Schedule 16

Part of Orders of the Day — Finance Bill – in the House of Commons at 6:30 pm on 8 May 1985.

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Photo of Mr Peter Rees Mr Peter Rees , Dover 6:30, 8 May 1985

I had noticed the amendments that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) had tabled. I appreciate his concern and I shall respond to his remarks as lucidly as I can.

The hon. Gentleman will recall that between 1965 and 1982 the FIFO rule—first in, first out—applied. After a measure of indexation was introduced in 1982, both the FIFO and LIFO—last in, first out—rules applied. Now we are reverting to the original intention of the legislation, to FIFO, and I shall list the advantages that we see in returning to that.

We hope that it will leave taxpayers at the earliest opportunity—of course, it is within their control whether it will be so—with one holding of shares and one pool of expenditure. It will therefore be a considerable simplification, and simplification is sought by hon. Members in all parts of the Committee.

It will no longer be necessary to keep details of shares acquired more than 20 years ago. That should be particularly helpful for those with computer programmes. The effect of the rule on individual taxpayers—I appreciate that the hon. Member for Roxburgh and Berwickshire was concerned more with institutions—will depend on the price and acquisition date of their holdings. They will have to check on their position in that respect.

The hon. Gentleman pointed out that people with big, pre-1982, gains might be frozen, as it were, into a particular position. I regret that, but it must be for them to judge. I explained clearly in answer to the first set of amendments to clause 54 moved by my hon. Friend the Member for Tatton (Mr. Hamilton) and when replying to the debate on the last series of amendments that, in our view, the tax is now in a sustainable and acceptable form. That does not, however, rule out minor amendments. It is for people to draw their own conclusions on that.

I do not believe that the provision will necessarily have the consequences that the hon. Gentleman forecast, but he is right to say that the position should be made absolutely clear. While the language may seem somewhat convoluted—it is a complex subject—I hope that I have explained what the provisions convey. We shall look again at the wording. In the meantime, I hope that I have conveyed the intention of the Government.