Clause 3 - Special provision for roll-overs
Social Security Contributions
12:00 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
Without wishing to offend anyone, the drafting of the clause is rather a mess, and it does not make the correct provision for roll-overs. It seems to assume that section 136(1) of the Income and Corporation Taxes Act 1988 is a taxing section, whereas it is an explicitly non-taxing section, and says that an option exchange is not treated as a payment to buy out the original option. The Government apparently want to allow for the advanced NIC payment to be carried over on an exchange of options of equal value but to retain an NIC charge where the new right is more valuable—in other words, where there has been an injection of value.
That could be done simply, with our amendments addressing a technical issue on post-takeover exchanges, where the roll-over generally occurs on the same terms as the takeover but after control has passed, so that, strictly, all post-takeover exchanges have an enhancement element. As matters stand, that is ignored for approved option exchanges, an approach that should surely be followed here.
Amendment No. 15 follows the previous arrangement. If there has already been an NIC payment on new options, surely there cannot be a claim for repayment of any excess.
This is a highly technical area. I assume that the Government do not intend that, in roll-overs, special NIC arrangements and wider arrangements should follow a different path from the accepted approach. Those in such a case should not be subject to additional NIC taxation.