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S.C.B.

19

 
 

House of Commons

 
 

Tuesday 28th June 2005

 

Standing Committee Proceedings

 

Standing Committee B

 

Finance Bill


 

(except Clauses 11, 18, 40, 43, 44 and 69 and Schedule 8)

 

 

[Fifth and Sixth Sittings]


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  49

 

Clause  31,  page  28,  line  10,  leave out ‘16th March 2005’ and insert ‘31st July

 

2005’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  50

 

Clause  31,  page  28,  line  12,  leave out ‘16th March 2005’ and insert ‘31st July

 

2005’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  51

 

Clause  31,  page  28,  line  15,  leave out ‘15th March 2005’ and insert ‘30th July

 

2005’.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

20

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  52

 

Clause  31,  page  28,  line  17,  leave out ‘16th March 2005’ and insert ‘31st July

 

2005’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  53

 

Clause  31,  page  28,  line  22,  leave out ‘16th March 2005’ and insert ‘31st July

 

2005’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  56

 

Clause  31,  page  28,  line  24,  leave out subparagraph (a).

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  54

 

Clause  31,  page  28,  line  24,  leave out ‘16th March 2005’ and insert ‘31st July

 

2005’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  55

 

Clause  31,  page  28,  line  26,  leave out ‘31st August 2005’ and insert ‘31st

 

December 2005’.

 

Clause Agreed to.

 

Clauses 33 and 34 Agreed to.

 

Schedule 4 Agreed to.

 

Clause 35 Agreed to.

 

Schedule 5 Agreed to.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

21

 

Finance Bill, continued

 
 

Clauses 36 and 37 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  114

 

Schedule  6,  page  84,  line  35,  after ‘company’, insert ‘(such accounts being

 

prepared in accordance with generally accepted accounting practice).’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  115

 

Schedule  6,  page  85,  line  18,  after ‘company’, insert ‘(such accounts being

 

prepared in accordance with generally accepted accounting practice).’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  113

 

Schedule  6,  page  86,  line  24,  at end insert—

 

‘Spreading of adjustment on change of accounting policy

 

6A      (1)    

In paragraph 19A of Schedule 9 to FA 1996 (loan relationships:

 

adjustment on change of accounting policy), after sub-paragraph (5)

 

insert—

 

“(5A)  

Where there is a change of accounting policy in accordance with

 

sub-paragraph (2)(a) above, then the company may in respect of its

 

cumulative adjustments, elect that the adjustment shall be spread

 

over six periods of account rather than being taxed in accordance

 

with sub-paragraph (3) above.

 

    (5B)  

An election made in accordance with sub-paragraph (5A) must be

 

made—

 

(a)    

by notice in writing,

 

(b)    

to the Commissioners,

 

(c)    

within twelve months of the end of the first accounting

 

period to which the new basis applies.

 

    (5C)  

If an election is made, then, in each of the six periods of account

 

beginning with the first period for which the company prepares

 

accounts in accordance with international accounting standards, an

 

amount equal to one-sixth of the amount of adjustment is treated as

 

arising and chargeable to tax.”.’.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

22

 

Finance Bill, continued

 
 

Schedule Agreed to.

 

Clauses 38 and 39 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  116

 

Schedule  7,  page  88,  line  40,  at beginning insert ‘In’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  117

 

Schedule  7,  page  88,  line  41,  leave out from ‘years)’ to end and insert ‘at end insert

 

“and where the main purpose, or one of the main purposes, of one or more of the parties

 

to the finance agreement was a tax avoidance purpose.”.’.

 

Chris Huhne

 

Susan Kramer

 

Stephen Williams

 

Not called  69

 

Schedule  7,  page  89,  line  5,  leave out sub-paragraphs (5) and (6).

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  118

 

Schedule  7,  page  89,  line  32,  at end insert—

 

    

‘“tax advantage” has the meaning given by section 709(1) of the

 

Taxes Act 1988;

 

“tax avoidance purpose” in the case of any person, means any

 

purpose that consists in securing a tax advantage (whether for the

 

person or any other person).’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  119

 

Schedule  7,  page  91,  line  28,  at end insert—

 

  ‘(8A)    

In section 768B(1)(a) after “capital” insert “and the main purposes or one

 

of the main purposes, of the change of ownership was a tax avoidance

 

purpose.”.’.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

23

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  120

 

Schedule  7,  page  95,  line  24,  at end insert—

 

  ‘(2A)    

Where credits representing any distribution in respect of the share are

 

brought into account for the purposes of this Chapter, then this Chapter

 

shall have effect for the accounting period of the issuing company in

 

accordance with subsection (3) below as if—

 

(a)    

the shares were obligations under a debtor relationship of that

 

company, and

 

(b)    

any distribution in respect of the share were not a distribution

 

falling within section 209(2)(a) or (b) of the Taxes Act 1988,

 

unless such a distribution is payable to a person who is not within

 

the charge to income tax or corporation tax.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  121

 

Schedule  7,  page  95,  line  26,  leave out from ‘share’ to end of line 27 and insert

 

‘shall be determined in accordance with those principles of generally accepted accounting

 

practice which are applied in determining the company’s profit or loss for the accounting

 

period’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  122

 

Schedule  7,  page  95,  line  28,  leave out sub-paragraph (4).

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  123

 

Schedule  7,  page  96,  line  28,  at end insert—

 

‘(11)    

This section shall not apply unless the purpose, or one of the main purposes, of

 

the investing company holding the share in the circumstances described in

 

subsection (1) above is a tax avoidance purpose.

 

(12)    

In this section “tax advantage” had the meaning given by section 709(1) of the

 

Taxes Act 1988;

 

“tax avoidance purpose” in the case of any company, means any purpose that

 

consists in securing a tax advantage (whether for the company or any other

 

person).’.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

24

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  124

 

Schedule  7,  page  96,  line  39,  leave out ‘and’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  125

 

Schedule  7,  page  96,  line  40,  at end insert—

 

‘(d)    

the issuing company is not an associated company of the investing

 

company, and

 

(e)    

the investing company’s purpose in acquiring the share is an unallowable

 

purpose.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  127

 

Schedule  7,  page  97,  line  3,  at end insert—

 

‘(2A)    

Where credits representing any distribution in respect of the share are brought

 

into account for the purposes of this Chapter, then this Chapter shall have effect

 

for an accounting period of the issuing company in accordance with subsection

 

(3) below as if—

 

(a)    

the shares were obligations under a debtor relationship of that company,

 

and

 

(b)    

any distribution in respect of the share were not a distribution falling

 

within section 209(2)(a) or (b) of the Taxes Act 1988, unless such a

 

distribution is payable to a person that is not within the charge to income

 

tax or corporation tax.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  128

 

Schedule  7,  page  97,  line  5,  leave out from ‘share’ to end of line 6 and insert ‘shall

 

be determined in accordance with those priciples of generally accepted accounting

 

practice which are applied in determining the company’s profit or loss for the accounting

 

period.’.


 
 

S.C.B.  Standing Committee Proceedings: 28th June 2005            

25

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  129

 

Schedule  7,  page  97,  leave out lines 7 to 12.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  126

 

Schedule  7,  page  97,  line  29,  at end insert—

 

‘(8)    

For the purposes of this section, a share is acquired by the investing company for

 

an unallowable purpose if the main purpose, or one of the main purposes, for

 

which the company acquired the share is—

 

(a)    

the purpose of circumventing Section 95 of the Taxes Act 1988, or

 

(b)    

any other purpose which is a tax avoidance purpose.

 

(9)    

The main purpose, or one of the main purposes, for which the investing company

 

acquired a share shall be taken to be the purpose of circumventing Section 95 of

 

the Taxes Act 1988 (Taxation of Dealers in respect of distributions etc) if, at the

 

time when the company acquired the share—

 

(a)    

a credit institution was an associated company of the investing company,

 

and

 

(b)    

had the share been acquired by the credit institution, that institution

 

would have held the share in circumstances such that Section 95 of the

 

Taxes Act would have applied.

 

(10)    

In this section—

 

“associated company”, in relation to any other company, means a company

 

which, within the meaning given by section 413(3)(a) of the Taxes Act 1988, is a

 

member of the same group of companies as that other company;

 


 

“credit institution” means—

 

(a)    

a bank, within the meaning of section 840A of the Taxes Act 1988;

 

(b)    

a building society; or

 

(c)    

a person authorised by a licence under Part 3 of the Consumer Credit Act

 

1974 to carry on consumer credit business or consumer hire business

 

within the meaning of that Act;

 

    


 

“tax advantage” has the meaning given by section 709(1) of the Taxes Act 1988;

 


 

“tax avoidance purpose” in the case of any company, means any purpose that

 

consists in securing a tax advantage (whether for the company or any other

 

person).’.

 

Dawn Primarolo

 

Agreed to  78

 

Schedule  7,  page  97,  line  32,  leave out ‘are not income producing but’.

 

Dawn Primarolo

 

Agreed to  79

 

Schedule  7,  page  97,  line  39,  at end insert—


 
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