Finance (No. 2) Bill — Repeals — 1 Jul 1998

Not amended (in the Committee) and as amended (in the Standing Committee), further considered.

I beg to move amendment No. 48, in page 3, line 43, leave out £0.4499 and insert £0.4358'.

It was noted at the time of the Budget that the Government were using road fuel tax simply as a way of raising extra revenue without any genuine environmental reasons. To do that, they increased the annual escalator, or rate of increase, to at least 6 per cent. above the rate of inflation. By bringing forward the increases by the earlier dates of their Budgets, the Government have further added to the burdens on the motorist. The House of Commons Library has confirmed that at the present rate an extra £9 billion will be extracted from motorists over the life of the Parliament. That is over and above the inherited pattern of increases from the previous Government.

Most disturbing, the Government have singled out diesel for especially high increases. Diesel is the fuel of industry, so increasing the fuel tax in the way proposed is inflationary because the price of all goods is affected. It is also uncompetitive because it will widen the gap with the continent. It is anti-environmental because firms, especially small ones, will be less able to invest in new engines and fuel monitoring systems. After those two increases, which have already taken effect, under this Government, diesel in the United Kingdom is 70 per cent. more expensive than in the European Union on average. That gap is set to widen. The beneficiaries will be foreign haulage firms whose lorries will arrive in this country with cheap fuel in their tanks and take business from British haulage firms and jobs from British truck drivers. Another beneficiary will be the French Treasury, because British lorries travelling to the continent will fill their tanks with cheap French diesel.

The amendment cuts the increase to the rate that applied until the election. We want the Government to revert to the previous increase rate, so that the £9 billion hit on British motorists will disappear. The Government's policy is short-sighted, damaging to employment and bad for business, and we should like them, even at this late stage, to change it.

Mr. Christopher Leslie (Shipley):

I listened with interest to the right hon. Member for Wells(Mr. Heathcoat-Amory). I, too, consulted the Library and was told that the financial implications of his amendment would be £180 million-plus a year, especially for1999-2000--indexed, of course.

Amendment, by leave, withdrawn .

I beg to move amendment No. 19, in page 5, leave out lines 35 to 40 and insert--

'Table

Amendment agreed to .

Amendments made: No. 1, in page 26, line 25, leave out from 'used' to end of line 26 and insert

'in a designated country or territory either for medical purposes or by an educational establishment in that country or territory.'.

No. 2, in page 27, line 35, leave out 'and'.

No. 3, in page 27, line 37, at end insert

'and

"medical purposes" includes medical research and the promotion of health.'.-- [Dawn Primarolo.]

I beg to move amendment No. 15, in page 35, line 27, leave out 'or securities'.

This is a very simple amendment, the purpose of which is to remove from clause 51 two unnecessary words. Under the clause, employees who receive shares that subsequently convert to shares of another class pay income tax on the value of the new class of shares, less anything that they paid when they first received the shares. The amendment will simply ensure that employees who receive such shares are fairly taxed and closes a potential tax avoidance opportunity.

Convertible securities do not present the same problems and are therefore excluded from the scope of the clause. However, there is a reference to convertible shares or securities in one subsection of the clause. Although the reference to securities does not in any way change the effect of the clause, it might lead to some confusion. We have therefore decided to remove the two unnecessary words.

Amendment agreed to.

Amendments made: No. 4, in page 60, line 12, leave out

'(5) The preceding provisions of this section'

and insert--

'(4A) In paragraph 8(1) of Schedule 28B to that Act (requirement as to capital of the relevant company), for "£10 million" and "£11 million" there shall be substituted, respectively, "£15 million" and "£16 million".

(5) Subsections (1) to (4) above'.

No. 5, in page 60, line 14, at end insert

'; and subsection (4A) above has effect in relation to relevant holdings issued on or after that date.'.-- [Dawn Primarolo.]

Amendments made: No. 20, in page 60, line 40, leave out from beginning to 'there' in line 41 and insert--

'(3) In paragraph (b) of subsection (4) of that section (power to provide for persons to be liable to account for tax wrongly relieved)--

(a) after "Board" there shall be inserted "either--

(i)";

and

(b) after "it" there shall be inserted "or

(ii) for an amount determined in accordance with the regulations to be the amount which is to be taken to represent such tax;".

(4) In paragraph (c) of that subsection (adaptation and modification of enactments to secure tax accounted for), in sub-paragraph (iii) after "tax" there shall be inserted "and other amounts".

(5) After that paragraph'.

No. 21, in page 61, line 6, after 'above;' insert--

'(cc) that an investor under a plan or a plan manager is, in prescribed cases where relief has been given to which there was no entitlement, to be liable to a penalty of a prescribed amount, instead of to any obligation to account as mentioned in paragraph (b) or (cb) above;

(cd) that liabilities equivalent to any of those which, by virtue of any of the preceding paragraphs of this subsection, may be imposed in cases where relief has been given to which there was no entitlement are to arise (in place of the liabilities to tax otherwise arising) in other cases where, in relation to any plan--

(i) a prescribed contravention of, or failure to comply with, the regulations, or

(ii) the existence of such other circumstances as may be prescribed,

would have the effect (subject to the provision made by virtue of this paragraph) of excluding or limiting an entitlement to relief;'.

No. 22, in page 61, line 6, at end insert--

'(6) In section 151(2) of the Taxation of Chargeable Gains Act 1992 (application of subsections (2) to (5) of section 333 of the Taxes Act 1988 to relief from capital gains tax in respect of investments under plans), for "(2)" there shall be substituted "(1A)".'.-- [Dawn Primarolo.]

Amendments made: No. 23, in page 63, line 9, leave out 'of the provisions of' and insert

'provision made by or under'.

No. 24, in page 63, line 13, at end insert--

'(7A) Without prejudice to the generality of the powers conferred by subsection (7) above, the provision that may be made in connection with an exemption from tax conferred by virtue of subsection (1) above shall include provision for section 436 to apply (with any such modifications as may be prescribed) in relation to section 333 business as it applies in relation to pension business.'.-- [Dawn Primarolo.]

Amendments made: No. 9, in page 67, line 7, at end insert--

'(1A) Section 797 (limits on credit: corporation tax) and section 797A (foreign tax on interest brought into account as a non-trading credit) of the Taxes Act 1988 are amended as follows--

(a) in section 797(3B)(b), omit "or in accordance with subsection (3) of that section";

(b) in section 797A(5), at the end of paragraph (a) insert the word "and" and omit paragraph (c) and the word "and" preceding it;

(c) at the end of section 797A(5), insert--

Amendments made: No. 25, in page 67, line 26, leave out

'subsection (3C) of that section'

and insert

'the subsection (3CC) of that section inserted by section (First-year allowances for investment in Northern Ireland) above.'.

No. 26, in page 67, line 38, leave out from beginning to end of line 3 on page 68.-- [Dawn Primarolo.]

I beg to move amendment No. 42, in page 108, line 40, at end insert--

'(4A) The total amount of taper relief which can be claimed in accordance with this section by any one taxpayer in any one tax year shall be limited to £5 million.'.

Question , That the amendment be made, put and negatived .

Amendments made: No. 61, in page 156, line 7, at end insert--

'Section 109 of the Taxes Management Act 1970

5A.--(1) Section 109 of the Taxes Management Act 1970 (corporation tax on close company in connection with loans to participators etc) shall be amended as follows.

(2) In subsection (3A) (interest under section 87A on so much of tax under section 419 of Taxes Act 1988 as is referable to amount of loan or advance repaid shall not be payable in respect of any period after repayment made)--

(a) after "If" there shall be inserted "(a)";

(b) after "principal Act," there shall be inserted "or

(b) there is such a release or writing off of the whole or any part of the debt in respect of a loan or advance as is referred to in that subsection,";

(c) after "amount repaid" there shall be inserted ", released or written off"; and

(d) after "the repayment was made" there shall be inserted "or the release or writing off occurred".

(3) This paragraph has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.'.

No. 62, in page 160, line 13, leave out second 'and'.

No. 63, in page 160, line 16, at end insert

'and

(c) after "the repayment is made" there shall be inserted "or the release or writing off occurs".'.

No. 64, in page 160, line 17, leave out from '(4))' to 'there' in line 18 and insert--

'(a) after "Where" there shall be inserted "(a)";

(b) after "that loan or advance," there shall be inserted "or

(b) the release or writing off of the whole or any part of the debt in respect of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance,"; and

(c) after "repayment", in the second and third places where it occurs,'.-- [Mr. Geoffrey Robinson.]

Amendments made: No. 6, in page 216, line 25, leave out '£10 million' and insert '£15 million'.

No. 7, in page 216, line 27, leave out '£11 million' and insert '£16 million'.

No. 8, in page 234, line 5, at end insert--

'() provides a benefit or facility for the individual;'.-- [Mr. Geoffrey Robinson.]

No. 18, in page 259, line 32, leave out

'paragraph 5(3) above is satisfied'

and insert

'sub-paragraph (3) of paragraph 5 above either--

(i) is satisfied, or

(ii) were any such exemption as is mentioned in paragraph (b) of that sub-paragraph to be disregarded, would be satisfied.'.-- [Mr. Geoffrey Robinson.]

Amendments made: No. 29, in page 297, leave out lines 23 to 49 and insert--

'Claims that cannot be made without a return

9.--(1) No claim to which this paragraph applies may be made by a company before it delivers a company tax return for the period to which the claim relates.

(2) This paragraph applies to a claim by a company for any repayment of income tax called for by virtue of--

(a) section 6(2) of the Taxes Act 1988 (exclusion of income tax charge in case of UK resident company or income within chargeable profits for corporation tax), or

(b) exemptions from income tax conferred by the Corporation Tax Acts.

(3) This paragraph applies to a claim by a company for payment of a tax credit, unless--

(a) the company is wholly exempt from corporation tax or is only not so exempt in respect of trading income, and

(b) the tax credit is not one in respect of which a payment on account may be claimed by the company under Schedule 19AB to the Taxes Act 1988 (pension business).

Other claims and elections to be included in return

10.--(1) In Part VII of this Schedule (general provisions as to claims and elections) paragraphs 57 to 57B contain provisions as to the circumstances in which a claim or election may or must be made, or is to be treated as having been made, in a company tax return.

(2) A claim to which Part VIII or IX of this Schedule applies (claims for group relief or capital allowances) can only be made by being included in a company tax return (see paragraphs 64 and 76).'.

No. 30, in page 314, leave out lines 34 to 37, and insert--

'Claims or elections affecting a single accounting period

57.--(1) This paragraph applies to a claim or election for tax purposes which affects only one accounting period ("the relevant accounting period").

(2) If notice has been given under paragraph 3 requiring a company to deliver a company tax return for the relevant accounting period, a claim or election by the company which can be made by being included in the return (as originally made or by amendment) must be so made.

(3) If a company has delivered a company tax return for the relevant accounting period, a claim or election made by the company which could be made by amending the return is treated as an amendment of the return.

The provisions of paragraph 15 (amendment of return by company) apply.

(4) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company which cannot be included in a company tax return for the relevant accounting period.

No. 34, in page 324, line 2, at end insert--

'Conclusiveness of amounts stated in return

84A.--(1) This paragraph applies to an amount stated in a company tax return for an accounting period which is required to be included in the return and which affects or may affect--

(a) the tax payable by the company making the return for another accounting period, or

(b) the tax liability of another company for any accounting period.

(2) If such an amount can no longer be altered it is taken to be conclusively determined for the purposes of the Corporation Tax Acts in relation to that other period or other company.

Sub-paragraphs (3) to (5) explain what is meant by "can no longer be altered".

(3) An amount is regarded as one that can no longer be altered if--

(a) the period specified in paragraph 15(4) (general period for amendment by company) has ended,

(b) any enquiry into the return has been completed and the period specified in paragraph 34(1) (period for amendment by company after enquiry) has ended,

(c) if the Inland Revenue amend the return under paragraph 34(2), the period within which an appeal may be brought against that amendment has ended, and

(d) if an appeal is brought, the appeal has been finally determined.

(4) If the return is amended by the company under a provision that allows an amendment after the end of the period specified in paragraph 15(4), an amount affected by the amendment ceases to be regarded as one that can no longer be altered until after whichever is the last of the following--

(a) the end of the period within which notice of enquiry into the return may be given in consequence of the amendment;

(b) if such a notice is given, the end of the period specified in paragraph 34(1);

(c) if the Inland Revenue amend the return under paragraph 34(2), the end of the period within which an appeal against that amendment may be brought;

(d) if an appeal is brought, the date on which the appeal is finally determined.

(5) If the return is amended by the Inland Revenue under paragraph 80(3) (consequential amendment of return where amount available by way of capital allowances is reduced), an amount affected by the amendment ceases to be regarded as one that can no longer be altered until after--

(a) the end of the period within which an appeal against that amendment may be brought, or

(b) if an appeal is brought, the date on which the appeal is finally determined.

(6) For the purposes of this paragraph an amount carried forward from a period for which a return was made under section 11 of the Taxes Management Act 1970 is not regarded as one required to be included in a company tax return for a later period.

(7) Nothing in this paragraph affects any power to make an assessment other than a self-assessment or the power to make a discovery determination.'.-- [Mr. Geoffrey Robinson.]

No. 36, in page 335, line 40, at end insert--

'(4) After subsection (4A) insert--

"(4B) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in return) applies to a claim for relief under subsection (4) above unless--

(a) the claim is included (by amendment or otherwise) in the return for the period in which the loan or advance was made, and

(b) the relief may be given at the time the claim is made.".'.

No. 37, in page 336, line 36, leave out from 'Paragraphs' to 'do' in line 38 and insert

'57 to 57C of Schedule 18 to the Finance Act 1998 (general provisions as to procedure on claims and elections)'.

No. 38, in page 336, line 40, leave out '9(1)' and insert '9(2)'.

No. 39, in page 337, line 24, leave out '9(1)' and insert '9(2)'.-- [Mr. Geoffrey Robinson.]

Amendments made: No. 41, in page 385, line 27, column 3, leave out '589(9A)' and insert '589A(9A)'.

No. 14, in page 392, line 12, in column 3 at the beginning insert--

'In section 797(3B)(b), the words "or in accordance with subsection (3) of that section".

In section 797A(5), paragraph (c) and the word "and" preceding it.'.

No. 27, in page 392, line 20, at end insert--

'1990 c. 1. The Capital Allowances Act 1990. Section 76(3).'.

No. 28, in page 392, line 23, leave out 'This repeal' and insert--

'1. The repeal of section 76(3) of the Capital Allowances Act 1990 has effect in relation to every chargeable period ending on or after 12th May 1998.

2. The repeal of section 42(6) and (7) of the Finance (No. 2) Act 1997'.

No. 40, in page 398, line 30, column 3, at end insert--

'In section 419(4), the words "by discharge or repayment".'.

-- [Mr. Geoffrey Robinson.]

Order for Third Reading read.

I beg to move, That the Bill be now read the Third time.

This is the second Finance Bill of the Parliament. It continues the process, which the Labour Government started on their election in 1997, of modernising the British economy, with the objective of raising the sustainable rate of long-term growth and ensuring that everyone has a share in rising prosperity. The Bill implements the second Budget of my right hon. Friend

1 Jul 1998 : Column 385

the Chancellor of the Exchequer. The aim of the Budget is to turn ambition into achievement, encourage work, promote enterprise and support families.

Question put , That the Bill be now read the Third time:-

The House divided: Ayes 308, Noes 171.

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