Schedule 29 - Gains and losses of a company from intangible fixed assets

Part of Finance Bill – in a Public Bill Committee at 10:00 am on 13th June 2002.

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Photo of John Healey John Healey The Economic Secretary to the Treasury 10:00 am, 13th June 2002

The simple answer is that we shall keep the matter, as we generally do, under careful and constant review.

It is not correct to say that we are limiting the range of reliefs available when pre-commencement assets are sold, nor that the proposals are in this respect unfair to companies, nor that they do not adequately take into account their expectations with regard to existing assets. The hon. Member for Arundel and South Downs suggested that there was an element of retrospection in the provision. I do not accept that argument, and would point out that the consultation on the changes began in March 1998, so the proposals have been in the pipeline and in the public domain, and have been the subject of detailed discussion with many of the representative bodies and interests in the field, for a considerable time.

As stated in the background information, the estimated cost of the provisions to the Exchequer is some £200 million, rising in due course to £350 million. I submit that schedule 29 and the clause that it supports represent—by anyone's standards—a generous set of proposals that has been developed in the light of extensive consultation. Finding the right balance between the benefits to be enjoyed by companies from the new relief and their expectations with regard to future disposals of their existing assets has been an important element in the consultation.

The proposals represent a balanced package at an affordable, but not insignificant, cost to the Exchequer. The package is both competitive and fair, because it provides relief for all expenditure on intangibles; fair taxation of sale profits; and roll-over relief to ensure that companies have an incentive to reinvest in further intangible assets.

The amendment proposed by the hon. Member for Arundel and South Downs would make the package even more generous. It would allow a choice of capital gains or intangibles roll-over relief, and would add to the Exchequer cost and alter the balance of the package. To that extent, the amendment goes too far and cannot be right at the moment.