House of Commons Public Bill Committee Proceedings

House of Commons

Session 2006 - 07
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Other Bills before Parliament

15

House of Commons

Thursday 17th May 2007

Public Bill Committee Proceedings

Finance Bill

(except Clauses 1, 3, 7, 8, 12, 20, 21, 25, 67 and 81 to 84, Schedules 1, 18, 22 and 23, and

New Clauses relating to Microgeneration)

[sixth and seventh SITTINGS]

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Withdrawn  31

Clause  27,  page  17,  line  28,  at end insert—

‘(A1)
The purpose of this section is that relief for allowable losses shall not be granted

where a person deliberately and knowingly enters into complex arrangements

intended to avoid liability to capital gains tax, income tax or corporation tax.

(A2)
This section shall be construed purposively in line with the principles set out in

the statement of principles issued by Her Majesty’s Revenue and Customs on 6

December 2006.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Withdrawn  34

Clause  27,  page  17,  line  29,  at beginning insert ‘Subject to section 16B below,’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Withdrawn  30

Clause  27,  page  17,  line  33,  leave out ‘, or one of the main purposes,’.

Public Bill Committee Proceedings: 17th May 2007
16

Finance Bill, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  29

Clause  27,  page  17,  line  34,  after ‘arrangements’, insert ‘taken as a whole’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  27

Clause  27,  page  17,  line  34,  leave out ‘secure a tax advantage’ and insert ‘avoid a

liability to capital gains tax, corporation tax or income tax’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  32

Clause  27,  page  17,  line  34,  at end insert ‘; and

(c)
the arrangements are not prescribed arrangements.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  36

Clause  27,  page  17,  line  34,  at end insert ‘; and

(c)
the arrangements, taken as a whole, are not genuine commercial

arrangements.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Withdrawn  37

Clause  27,  page  17,  line  34,  at end insert—

‘(1A)
This section does not apply where the aggregate of a person’s allowable losses

does not exceed £25,000 in the year of assessment.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  26

Clause  27,  page  17,  line  38,  leave out from ‘enforceable),’ to end of line 7 on page

18.

Public Bill Committee Proceedings: 17th May 2007
17

Finance Bill, continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  33

Clause  27,  page  17,  line  38,  leave out ‘and’ and insert—

‘ “prescribed” means set out in regulations made by the Commissioners for

Her Majesty’s Revenue and Customs.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  28

Clause  27,  page  18,  line  11,  leave out ‘tax advantage is secured for’ and insert

‘avoidance of liability to taxation relates to’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  35

Clause  27,  page  18,  line  12,  at end insert—

‘16B
Clearance procedure

(1)
Section 16A shall not affect the operation of section 135 or 136 in any case where,

before the issue is made, the Board have, on the application of either company

mentioned in section 137(1), notified the Company that the Board are satisfied

that the exchange, reconstruction or amalgamation will be effected for bona fide

commercial reasons and will not form part of any such scheme or arrangements

as are mentioned in section 137(1).

(2)
Any application under subsection (1) above shall be in writing and shall contain

particulars of the operations that are to be effected; and the Board may, within 30

days of the receipt of the application or of any further particulars previously

required under this subsection, by notice require the applicant to furnish further

particulars for the purpose of enabling the Board to make their decision; and if

any such notice is not complied with within 30 days or such longer period as the

Board may allow, the Board need not proceed further on the application.

(3)
The Board shall notify their decision to the applicant within 30 days of receiving

the application or, if they give a notice under subsection (2) above, within 30 days

of the notice being complied with.

(4)
If the Board notify the applicant that they are not satisfied as mentioned in

subsection (1) above or do not notify their decision to the applicant within the

time required by subsection (3) above, the applicant may within 30 days of the

notification or of that time require the Board to transmit the application, together

with any notice given and further particulars furnished under subsection (2)

above, to the Special Commissioners; and in that event any notification by the

Special Commissioners shall have effect for the purposes of subsection (1) above

as if it were a notification by the Board.

(5)
If any particulars furnished under this section do not fully and accurately disclose

all facts and considerations material for the decision of the Board or the Special

Public Bill Committee Proceedings: 17th May 2007
18

Finance Bill, continued

Commissioners, any resulting notification that the Board or Commissioners are

satisfied as mentioned in subsection (1) above shall be void.’.

Clause Agreed to.

Clauses 28 and 29 Agreed to.

Mr Stephen Timms

Agreed to  68

Schedule  5,  page  109,  line  10,  at end insert—

‘Loan relationships: amounts not fully recognised for accounting purposes

10A(1)
Section 85C of FA 1996 (amounts not fully recognised for accounting

purposes) is amended as follows.

      (2)
In subsection (1)—

(a)
in paragraph (c), for the words from “has at any time” to “liability”)”

substitute “an amount (a “relevant capital contribution”) has at any

time been contributed to the company which forms part of its capital

(whether share or other capital)”, and

(b)
in paragraphs (d) and (e), for “relevant accounting liability” substitute

“relevant capital contribution”.

      (3)
In subsection (2)—

(a)
for “or relevant accounting liability of the company” substitute “of the

company or any relevant capital contribution made to the company”,

and

(b)
for “or liability” (in both places) substitute “or contribution”.

      (4)
The amendments made by this paragraph have effect in relation to periods of

account ending on or after 9th May 2007.

      (5)
But, in relation to periods of account beginning before that date, amounts are

to be brought into account for the purposes of Chapter 2 of Part 4 of FA 1996

as a result of those amendments only if the amounts relate to any time on or

after that date.’.

Mr Stephen Timms

Agreed to  69

Schedule  5,  page  111,  line  15,  after ‘investment’ insert ‘or liability’.

Mr Stephen Timms

Agreed to  70

Schedule  5,  page  111,  line  16,  after ‘made’ insert ‘, or the liability was incurred,’.

Mr Stephen Timms

Agreed to  71

Schedule  5,  page  111,  line  19,  after ‘investment’ insert ‘or liability’.

Mr Stephen Timms

Agreed to  72

Schedule  5,  page  111,  line  26,  at beginning insert ‘In the case of amounts relating

to investments,’.

Public Bill Committee Proceedings: 17th May 2007
19

Finance Bill, continued

Mr Stephen Timms

Agreed to  73

Schedule  5,  page  111,  line  28,  after ‘But’ insert ‘in that case’.

Mr Stephen Timms

Agreed to  74

Schedule  5,  page  111,  line  30,  at end insert—

    ‘(6)
In the case of amounts relating to liabilities, those amendments have effect in

relation to accounting periods ending on or after 9th May 2007.

      (7)
But in that case, in relation to accounting periods beginning before that date,

amounts are to be left out of account as a result of those amendments only if

they relate to any time on or after that date.’.

Schedule, as amended, Agreed to.

Clause 30 Agreed to.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Withdrawn  67

Schedule  6,  page  115,  line  5,  leave out ‘paragraph 41(8) of that Schedule’ and

insert ‘section 577 of the Capital Allowances Act 2001’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Mr David Evennett

Not called  66

Schedule  6,  page  115,  line  11,  after ‘2006’, insert ‘but where either the predecessor

or the successor has no principal company as therein provided (because it is itself a

principal company) it shall be deemed for the purposes of this section to be its own

principal company’.

Schedule Agreed to.

Mr Stephen Timms

Agreed to  79

Clause  31,  page  23,  line  7,  leave out ‘and’.

Mr Stephen Timms

Agreed to  80

Clause  31,  page  23,  line  7,  at end insert—

‘(ca)
after that paragraph insert—

Public Bill Committee Proceedings: 17th May 2007
20

Finance Bill, continued

“(ca)
no qualifying change of ownership occurs at any time in

relation to the principal company of that group for the

purposes of section 184A of TCGA 1992 directly or

indirectly in consequence of, or otherwise in connection

with, any arrangements the main purpose, or one of the

main purposes, of which is to secure a tax advantage

falling within subsection (1)(d) of that section, and”,’.

Mrs Theresa Villiers

Mr Mark Hoban

Mr Paul Goodman

Mr Mark Francois

Mr David Evennett

Not called  83

Clause  31,  page  23,  line  34,  leave out ‘that date’ and insert ‘5th December 2005’.

Mr Stephen Timms

Agreed to  81

Clause  31,  page  23,  line  34,  at end insert ‘; but the amendment made by subsection

(5)(ca) has no effect in relation to disposals made before 9th May 2007.’.

Clause, as amended, Agreed to.

Mr Stephen Timms

Agreed to  75

Clause  32,  page  24,  line  15,  after ‘premium’ insert ‘or other consideration’.

Clause, as amended, Agreed to.

Clause 33 Agreed to.

[Adjourned till Tuesday next at 10.30 a.m.