Clause 34 - Location of assets etc
Finance Bill
11:45 am
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
I am grateful for your guidance, Sir Nicholas. I thought it sensible to combine the two matters, given that the clause simply gives effect to schedule 4 and given the substance at stake.
I was explaining how the avoidance practices mean that the taxes avoided on assets ought, in any reasonable view, to be regarded as UK assets and should attract a UK tax charge. The measure stops exploitation in two ways. First, shares in companies incorporated in the UK will generally be regarded as situated here. Secondly, unless an existing tax rule already specifies their location, intangible assets, such as options or rights over other assets, will now be treated as being situated in the UK for the purposes of tax and capital gains if they are subject to UK law at the time that they are created. The rules for futures and options that are not subject to UK law at the time they are created will take account of the location of the underlying subject matter.
The measure is designed to frustrate the schemes arising on the disposal of assets related to the UK outside the scope of UK tax on capital gains. It does not deal with assets that are unrelated to the UK—for example, shares in an overseas incorporated company that are registered abroad as UK assets—and it strikes a fair balance as it closes a lucrative avoidance scheme. I trust and hope that the Committee will accept it.