Clause 76 - Taper relief: assets qualifying as business assets
Finance Bill
9:30 am
Mr Howard Flight (Arundel and South Downs, Conservative)
We welcome clause 76, in general, which extends business taper relief to non-trading companies because of the problems with the definition of trading companies and because greater moral worth is not necessarily attached to trading than to non-trading companies. I suggest gently that to be in accordance with the tax law rewrite, subsection (2) might be better read if it made reference to the dates on which the amendments would have effect rather than referring back to previous legislation.
Our amendments reflect that the extension still has the complexities of different dates between the start of taper relief and the start of business relief. Taper relief rules apply from April 1998, but the new rules on business assets came into force only in April 2000. The result is that many people who acquired assets before April 2000 on terms which then did not qualify for business asset taper, but which now do, have a less favourable as well as a different tax situation from those who acquired business assets after April 2000. In many cases, they may end up paying more capital gains tax, rather than less. The amendments seek to address and cure that problem and to get rid of the considerable tax complexity that results from the two different dates.
There is a view that it might be more satisfactory, in due course, to have a workable statutory definition of qualifying companies for the purpose of business assets. In addition, there are still investors who are not employees and those who hold more than 10 per cent. We would continue to argue for an amendment to the trading company definition that is based wholly or mainly on purpose, rather than on activities, as at present.