Schedule 10 - Stamp duty land tax: miscellaneous amendments
Finance Bill
3:00 pm
Mark Francois (Shadow Minister, Treasury; Rayleigh, Conservative)
I congratulate the Economic Secretary on winning that brief naval engagement. The only drawback is that he will now have to be shot.
We have a number of amendments relating to the schedule to consider. I should give notice that part of the schedule is potentially controversial. Amendment No. 95 is a probing amendment, which deals with the issue of potential secondary liabilities as outlined in part 1 of the schedule, and deals with group relief from stamp duty land tax. The amendment concentrates on what happens when property is transferred between companies within a group, for instance as a result of a corporate reorganisation. Those transactions are usually given so-called group relief from payment of stamp duty land tax on the general rule that the transferred property then remains in the group for at least three years.
In essence, the Government's proposal in part 1 relates to a situation where a property is transferred from company A to company B within a group, is then subsequently transferred from company B to company C, again within the group, and Company C then leaves the group within the three-year period. That makes company C potentially liable for repaying the group relief, which had been given at the time of the internal transfer. I am sure that you follow all that, Mr. Cook.
The new clawback provision in new section 4A also appears to open a potential secondary liability for company A if company C fails to pay the stamp duty land tax. Our concern is that, as drafted, new section 4A(1) opens such secondary liability too far back down the chain, to A, even though A might not have been involved in the subsequent transaction between B and C. That is achieved by deeming A in the example just given to be the vendor for the relevant transaction previously having taken place further up the chain. The purpose of the amendment is to ascertain whether that was the Government's original intention. If it was, what is their rationale for the measure? Do they genuinely believe that there have been a number of attempted avoidance schemes on the basis that we are discussing? Are they using this part of the schedule to plug a loophole? We are interested to know the rationale underlying the proposal and to know about any evidence that they can give the Committee in order to substantiate what they seek to do. I look forward to hearing the Economic Secretary's reply.