Clause 79 - Double taxation relief
Finance Bill
10:30 am
Mr Oliver Letwin (West Dorset, Conservative)
Yes, I am. It is not a judgment on the part of the intermediate company but rather of the holding company. The mechanism that would be dictated by such a decision is not the stepping out of the intermediate company but the sale by the intermediate company to the holding company of the subsidiary of the subsidiary. We are discussing the sale by the subsidiary of its subsidiary to the holding company. Nevertheless, the effect is exactly as the hon. Gentleman suggests. A direct relationship would be established between the holding company and what had been the subsidiary of the subsidiary. Two possibilities were mooted when the package was originally discussed: exemption from, or rollover relief for, capital gains tax under such circumstances. Exemption is preferable, but either will do. The total package will not work without one or other of the adjustments.
It is important that the Paymaster General puts something on the record about the Government's intentions. I have little foresight, but in this instance, I know that we will not reach the new clauses that we tabled, in which we advocate particular solutions. I do not place the slightest emphasis on the no doubt inadequate drafting of those new clauses nor do I expect that the Paymaster General will revise the ways and means resolution that will come before the House later today to include new Government clauses in the Bill. However, it would be a great help to everyone if we could at least have a statement from the Government that they will—should they still be in charge of the process—include a clause in the next Finance Bill to enact one or other of the effects that I describe. If, by any happy chance, we were to find ourselves sitting on the Government Benches and in charge of proceedings, there would indeed be such an adjustment.
Such an adjustment is needed, and industry needs to know that there will be one. The importance of a statement today is that it will, I hope, give some assurance to firms that need to plan around that over the coming years. I do not want to labour the point, as I hope that I have made myself clear. If the Paymaster General feels that I have left out something about our position that needs to be explained, I shall be delighted to do so.