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I hope that you, Mr. Deputy Speaker, will not mind if I deal with the new clause. The hon. Member for Horsham and Crawley (Mr. Hordern) seemed to go a little wide of the subject. I hope that he has not prejudiced his chance of speaking on these matters on Monday or Tuesday of next week.
In case the hon. Gentleman had not appreciated it, the new clause turns stock relief, which at present is a deferral of the tax relief, into a permanent relief. The hon. Gentleman did not pay too much attention to that. Therefore, perhaps I should say at the outset that I find that proposition unacceptable. I hope that the House will also find it unacceptable.
I should explain that the new clause is unacceptable on the interim or any other form of stock relief because of the rough and ready nature of the relief. Stock appreciation need not necessarily be due to inflation. It could be due to a substantial increase in the volume of stock. Nevertheless, this stock relief would still be available. I find it unacceptable to allow that as a permanent relief.
For example, if a company had £100,000 worth of relief, a year or two years later went out of business or went into a different form of business, sold off and took the profit on stock for which it had received stock relief, under the new clause that profit would be wholly tax-free. I cannot believe that would be considered right as a form of stock relief.
The hon. Gentleman began by paying not too churlish a tribute—I will take it as a tribute—to the stock relief which gives a substantial amount of tax relief to individual traders, partnerships and small companies with stocks below £25,000 which previously did not get the relief in the first year. I think he recognises, as most people in industry do, that this is a very substantial form of tax relief. He made the point, perfectly reasonably, that what tends to happen in accountancy terms is that in the balance sheet of the firm concerned the relief appears in the tax equalisation account. There is nothing unusual about that. It happens in exactly the same way in the case of capital allowances, where the first year allowance is now 100 per cent. Most companies do not write off 100 per cent. in the first year, and the difference is usually put to a tax equalisation account. That is the normal procedure and the recommendation of the Institute of Chartered Accountants. That is what happens.
The hon. Gentleman said that that means that the funds are frozen, but he completely overlooked the fact that all that is frozen is the account on the balance sheet and that the cash flow is helped, which is what this measure of relief is intended to do. The fact that it was in a tax equalisation account would not alter anything, unless—and here one comes to the nub of the argument—the form of tax relief given in this interim measure were to be removed while inflation was continuing.