Clause 36 - Balancing payments and elections to
Finance Bill
5:00 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I beg to move amendment No. 80, in
clause 36, page 41, line 14, at end add—
'(4) After paragraph 7C insert—
''Guarantees etc: election to discharge tax liability instead of making balancing payments
7D (1) This paragraph applies where the following conditions are satisfied—
(a) both of the affected persons are companies,
(b) the circumstances are as described in paragraph 6(1) above,
(c) the actual provision falls within paragraph 1B(1) above.
(2) Sub-paragraphs (2) to (8) of paragraph 7B above apply in a case where this paragraph applies as they apply in a case where that paragraph applies, but with the modifications in sub-paragraphs (3) and (4) below.
(3) The relevant security is the security in paragraph 1B(1)(a) above.
(4) In sub-paragraph (4) (nature of the election)—
(a) for ''paragraph 7A above'' substitute ''paragraph 7C below'';
(b) for ''paragraph 1A'', in both places, substitute ''paragraph 1B''.''.'.
The amendment extends the range of circumstances in which special provisions for securitisation may apply. It is made following representations received since the publication of the Bill. Thin capitalisation restrictions can apply to loans made between two connected companies or they can apply to loans from independent lenders if the loan is guaranteed by a connected company.
The Bill allows a securitisation rule to apply only where a transfer pricing adjustment is made to a loan made between two connected companies, and not to guaranteed loans. As I said, the amendment has been tabled following representations made since the Bill was published. Those representations concern circumstances in which thin capitalisation rules might apply to a guaranteed loan from an independent lender in the context of a securitisation, and might affect the rating of bonds issued under the securitisation. The amendment will allow the special rule to apply to such a loan, subject to the other conditions in the clause. The amendment therefore provides further protection for existing and future financing arrangements, and I commend it to the Committee.
Amendment agreed to.
Clause 36, as amended, ordered to stand part of the Bill.