I beg to move amendment No. 197, in page 433, line 18, leave out from 'acquisition' to end of line 19.
The amendment is about the rules for bringing Lloyd's syndicate capacity within the new intangible property regime. Paragraph 128 of the schedule applies the new intangible property regime to existing syndicate capacity at Lloyd's—that is, the right that a corporate member of Lloyd's has to underwrite in syndicate. Syndicate capacity is already dealt with under an income regime for corporation tax purposes.
It therefore makes sense immediately to bring existing capacity into the new rules. Lloyd's made representations to that effect during the consultation and is satisfied with what has been agreed.
The amendment concerns paragraph 128(4), on which the Treasury's explanatory note states:
''Paragraph 128(4) ensures that reinvestment relief under Part 7 is not prohibited on the realisation of existing capacity by virtue of the requirement in paragraph 38(1)(a) that the asset may have been a 'chargeable intangible asset' throughout the period it is held.''
That is covered by the decision, which is to be supported, to bring existing capacity within the new rules. A corporate member of Lloyd's who acquired a syndicate capacity in 1998 and realised in 2003 would be able to qualify for full reinvestment, provided they met the reinvestment requirements.
The wording of paragraph 128(4) seems not to achieve the result stated in the Treasury's note. It states:
''For the purposes of Part 7 (roll-over relief on realisation and reinvestment) the asset shall be treated as if it had been a chargeable asset from the time of its acquisition or, if later, the beginning of the first accounting period to which this Schedule applies in relation to it.''
That would surely mean that the capacity would be treated as having been acquired in 1998, when it was acquired, or if it were acquired later it would be considered to have been acquired on 1 January 2002. A significant period of ownership would therefore not qualify for reinvestment relief. That seems to be the opposite of the Government's intention, and if that is so it surely needs correcting, which is what the amendment is designed to do.
The wording of paragraph 128(4) continues to baffle the tax lawyers advising Lloyd's, who remain convinced that it states the opposite of what is both intended and in the Treasury notes. I hope that the Economic Secretary can place something on the record to make the wording mean what the Government intend it to mean.