Clause 79 - Double taxation relief
Finance Bill
10:30 am
Mr Oliver Letwin (West Dorset, Conservative)
The schedule to which it gives effect is less easy to follow. I hope that it will in time be redone on tax law rewrite principles.
My complaint relates to the dog that does not bark. When the double tax relief saga began last year, a resolution of the problem of subsidiaries that are subsidiaries of subsidiaries was promised as part of the final package. Before I go on, I should declare an interest. I do not know that I have a specific interest, but it is possible that I might.
If a UK-based multinational has a subsidiary A in one country and that subsidiary has a subsidiary B in another country and, in order to move to arrangements that are suitable for the type of onshore pooling that is now implicit, the company decides to flatten the structural holding and to reorganise so that both subsidiaries A and B are held directly, a capital gain might be crystallised by the sale of subsidiary B by subsidiary A to the holding company. I envisage circumstances in which there is a 100 per cent. holding at both levels. Clearly, without a genuine third party sale or profit taken, there is no reason for a gain to be crystallised.