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House of Commons

Session 2005 - 06
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Other Bills before Parliament

743

House of Commons

Tuesday 4th July 2006

Report Stage Proceedings

Finance (No. 2) Bill [Lords], As Amended

Mr Chancellor of the Exchequer

Agreed to

To move, That the Finance (No.2) Bill, as amended, be considered in the following

order, namely, new Clauses relating to Part 6, new Schedules relating to Part 6,

amendments relating to Clauses 155 and 156, Schedule 20, Clause 157, remaining new

Clauses, remaining new Schedules, amendments relating to Clauses 1 to 27, Schedule 1,

Clause 28, Schedule 2, Clause 29, Schedule 3, Clauses 30 to 37, Schedule 4, Clauses 38

to 42, Schedule 5, Clauses 43 to 76, Schedule 6, Clauses 77 to 79, Schedule 7, Clauses 80

and 81, Schedules 8 and 9, Clause 82, Schedule 10, Clauses 83 to 86, Schedule 11,

Clauses 87 and 88, Schedule 12, Clause 89, Schedule 13, Clauses 90 and 91, Schedule 14,

Clauses 92 to 102, Schedule 15, Clauses 103 and 104, Schedule 16, Clauses 105 to 134,

Schedule 17, Clauses 135 to 146, Schedule 18, Clauses 147 to 154, Schedule 19, Clause

158, Schedule 21, Clauses 159 and 160, Schedule 22, Clause 161, Schedule 23, Clauses

162 and 163, Schedule 24, Clause 164, Schedule 25, Clauses 165 to 178, Schedule 26, and

Clauses 179 and 180.

NEW CLAUSES RELATING TO PART 6

Trusts relating to divorce, life protection policies and disabled persons

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Negatived on division  NC2

To move the following Clause:—

‘The provisions of Schedule 20 shall not operate so as to discourage, impede or

prevent the use of trusts which are set up—

(a)
as a result of relationship breakdown and create a “relationship

breakdown settlement interest”, as defined in section 59A of the

Inheritance Tax Act 1984; or

(b)
in relation to the proceeds of life protection policies, as defined in section

58(4) of the Inheritance Tax Act 1984; or

Report Stage Proceedings: 4th July 2006
744

Finance (N–[ [], continued

(c)
by or in favour of disabled persons within the definition set out in section

89 of the Inheritance Tax Act 1984.’.

Information relating to section 157 and Schedule 20

Julia Goldsworthy

Not selected  nc18

To move the following Clause:—

‘The Chancellor of the Exchequer shall provide the House with the information

relating to section 157 of and Schedule 20 to this Act requested by the Treasury

Committee in its Report on the 2006 Budget at page 56 paragraph 109.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  58

Page  377,  line  21  [Schedule  20],  after ‘minor’, insert ‘(whether by exercise of

trustees’ powers under such a will or otherwise).’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  56

Page  380,  line  30  [Schedule  20],  at end insert—

‘(4A)
Where—

(a)
section 71 above applied to settled property immediately before 22nd

March 2006,

(b)
on or after that date a beneficiary (within the meaning of section 71

above) (“B”) became entitled to an interest in possession in that settled

property, and

(c)
before that interest in possession had come to an end and while B was

under the age of 25 and before [6th April 2008] that settled property

became held for the benefit of B on trusts such as are mentioned in

subsection (3)(b)(i) above,


subsections (3) and (4) above shall apply as though the settled property had

become held on the trusts referred to in paragraph (c) above immediately at the

Report Stage Proceedings: 4th July 2006
745

Finance (N–[ [], continued

time B in fact became entitled to the interest in possession referred to in paragraph

(b) above.’.

Mr Chancellor of the Exchequer

Agreed to  70

Page  384,  line  38  [Schedule  20],  at end insert—

‘(2)
For the purposes of sections 71A to 71G above, a deceased individual

(“D”) shall be taken to have been a parent of another individual (“Y”)

if, immediately before D died, D had—

(a)
parental responsibility for Y under the law of England and

Wales,

(b)
parental responsibilities in relation to Y under the law of

Scotland, or

(c)
parental responsibility for Y under the law of Northern

Ireland.

(3)
In subsection (2)(a) above “parental responsibility” has the same

meaning as in the Children Act 1989.

(4)
In subsection (2)(b) above “parental responsibilities” has the meaning

given by section 1(3) of the Children (Scotland) Act 1995.

(5)
In subsection (2)(c) above “parental responsibility” has the same

meaning as in the Children (Northern Ireland) Order 1995.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  34

Page  386,  line  3  [Schedule  20],  after ‘interest’, insert ‘, or

(d)
a relationship breakdown settlement interest.’.

Mr Chancellor of the Exchequer

Agreed to  71

Page  386,  line  29  [Schedule  20],  leave out ‘(“B”)’.

Mr Chancellor of the Exchequer

Agreed to  72

Page  386,  line  30  [Schedule  20],  leave out ‘(“the current interest”)’.

Mr Chancellor of the Exchequer

Agreed to  73

Page  386,  line  33  [Schedule  20],  leave out ‘the following conditions are met’ and

insert ‘section 49BA or 49BB below so provides’.

Report Stage Proceedings: 4th July 2006
746

Finance (N–[ [], continued

Mr Chancellor of the Exchequer

Agreed to  74

Page  386,  line  34  [Schedule  20],  at end insert—

‘49BA
  Transitional serial interest: interest to which person becomes

entitled during period 22nd March 2006 to 5th April 2008

(1)
Where a person (“B”) is beneficially entitled to an interest in

possession in settled property (“the current interest”), that interest is a

transitional serial interest for the purposes of this Chapter if the

following conditions are met.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  59

Page  386,  line  42  [Schedule  20],  after ‘but’, insert ‘(unless B was the spouse or

civil partner of the person entitled to the prior interest)’.

Mr Chancellor of the Exchequer

Agreed to  75

Page  387,  line  6  [Schedule  20],  at end insert—

‘49BB
  Transitional serial interest: interest to which person becomes

entitled on death of spouse or civil partner on or after 6th April 2008

(1)
Where a person (“E”) is beneficially entitled to an interest in

possession in settled property (“the successor interest”), that interest 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, the property then

comprised in the settlement was property in which a person

other than E was beneficially entitled to an interest in

possession (“the previous interest”).

(3)
Condition 2 is that the previous interest came to an end on or after 6th

April 2008 on the death of that other person (“F”).

(4)
Condition 3 is that, immediately before F died, F was the spouse or

civil partner of E.

(5)
Condition 4 is that E became beneficially entitled to the successor

interest on F’s death.

(6)
Condition 5 is that—

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

successor interest subsists, and

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

Report Stage Proceedings: 4th July 2006
747

Finance (N–[ [], continued

Mr Chancellor of the Exchequer

Agreed to  76

Page  387,  line  47  [Schedule  20],  leave out ‘49B(1)(a)’ and insert ‘49BA’.

Mr Chancellor of the Exchequer

Agreed to  77

Page  388,  line  4  [Schedule  20],  leave out ‘49B(1)(a)’ and insert ‘49BA’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Negatived on division  5

Page  388,  line  18  [Schedule  20],  at beginning insert—

‘6  (1)
In section 89 (trusts for disabled persons)—

(a)
in subsection (4)(a) at end insert—

“(aa)
a person who lacked capacity within the meaning of

section 272 below, or”;

(b)
in subsection (4)(c), leave out “or middle” and insert “middle or

lower”; and

(c)
after subsection (4)(c) at end insert—

“(d)
a person who satisfies the Commissioners for Her

Majesty’s Revenue and Customs that he had a

condition that it was at that time reasonable to expect

would have such effects on him as to lead to him

becoming a person—

(i)
falling within subsection (4)(a) or (aa) above,

or

(ii)
in receipt of an attendance allowance

mentioned in subsection (4)(b) above, or

(iii)
in receipt of a disability living allowance

mentioned in subsection (4)(c) above.”.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Not called  6

Page  388,  line  29  [Schedule  20],  after ‘89(4)(a)’, insert ‘or (aa)’.

Report Stage Proceedings: 4th July 2006
748

Finance (N–[ [], continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Not called  7

Page  388,  line  34  [Schedule  20],  leave out ‘or middle’ and insert ‘, middle or

lower’.

Mr Chancellor of the Exchequer

Agreed to  78

Page  389,  line  36  [Schedule  20],  leave out from ‘person’ to ‘on’ in line 37 and

insert ‘becomes beneficially entitled’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Not called  8

Page  390,  line  26  [Schedule  20],  leave out ‘or middle’ and insert ‘, middle or

lower’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Not called  9

Page  390,  line  46  [Schedule  20],  leave out ‘or middle’ and insert ‘, middle or

lower’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Julia Goldsworthy

Not called  10

Page  391,  line  2  [Schedule  20],  at end insert—

‘(7)
The reference in subsection (1) above to a disabled person includes, in relation to

any settled property, a reference to a person who satisfied Her Majesty’s Revenue

Report Stage Proceedings: 4th July 2006
749

Finance (N–[ [], continued

and Customs that he would, when the property was transferred into settlement,

have been entitled to an attendance allowance or disability living allowance, by

virtue of entitlement to the care component at the highest, middle or lower rate,

whether or not such an allowance was actually claimed.’.

Mr Chancellor of the Exchequer

Agreed to  79

Page  392,  line  10  [Schedule  20],  leave out ‘or 89A’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  35

Page  393,  line  9  [Schedule  20],  at end insert ‘, and

(iv)
not a relationship breakdown settlement interest.”’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  32

Page  393,  line  9  [Schedule  20],  after ‘interest’, insert—

‘10A (1)
Section 10 of IHTA 1984 is amended as follows.

      (2)
In subsection (1)(b) after “with each other”, insert “, or

(c)
it is made in accordance with or pursuant to a court order in

proceedings for the following types of provision—

(i)
financial relief for the parties to a marriage and any

children of the family in connection with proceedings

for divorce, nullity of marriage or judicial separation

including, but not limited to, property adjustment

orders or variation of settlement orders under section

24 of the Matrimonial Causes Act 1973 or orders

under section 8 of the Family Law (Scotland) Act

1985 and any successive legislation; or

(ii)
financial relief for the parties of a civil partnership in

connection with proceedings for dissolution of the

civil partnership including, but not limited to,

property adjustment orders or variation of settlement

orders under Schedule 5 of the Civil Partnership Act

2004 and any successive legislation; or

(iii)
where a marriage has been dissolved or annulled or

the parties to a marriage have been legally separated,

by means of judicial or other proceedings in an

overseas country and the divorce, annulment or legal