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Regulatory Enforcement and Sanctions Bill [Lords]
11:15 am
Pat McFadden (Minister of State (Employment Relations and Postal Affairs), Department for Business, Enterprise & Regulatory Reform; Wolverhampton South East, Labour)
As the hon. Member for Hertford and Stortford says, the provision is about the tax treatment of the LBRO as it becomes a statutory body. We are keen to make the transfer from the operation as a private company to a statutory body as smooth as possible. The creation of LBRO as a company last year has enabled a lot of good preparatory work to be done to make it ready for that transition. However, the Bill needs to provide for transfers to the statutory corporation when it comes into existence, and that involves the transfer of property, which would have tax consequences, whether through income or corporation tax, or stamp duty.
The transfer of assets and liabilities from the LBRO company to the LBRO could result in inappropriate tax consequences for the transferor or transferee, which would arise solely because of the transfer. For example, property transferred for no consideration could be treated as transferred at market value for capital gains purposes. Paragraph 3 addresses those consequences by providing tax neutrality. It ensures that a transfer will not give rise to a tax change or confer a tax advantage on either the transferor or the transferee. This is about ensuring that the transition between the private company and a statutory body can operate without unintended tax consequences. In terms of retrospection, I am not clear what the hon. Gentleman is driving at, given that we are talking about a transfer that is to take place if the Bill is approved by Parliament. The schedule deals with the tax implications of the transfer at the point that it takes place.