subsections (1A) to (2) below, this section applies to settled property

if—

(a)
one or more persons (in this section referred to as “beneficiaries”) will,

on or before attaining a specified age not exceeding twenty-five, become

absolutely entitled to it, and

(b)
until a beneficiary becomes entitled to the settled property or the income

arising from it, the settled property and the income from the settled

property is to be accumulated so far as not applied for the maintenance,

education or benefit of a beneficiary.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  284

Schedule  20,  page  114  [Vol II],  leave out lines 10 to 14 and insert

  ‘For section 71(1) of IHTA 1984 substitute—

“(1)
Subject to subsections (1A) to (2) below, this section applies to settled property

if—

(a)
one or more persons (in this section referred to as beneficiaries) will, on

or before attaining a specified age not exceeding eighteen, become

absolutely entitled to it or to any income arising from it,

(b)
where a beneficiary becomes entitled pursuant to paragraph (a) above to

the income arising from the settled property rather than to the property

S.C.A.  Standing Committee Proceedings: 15th June 2006
298

Finance (N, continued

itself, that beneficiary subsequently becomes absolutely entitled to the

property concerned on or before attaining a specified age not exceeding

twenty-five, and

(c)
until a beneficiary becomes entitled to the settled property or the income

arising from it pursuant to paragraph (a) above, the settled property and

the income from the settled property is to be accumulated so far as not

applied for the maintenance, education or benefit of a beneficiary.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  276

Schedule  20,  page  114,  line  14  [Vol II],  at end insert—

‘(1A)
Section 71(4) shall be replaced with the following provision with effect from 6th

April 2008—

“(4)
Tax shall not be charged under this section—

(a)
on a beneficiary’s becoming absolutely entitled to, or to the

income arising from, settled property on or before attaining the

specified age,

(b)
on the death of a beneficiary before attaining the specified

age.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  285

Schedule  20,  page  114,  line  14  [Vol II],  at end insert—

‘(1A)
Section 71(4) shall be replaced with the following provision with effect from 6th

April 2008—

“(4)
Tax shall not be charged under this section—

(a)
on a beneficiary’s becoming absolutely entitled to, or to the

income arising from, settled property on or before attaining the

age specified for the purposes of paragraph (a) of subsection (1)

above or, if later, on the beneficiary becoming absolutely entitled

to the settled property on or before the age specified for the

purposes of paragraph (b) of subsection (1) above, or

(b)
on the death of a beneficiary under the age at which he would

have become absolutely entitled to the settled property pursuant

to paragraph (a) or (b) of subsection (1) above.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  286

Schedule  20,  page  114,  line  14  [Vol II],  at end insert—

‘(1B)
In section 71(6) IHTA 1984 leave out ‘and’ after ‘paragraphs (a)’ and insert ‘and

(c)’ after ‘(b)’.’.

S.C.A.  Standing Committee Proceedings: 15th June 2006
299

Finance (N, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Negatived on division  230

Schedule  20,  page  114,  line  30  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Negatived on division  300

Schedule  20,  page  114,  line  34  [Vol  II],  after ‘interest’, insert ‘; or

(d)
an immediate self-settled interest.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Negatived on division  319

Schedule  20,  page  114,  line  34  [Vol  II],  after ‘interest’, insert ‘, or

(d)
a relationship breakdown settlement interest.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  231

Schedule  20,  page  114,  line  36  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  292

Schedule  20,  page  114,  line  38  [Vol  II],  after ‘section’, insert ‘71 or’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  232

Schedule  20,  page  114,  line  40  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

S.C.A.  Standing Committee Proceedings: 15th June 2006
300

Finance (N, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Withdrawn  226

Schedule  20,  page  115,  line  12  [Vol II],  leave out from beginning to end of line

25.

Dawn Primarolo

Agreed to  359

Schedule  20,  page  115  [Vol II],  leave out lines 12 to 25.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  293

Schedule  20,  page  115,  line  22  [Vol  II],  after ‘section’, insert ‘71 or’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  227

Schedule  20,  page  115,  line  26  [Vol II],  leave out ‘5’ and insert ‘3’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  294

Schedule  20,  page  115,  line  27  [Vol  II],  after ‘section’, insert ‘71 or’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  228

Schedule  20,  page  115,  line  30  [Vol II],  leave out from beginning to end of line

18 on page 116.

Dawn Primarolo

Agreed to  360

Schedule  20,  page  115,  line  30  [Vol II],  leave out ‘Conditions 3 to 5 have’ and

insert ‘Condition 5 has’.

Dawn Primarolo

Agreed to  361

Schedule  20,  page  115,  line  32  [Vol II],  leave out from beginning to end of line

18 on page 116.

S.C.A.  Standing Committee Proceedings: 15th June 2006
301

Finance (N, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not moved  354

Schedule  20,  page  116,  line  8  [Vol  II],  at end insert ‘or

(c)
L is excluded from exercise of the power or participation in its exercise

wholly to ensure compliance with religious rules.’.

Dawn Primarolo

Agreed to  385

Schedule  20,  page  116,  line  23  [Vol II],  after ‘only’ insert ‘— (a)’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Withdrawn  298

Schedule  20,  page  116,  line  23  [Vol  II],  after ‘if’, insert ‘section 49D below

applies or’.

Dawn Primarolo

Agreed to  386

Schedule  20,  page  116,  line  23  [Vol II],  at end insert ‘, or

(b)
if, and to the extent that, section 49D below so provides.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  233

Schedule  20,  page  116,  line  25  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  234

Schedule  20,  page  116,  line  26  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  295

Schedule  20,  page  116,  line  29  [Vol  II],  after ‘possession’, insert ‘or was

property to which section 71 applied’.

S.C.A.  Standing Committee Proceedings: 15th June 2006
302

Finance (N, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  229

Schedule  20,  page  116,  line  30  [Vol II],  after ‘that’, insert ‘unless B is the spouse

or civil partner of the person beneficially entitled to the prior interest’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  235

Schedule  20,  page  116,  line  31  [Vol II],  leave out ‘22nd March 2006’ and insert

‘6th April 2007’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  296

Schedule  20,  page  116,  line  31  [Vol  II],  leave out ‘but before 6th April 2008’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  297

Schedule  20,  page  116,  line  35   [Vol  II],  after ‘section’, insert ‘71 or’.

Dawn Primarolo

Agreed to  387

Schedule  20,  page  116,  line  37  [Vol II],  at end insert—

‘49D
Transitional serial interest: contracts of life insurance

(1)
Where—

(a)
a person (“C”) is beneficially entitled to an interest in

possession in settled property (“the present interest”), and

(b)
on C’s becoming beneficially entitled to the present interest,

the settled property consisted of, or included, rights under a

contract of life insurance entered into before 22nd March

2006,


the present interest so far as subsisting in rights under the contract, or

in property comprised in the settlement that directly or indirectly

represents rights under the contract, is a “transitional serial interest”

for the purposes of this Chapter if the following conditions are met.

(2)
Condition 1 is that—

(a)
the settlement commenced before 22nd March 2006, and

(b)
immediately before 22nd March 2006—

S.C.A.  Standing Committee Proceedings: 15th June 2006
303

Finance (N, continued

(i)
the property then comprised in the settlement

consisted of, or included, rights under the contract,

and

(ii)
those rights were property in which C, or some other

person, was beneficially entitled to an interest in

possession (“the earlier interest”).

(3)
Condition 2 is that—

(a)
the earlier interest came to an end at a time on or after 6th

April 2008 (“the earlier-interest end-time”) on the death of the

person beneficially entitled to it and C became beneficially

entitled to the present interest—

(i)
at the earlier-interest end-time, or

(ii)
on the coming to an end, on the death of the person

beneficially entitled to it, of an interest in possession

to which that person became beneficially entitled at

the earlier-interest end-time, or

(iii)
on the coming to an end of the second or last in an

unbroken sequence of two or more consecutive

interests in possession to the first of which a person

became beneficially entitled at the earlier-interest

end-time and each of which ended on the death of the

person beneficially entitled to it, or

(b)
C became beneficially entitled to the present interest—

(i)
on the coming to an end, on the death of the person

entitled to it, of an interest in possession that is a

transitional serial interest under section 49C(1)(a), or

(ii)
on the coming to an end of the second or last in an

unbroken sequence of two or more consecutive

interests in possession the first of which was a

transitional serial interest under section 49C(1)(a) and

each of which ended on the death of the person

beneficially entitled to it.

(4)
Condition 3 is that rights under the contract were comprised in the

settlement throughout the period beginning with 22nd March 2006 and

ending with C’s becoming beneficially entitled to the present interest.

(5)
Condition 4 is that—

(a)
section 71A below does not apply to the property in which the

present interest subsists, and

(b)
the present interest is not a disabled person’s interest.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  299

Schedule  20,  page  116,  line  37  [Vol  II],  at end insert—