Schedule 6
Finance (No. 2) Bill
5:00 pm
David Gauke (South West Hertfordshire, Conservative)
In a similar spirit, may I just raise a couple of points that the Law Society has highlighted in respect of schedule 6, and ask whether the new wording introduced by the Paymaster General will address those concerns? The first relates to basic principles of loan relationship legislation. I assure the House that the Law Society guidance was not produced by my wife, although it was produced by my former law firm—I stress the “former”, so I have no financial interest to declare. According to the Law Society brief,
“The general rule is that the items that are brought into account and the timing of any tax charge or relief are determined in accordance with the company’s accounting treatment”,
but the view is that the original wording of schedule 6 undermined that principle. The Law Society states:
“The effect is that once a company has determined the relevant profits and losses on its loan relationships that are reflected in its accounts, it will have to consider separately whether those credits and debits ‘fairly represent’ its profits and losses”.
The Law Society’s concern is about the degree of uncertainty, because there does not appear to be any guidance on how a firm should make that assessment.
My second point is similar to one mentioned by my hon. Friend the Member for Fareham (Mr. Hoban). It is about whether the new provision will catch all forms of intra-group lending. The Law Society does not believe that that is the intention, but perhaps clarification would be helpful.