Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
The Chief Secretary said that the effect of this clause would be to turn the stock appreciation relief based on Clause 52 and Schedule 9 into a permanent relief. I believe that I know what he means. But he does not mean permanent in the sense that this relief would go on for years and years and would apply next year as it has this year or as it did last year. It is not permanent in that sense. What the right hon. Gentleman means is that the clause would ensure that the relief was not clawed back under any circumstances.
In the past the right hon. Gentleman has given—and he has repeated today—the terms of the undertaking which he gave that, in general this relief would not be clawed back. However, we know from the terms of his undertaking and we understand generally that not everyone is protected by that undertaking. Unless this clause or something like it is passed, some companies, individuals or partnerships are likely to find their relief clawed back, at least in part. At the moment, we do not know and they do not know who these individuals are. That is one reason why everyone is having to put the money into tax equalisation accounts. Another reason why they are having to do it is that, unless this clause is passed, no one can rely on the fact that they will not have to pay it back in due course and that it will not be collected on some subsequent occasion. It is this uncertainty which the clause seeks to end.
I do not care much for the drafting of the clause, but I have no wish to criticise it on that score. I understand some of the reasons which lie behind the way in which it has been drafted.
Being a member of the same profession as the Chief Secretary, I understand what he means when he talks about the balance sheet and the tax equalisation account and the fact that in at least a cash flow sense the money is not frozen in the sense that it cannot be used. But it remains a potential debt on every company's balance sheet, and it will turn into an actual debt in some balance sheets. This is where the uncertainty lies for all companies, and it is an even greater uncertainty for some companies, we know not which. But, as the Chief Secretary has been prepared to give and to repeat his undertaking, it is logical at least to accept the principle of the clause, even though I do not expect the right hon. Gentleman to accept it as it is drafted.
The Chief Secretary referred to the Sandilands Report. I understand that it is not easy to implement whatever the Sandilands Committee has reported and to frame it in legislation for insertion into this Bill.
However, the Chief Secretary has said that there will be legislation next year in the Finance Bill on this score. I do not suppose anyone knows exactly what form that legislation will take, but it will somehow continue this kind of relief—this was in the Chief Secretary's undertaking—although not necessarily in the sense of being applied to stock alone or even to stock at all. It may be in a more general form—perhaps on the lines of inflation accounting generally rather than being related to any specific asset or assets. Nevertheless, this sort of relief will continue.
I do not understand how it can possibly go on to cover anyone, who has been covered by this relief to precisely the same extent. However, as it is drafted some people will benefit mote than others from any recommendations the Sandilands Committee may make. It is important that this relief, rough and ready as it is which is being given for the second year by the Bill, should remain permanent.