Clause 53
Finance Bill
9:30 am
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
Thank you, Mr. Hood. It is a pleasure to serve under your chairmanship once again.
Clause 53 ensures that anti-avoidance legislation applies fairly where a partnership carrying on the business of leasing plant or machinery transfers that business to a single company. As such, we welcome it. It corrects schedule 10 of the Finance Act 2006, which addressed a concern about how leasing arrangements could be used as a tax-avoidance mechanism, incurring losses in the early years and then transferring them so that there was a permanent deferral of tax. The mechanism ensured that sellers would face a charge, with relief being provided to the purchasers of the leasing company. That worked well in a partnership-to-partnership arrangement but, due to various technical reasons and definitions, it did not work for a partnership-to- single company arrangement, as there would be a charge to the departing partners but it would not deliver relief to the successor company.
During a debate on the Finance Bill two years ago, a concern about the internal restructuring of partnerships was raised in relation to paragraph 23 of schedule 10. Whereas paragraph 13 of schedule 10 of the Finance Act 2006 contained an exemption from the regime for a group of companies, there was no equivalent provision regarding a group of partnerships. With a further two years’ experience following the 2006 Act, and given that wrinkle regarding partnerships, will the Minister say whether any concerns have arisen on that issue and whether any group of partnerships involved in an internal restructuring has been caught, perhaps inadvertently, within the regime although that was not the original intention? Subject to that query, we have no other concerns about the clause.