| Previous Section | Index | Home Page |
Dawn Primarolo: I shall deal with the point raised by the hon. Member for West Dorset before giving way to the hon. Member for Arundel and South Downs (Mr. Flight). One at a time, please.
The Government have clearly demonstrated in the development of their policy that they are prepared to hold discussions and listen to the points that companies and
many other people want to make about our proposals. There is no reason why that practice should not continue. Indeed, we have met a huge number of representative groups and large companies. The hon. Gentleman asks whether the Treasury and the Inland Revenue will engage in discussions with companies; of course we will, but we should do so anyway.
Mr. Flight: It is perfectly reasonable that British-based multinationals should not have everything all ways round. However, much as I support our alliance with the United States, I would not wish to stimulate a massive gratuitous payment of tax to the United States authorities. It would be better if that tax came to the UK authorities.
Dawn Primarolo: Indeed. As strong as our cultural, historical and business ties with the United States might be, our friendship would not extend to providing income for them. The hon. Gentleman knows a great deal about how complex the matter is, and he will have appreciated my points on providing certainty.
I agree with my hon. Friend the Member for Brent, North about the way in which the debate has been handled. It has been fraught at times for me at the Dispatch Box, but I feel that I have accounted for myself and the Government's policy clearly. We have developed a good policy. My hon. Friend is right to pay tribute to the officials who have supported Ministers in that exercise at the Inland Revenue and the Treasury.
I know that the hon. Member for Kingston and Surbiton does not believe everything he reads in the newspapers, so I can tell him that the scurrilous remarks about a division between political advisers and officials inside the Treasury and the Inland Revenue were not correct. The Treasury, the Inland Revenue, Ministers and special advisers work as a superb team to develop good policy--as we have done in this respect--with assistance from some others en route. I have dealt with the point about regulation and why section 806H of the Taxes Act 1988 deals with that.
The hon. Member for Kingston and Surbiton asked about capital gains tax on mixer companies. There may be a slight misunderstanding about that. The Inland Revenue is currently consulting on the roll-over relief for capital gains on sales of substantial shareholdings. He will have heard me refer to that in Committee. That will include shareholdings in trading companies that would have avoided capital gains in the mixer companies. That is subject to current consultation by the Government, and would cover the point raised by the hon. Gentleman.
Finally, the hon. Gentleman asked about yield. I direct him to the Inland Revenue's press release of 16 June. There have been huge estimates, with great variations, of how much would be raised or lost. I have explained how the Government systematically tried to measure the cost by looking at previous years. The Inland Revenue made it clear that given the scale of avoidance that has come to light since the Budget, the impact of the overall package represented by the changes--including onshore provisions--would be broadly similar to the estimates provided in the "Financial Statement and Budget Report". The hon. Gentleman wondered whether the Government were going to raise tax, but the figures are approximately the same.
I hope, therefore, that I have dealt with all the issues that have been raised. I hope that this closes the chapter on double taxation relief for this Finance Bill.
Amendments made: No. 104, in page 513, line 35, leave out from beginning to end of line 26 on page 514 and insert--
10.--(1) Amend section 801 of the Taxes Act 1988 as follows.
(2) After subsection (2) (cases where the overseas company receives a dividend from a related third company) insert--
"(2A) Section 799(1)(b) applies for the purposes of subsection (2) above only--
(a) if the overseas company and the third company are not resident in the same territory; or
(b) in such other cases as may be prescribed by regulations made by the Treasury."
(3) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
(4) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
No. 105, in page 515, line 9, at end insert--
11A.--(1) After section 801B of the Taxes Act 1988 insert--
"Separate streaming of dividend so far as representing an ADP dividend of a CFC
801C.--(1) This section applies in any case where--
(a) by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company; and
(b) one or more of the dividends paid by the controlled foreign company by virtue of which the condition in paragraph (a) above is satisfied are dividends falling within subsection (2) below.
(2) A dividend falls within this subsection if, for the purposes of Part I of Schedule 25, the whole or any part of it falls to be treated by virtue of paragraph 4 of that Schedule as paid by the controlled foreign company to a United Kingdom resident.
(3) If, in a case where this section applies,--
(a) an initial dividend is paid to a company resident outside the United Kingdom, and
(b) that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,
subsection (4) below shall have effect in relation to the UK recipient concerned.
(4) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to that UK recipient--
(a) that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and
(b) that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
(5) The dividends mentioned in subsection (4)(a) above are--
(a) as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an "ADP dividend") representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and
(b) a further separate dividend (a "residual dividend") representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.
(6) As respects each of the ADP dividends, the intermediate company is to be treated as if it were a separate company whose distributable profits are of a constitution corresponding to, and an amount equal to, that of the ADP dividend.
(7) As respects the residual dividend (if any), the relevant profits out of which it is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding accordingly so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid.
(8) If, in a case where this section applies, an intermediate company also pays a dividend which is not an intermediate dividend (an "independent dividend") and either--
(a) that dividend is paid to a United Kingdom resident, or
(b) if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,
subsection (9) below shall have effect in relation to the United Kingdom resident.
(9) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to the United Kingdom resident--
(a) that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and
(b) that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
(10) For the purposes of this section--
(a) a controlled foreign company is an "ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;
(b) an "initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and
(c) a "subsequent dividend" is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.
19 Jul 2000 : Column 454
(11) In this section--
"distributable profits" means a company's profits available for distribution, determined in accordance with section 799(6);
"intermediate company" means any company resident outside the United Kingdom which pays an intermediate dividend;
"intermediate dividend" means any dividend which is paid by a company resident outside the United Kingdom and which--
(a) for the purposes of paragraph 4 of Schedule 25, to any extent represents one or more initial dividends paid by other companies; and
(b) either is the subsequent dividend in the case of those initial dividends or is itself to any extent represented for those purposes by a subsequent dividend;
"the UK recipient" means the United Kingdom resident to whom a subsequent dividend is paid.
(12) Where--
(a) one company pays a dividend ("dividend A") to another company, and
(b) that other company, or a company which is related to it, pays a dividend ("dividend B") to another company,
then, for the purposes of this section, dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
(13) Sub-paragraph (2) of paragraph 4 of Schedule 25 (related companies) shall apply for the purposes of this section as it applies for the purposes of that paragraph.
(14) Where an intermediate company which is an ADP controlled foreign company pays a dividend--
(a) by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but
(b) which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,
the dividend shall not be regarded for the purposes of this section as an initial dividend paid by the company, to the extent that it so represents initial dividends paid by other ADP controlled foreign companies."
(2) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
(3) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
No. 106, in page 522, line 24, leave out from beginning to end of line 6 on page 527 and insert--
| Next Section
| Index | Home Page |