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S.C.B.

1

 
 

House of Commons

 
 

Tuesday 21st June 2005

 

Standing Committee Proceedings

 

Standing Committee B

 

Dawn Primarolo

 

Agreed to

 

That, during proceedings on the Finance Bill (except Clauses 11, 18, 40, 43, 44 and 69

 

and Schedule 8), the Committee do meet at half-past Ten o’clock and half-past Four

 

o’clock on Tuesdays and quarter-past Nine o’clock and Two o’clock on Thursdays when

 

the House is sitting

 


 

Finance Bill


 

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

 

 

[First Sitting]


 

Dawn Primarolo

 

Agreed to

 

To move, That the Order in which proceedings in Standing Committee on the Finance

 

Bill are to be taken shall be Clauses 1 to 6, Schedule 1, Clauses 7 to 10, Clause 12,

 

Schedule 2, Clauses 13 to 17, Clauses 19 to 24, Schedule 3, Clauses 25 to 34, Schedule 4,

 

Clause 35, Schedule 5, Clauses 36 and 37, Schedule 6, Clauses 38 and 39, Schedule 7,

 

Clauses 41 and 42, Schedule 9, Clauses 45 to 49, Schedule 10, Clauses 50 to 68, new

 

Clauses, new Schedules, Clause 70, Schedule 11 and Clauses 71 and 72.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  60

 

Clause  1,  page  1,  line  7,  at end add—

 

‘(1B)    

The circumstances which may be prescribed in subsection (1A) shall be limited

 

to those where goods are sold by taxable persons to non-registered persons within

 

the United Kingdom.’.


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

2

 

Finance Bill, continued

 
 

Clause Agreed to.

 

Clause 2 Agreed to.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  61

 

Clause  3,  page  5,  line  8,  leave out ‘relevant date’ and insert ‘last day of the month

 

next following the end of the next prescribed accounting period’.

 

Clause Agreed to.

 

Clauses 4 and 5 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not selected  62

 

Page  7,  line  32,  leave out Clause 6.

 

Clause 6 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not selected  63

 

Page  60,  line  2,  leave out Schedule 1.

 

Schedule 1 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  64

 

Clause  7,  page  8,  line  9,  after ‘(5)’, insert ‘below’.


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

3

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  65

 

Clause  7,  page  8,  line  30,  leave out from beginning to end of line 34.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  66

 

Clause  7,  page  8,  line  34,  at end add—

 

‘(9)    

In this section “total income” shall mean total income after deduction of the

 

relevant personal allowance mentioned in section 257 ICTA 1988’.

 

Clause Agreed to.

 

Clauses 8, 9, 10 and 12 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  1

 

Schedule  2,  page  63,  line  13,  after ‘is’, insert ‘entered into as part of a scheme or

 

arrangement the main purpose (or one of the main purposes) of which is the avoidance of

 

tax or national insurance contributions and is’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  2

 

Schedule  2,  page  63,  line  22,  at end insert—

 

‘(d)    

any contract of insurance offered by a company whose business

 

includes the business of selling insurance policies where the

 

contract is offered on substantially the same terms in the ordinary

 

course of that insurance business.”.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  3

 

Schedule  2,  page  63,  line  36,  leave out from beginning to end of line 3 on page 64

 

and insert—


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

4

 

Finance Bill, continued

 
 

    ‘(8)    

This paragraph has effect on and after 2nd December 2004 and applies in

 

relation to rights under contracts of insurance acquired on or after that

 

date.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Negatived on division  4

 

Schedule  2,  page  64,  line  19,  leave out from ‘acquired’ to end of line 24 and insert

 

‘after that date.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  5

 

Schedule  2,  page  64,  line  25,  leave out paragraphs 5 and 6.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  6

 

Schedule  2,  page  65,  line  1,  leave out paragraph 7.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  7

 

Schedule  2,  page  65,  line  9,  at end insert—

 

‘431C

  Procedure for clearance in advance

 

Section 431B shall not apply so as to treat an election as having been made for

 

the purposes of section 431 if, before the issue of securities is made, the Board

 

have, on the application of either the employer or the employee notified either the

 

employer or the employee that the Board are satisfied that the issue of the

 

securities is for bona fide commercial reasons and will not form part of any such

 

arrangements as are referred to in section 431B.”.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  8

 

Schedule  2,  page  65,  leave out lines 27 to 40 and insert—


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

5

 

Finance Bill, continued

 
 

    ‘(3)    

Where subsection (1) does not apply by virtue of subsection (2) the

 

market value of the employment-related securities is to be determined in

 

each case as if they were immediately and fully convertible.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Not called  9

 

Schedule  2,  page  66,  line  16,  at end insert—

 

  ‘(3B)    

(a) This subsection applies where subsection (2) of section 437 of this

 

Act applies.

 

(b) If on a chargeable event the amounts charged under the provisions

 

referred to in section 437(1) because of the application of subsection (2)

 

of section 437 and the amounts computed under this section (the “original

 

amounts”) exceed the amounts that would have been charged under

 

section 437(1) and under this section had section 437(2) not applied, the

 

associated person shall be charged on the lower of such amounts and any

 

amounts overpaid shall be refunded, provided that if, on a later

 

chargeable event, such amounts do not exceed the original amounts, the

 

original amounts shall be due on the dates on which such sums were due

 

and payable as if this provision had not applied.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  10

 

Schedule  2,  page  67,  line  12,  at end insert—

 

    ‘(3)    

Subsections (1) and (2) shall not apply if the loan is repaid, in which case

 

within one month after the repayment has been notified to the Inland

 

Revenue any tax and national insurance paid shall be repaid.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  11

 

Schedule  2,  page  67,  line  38,  at end insert—

 

    ‘(5)    

Where subsection (4) applies, then the taxable amount determined in

 

accordance with subsection (2) shall be reduced, where otherwise an

 

amount may be subject to tax more than once, to such an amount to

 

ensure that no part of the benefit is subject to tax more than once.”.’.

 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  12

 

Schedule  2,  page  67,  line  42,  at beginning insert—

 

‘(1)    

After section 447 ITEPA 2003 insert—


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

6

 

Finance Bill, continued

 
 

“447A (1)  

Section 447 shall not apply where the employee shows that the benefit

 

arose from an ordinary investment transaction.

 

      (2)  

An ‘ordinary investment transaction’ means any transaction in

 

securities regularly traded on an EEA exchange (being a market which

 

appears on the list drawn up by an EEA State pursuant to Article 16 of

 

EU Council Directive No 93122/EEC on investment services in the

 

securities field) and any transaction in securities not so regularly

 

traded where the following circumstances are present:

 

(a)    

the securities were acquired for an amount (or the acquirer is

 

charged to income tax on all or part of such amount under

 

Chapter 1 of part 3) which was not less than their market value

 

(as determined for the purposes of the Taxation of Chargeable

 

Gains Act 1992), provided that in the information a purchaser

 

may require there shall be included (if this would not

 

otherwise be the case) any known or reasonably projected

 

returns on the securities and any value the securities might

 

acquire through the conversion or alteration of rights of those

 

or other securities, always having regard to the possibility or

 

otherwise of such conversion or alteration occurring;

 

(b)    

other than the provisions in the constitution of the body

 

issuing the securities, giving the holder the right to transfer if

 

a majority decide to transfer their securities, there are no

 

arrangements which give the holder a right to transfer his

 

securities;

 

(c)    

at the date of the acquistion there is no certainty that the holder

 

of the securities will necessarily recover the amount invested

 

in the securities, and there is not at any time any guarantee or

 

indemnity from any third party of the amount invested in the

 

securities or any income therefrom; and

 

(d)    

the securities are securities acquired in a trading company or

 

the holding company of a trading group (as defined in

 

Schedule A1 of the Taxation of Chargeable Gains Act 1992).

 

      (3)  

Where in pursuance of this subsection a person furnishes to the Board

 

particulars of a transaction relating to employment-related securities

 

acquired or to be acquired by him or of any benefit anticipated or

 

received by him in relation to any employment-related securities

 

which may give rise to a charge under section 447, the following shall

 

apply:—

 

(a)    

if the Board are of the opinion that the particulars, or any

 

further information furnished in pursuance of this paragraph,

 

are not sufficient for the purposes of this section, they shall

 

within 30 days of the receipt notify to that person what further

 

information they require for tax purposes and unless that

 

information is furnished to the Board within 30 days from the

 

notification, or such further time as the Board may allow, they

 

shall not be required to proceed further under this subsection;

 

(b)    

subject to paragraph (a) above, the Board shall within 30 days

 

of the receipt of the particulars, or where that paragraph has

 

effect, of all further information required, notify that person

 

whether or not they are satisfied that the circumstances of the

 

aquisition were or will be such, or that the circumstances

 

giving rise to the receipt of any benefits were or will be such

 

that any benefits anticipated or received ought not to be


 
 

S.C.B.  Standing Committee Proceedings: 21st June 2005            

7

 

Finance Bill, continued

 
 

subject to the charge to income tax contained in section

 

447(1).

 

(c)    

if the particulars, and any further information given under

 

subsection 447A(4) with respect to any acquistion and benefit

 

are not such as to make full and accurate disclosure of all facts

 

and considerations which are material to be known to the

 

Board, any notification given by the Board under this section

 

shall be void.

 

(d)    

if the Board notify the person that they are satisfied that the

 

circumstances of the acquistion or receipt of benefits are such

 

that any benefits anticipated or received ought not to be

 

subject to the charge to income tax contained in section

 

447(1), section 447 shall not apply to that person in relation to

 

those benefits.

 

(e)    

if the Board notify the person that they are not so satisfied, the

 

person may within 30 days of such notification appeal to the

 

Special Commissions against such decision. Save for a

 

notification by the Board referred to under paragraph (d), in

 

no event shall the giving of a notification under this section

 

prevent section 447 applying to a person in relation to any

 

benefits received.”.’.

 

Schedule Agreed to.

 

Clauses 13 to 15 Agreed to.

 


 

Mr Philip Hammond

 

Mr Richard Spring

 

Mr Mark Field

 

Mr Mark Francois

 

Mr David Ruffley

 

Withdrawn  13

 

Clause  16,  page  14,  line  39,  at end insert—

 

‘(4)    

In relation to an open-ended investment company mainly invested in interests or

 

rights over land, the rate of corporation tax for the year 2005 and subsequent

 

financial years may be determined under Regulations made under section 18 of

 

this Act to be nil.’.

 

Clauses 16 and 17 Agreed to.

 

Clauses 19 to 23 Agreed to.

 

Further consideration adjourned —( Mr Tom Watson)

 

[Adjourned till Thursday at 9.15 a.m.


 
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Revised 22 June 2005