HOUSE OF COMMONS
Third Standing Committee on Statutory Instruments, &c.
DRAFT DOUBLE TAXATION RELIEF (TAXES ON ESTATES OF DECEASED PERSONS AND INHERITANCES AND ON GIFTS) (SWEDEN) ORDER 1989
Tuesday 23 May 1989
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The Committee consisted of the following Members:
Chairman: MR. TED LEADBITTER
Beith, Mr. A. J. (Berwick-upon-Tweed)
Boswell, Mr. Tim (Daventry)
Brown, Mr. Nicholas (Newcastle upon Tyne, East)
Campbell-Savours Mr. D. N. (Workington)
Gordon, Ms. Mildred (Bow and Poplar)
Hind, Mr. Kenneth (Lancashire, West)
Howarth, Mr. Alan (Stratford-on-Avon)
Janner, Mr. Greville (Leicester, West)
Lamont, Mr. Norman (Financial Secretary to the Treasury)
Maples, Mr. John (Lewisham, West)
Nellist, Mr. Dave (Coventry, South-East)
Stanley, Sir John (Tonbridge and Malling)
Stern, Mr. Michael (Bristol, North-West)
Stevens, Mr. Lewis (Nuneaton)
Sumberg, Mr. David (Bury, South)
Tapsell, Sir Peter (East Lindsey)
Temple-Morris, Mr. Peter (Leominster)
Wise, Mrs. Audrey (Preston)
Mr. C. D. Stanton, Committee Clerk2 3 Third Standing Committee on Statutory Instruments, &c. Tuesday 23 May 1989
[MR. TED LEADBITTER in the Chair]
The Financial Secretary to the Treasury (Mr. Norman Lamont): I beg to move, That the Committee has considered the draft Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (Sweden) Order 1989. I am pleased to see you in the Chair, Mr. Leadbitter. The United Kingdom has a network of bilateral double taxation treaties for taxes on estates, gifts and inheritances. The development of those conventions between members of the Organisation for Economic Co-operation and Development is a long-standing policy. Their purpose is to relieve the burden of international double taxation that would otherwise result where each of two states has the right under its law to tax the same property when a death occurs or a gift is made. The basic rule for the various conventions is that the country in which the person making the transfer is domiciled retains its right to tax all property wherever situated. The other country's right to tax is limited to land and unincorporated businesses situated in its territory and shipping and aircraft concerns managed there. Where tax is chargeable in both countries, there are detailed credit rules to relieve double taxation. Domicile for the purpose of the conventions is generally determined in accordance with the principles agreed in OECD for those agreements. We already have a comprehensive double taxation convention with Sweden, promulgated in 1981. It covers capital transfer tax and "any identical or substantially similar taxes which are imposed by either Contracting State" 4 thereafter. The changes that we made in 1986 when CTT was replaced with IHT made it advisable to negotiate protocols with various countries with which we have CTT conventions, to provide specifically for the inclusion of IHT. The protocol with Sweden is the first to be agreed. Its prime purpose is to improve the existing convention with Sweden by adding a specific reference to inheritance tax to the list of taxes covered. We have also taken the opportunity to sweep up a number of minor points. For example, the protocol clarifies the provision for the extension of the convention to substantially similar taxes, and the definition of United Kingdom national has been brought up to date to reflect the changes made in the British Nationality Act 1981. I am happy to inform hon. Members that the protocol has not changed the scope of the convention, which remains evenly balanced. It simply adapts the double taxation agreement to IHT instead of CTT.
Mr. Nicholas Brown (Newcastle upon Tyne, East): I, too, welcome you to the Chair, Mr. Leadbitter. It is always a pleasure when a fellow northern Member of Parliament guides us in Committee. The matter before us is not controversial and will not detain us for long. I thank the Financial Secretary for his explanation of the contents of the statutory instrument. The right hon. Gentleman correctly said that we have a comprehensive double taxation convention with Sweden. Are any other aspects of the convention affected by this instrument? He said that wide scope of the convention would not be affected, but will there be a knock-on effect? Secondly, how many estates does the right hon. Gentleman estimate will be covered by the order?
Mr. Lamont: The answer to whether there will be a knock-on effect is no. The only answer that I can give on how many estates will be affected by the convention is that very few come within the provisions of the convention and little tax is involved.
Question put and agreed to.
Resolved. That the Committee has considered the draft Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (Sweden) Order 1989.
Committee rose at twenty-four minutes to Eleven o' clock.
THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Leadbitter, Mr. Ted (Chairman)
Brown, Mr. Nicholas
Howarth, Mr. Alan
Lamont, Mr. Norman
Stanley, Sir John
Tapsell, Sir Peter