Schedule 6 - Accounting practice and related matters
Finance Bill
4:30 pm
Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I meant that in the nicest possible way.
The hon. Member for Wimbledon (Stephen Hammond) referred to the Chartered Institute of Taxation. He was concerned about schedule 9 of the Finance Act 1996 and asked whether it would stop a company from receiving relief for a drop in value of part of a loan relationship, when there is a derivative such as an interest rate swap acting as a cash-flow hedge of interest rate risk elements for the loan relationship. I checked matters over lunch, and my understanding is that officials from HMRC have discussed such issues with a leading tax practitioner at the CIOT and said that, in their view, the legislation will not have the effect that is feared, and the revised guidance that is being prepared on loan relationships and derivative contracts will make that clear. I am happy to make sure that the hon. Gentleman receives a copy of that draft in case he wants to return to it at some stage. The important point that he was making is the subject of discussion and I hope that it will be clearly resolved.
Finally, my hon. Friend the Member for Wolverhampton, South-West asked me to translate into English paragraph 25 of the explanatory notes on schedule 6. I have to say that it is rather a long translation so, to save the Committee’s time, I propose to circulate that to him and all Committee members. The Committee knows that any letter circulated by a Minister during proceedings on the Finance Bill is also deposited in the Library.
Paragraph 22 converts what are essentially pieces of accountancy jargon into what I was going to call a more readily usable description, although I am not quite sure it is that—but it is long and gives a clear explanation. I hope that my hon. Friend will accept, on this occasion, that that is the most sensible way to proceed.