Clause 41
Finance Bill
9:15 am
Ian Pearson (Economic Secretary, HM Treasury; Dudley South, Labour)
First, I acknowledge the comments made by the hon. Gentleman on how the consultation was handled. I am sure that that statement will be welcomed by my officials who have undertaken the consultation exercise. He is right to point out that there is widespread recognition for what the Government are doing; there were only some minor points raised regarding the issue of loan relationships involving connected parties.
He pointed to the issue of private equity companies. As he is aware, the legislation contains an election to enable a company to stay on a pay basis for a year after the change. That should give companies time to rearrange loans if they think they need to. The private equity industry has raised some practical difficulties with HMRC, where interest is payable to a company controlled by a number of private equity investors. Those are matters that we believe are best dealt with in guidance and HMRC is discussing them with the private equity industry.