Clause 54 - Trading profits etc. from securities: taxation of amounts taken to reserves
Finance Bill (except clauses 4, 5, 20, 28, 57 to 77, 86, 111 and 282 to 289, and schedules 1, 3, 11, 12, 21 and 37 to 39)
Public Bill Committees, 13 May 2004, 3:00 pm
Mr Howard Flight (Shadow Chief Secretary To the Treasury, Economic Affairs; Arundel & South Downs, Conservative)
The CIOT has expressed concern that the clause does not appear to have been discussed in earlier consultations and that there is an assumption that where items are marked ''to market'' on the balance sheet with any revaluation surplus taken to reserves, the revaluation surplus should, none the less, be taxable. The CIOT's concern is that that rule will introduce an unwanted element of volatility into the computation of taxable profits. Although it may be that few companies are likely to be affected, it suggests that that is an unwarrantedly hasty implementation of a somewhat dubious principle. I think that we appreciate the points that it makes. This is essentially a matter of tax policy, but I would welcome the Minister's comments thereon.