Clause 126 - Circumstances in which group relief withdraw

Finance Bill – in a Public Bill Committee at 4:45 pm on 10th June 2003.

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Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury 4:45 pm, 10th June 2003

I beg to move amendment No. 68, in

clause 126, page 75, line 22, leave out subsection (2).

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

With this it will be convenient to discuss amendment No. 75, in

clause 127, page 76, line 43, leave out subsection (2).

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

The amendments would delete part of a provision that rats on what was agreed in last year's Finance Bill. There is relief for transferring land around within a corporate group, and sections 111 and 113 provide for that relief to be withdrawn if, within two years of a transfer, the receiving company is sold out of the group. The amendments relate to clauses 126 and 127 where the period is extended to three years, contrary to the assurances made last year. Three years is too long and presents a genuine barrier to commercial turnover of property. The provision is widely regarded by the industry as dishonouring the understanding that was reached last year. The amendments would delete the relevant part of the provision.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

As part of the Government's commitment to tackling stamp duty avoidance, clauses 126 and 127 contain a number of changes to tighten the clawback of group and reconstruction relief that we introduced in last year's Finance Bill. We make no apology for that. One of the changes is to increase to three years the time within which clawback of the reliefs can be triggered. The amendments would remove that increased time limit.

We have chosen to increase the time limit for the clawback provisions to three years. There is no reason to delay implementation of the changes until stamp duty land tax takes effect. This is a direct response to continued avoidance using special purpose vehicles to avoid the full rate of stamp duty on transfers of UK land. A three-year time limit offers further protection, and I commend the provision to the Committee. It is an important part of the Government's strategy to counter stamp duty avoidance.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

The points raised illustrate how not to govern, in that a lot of time and effort was expended last year on the negotiations on stamp duty and the three-year principle was established. The Government are unwise to come back and say, ''Hard luck, chums; we are tightening the time'', particularly in the context of all the other changes. We shall therefore vote against the change from two to three years.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 14.

Division number 24 Adults Abused in Childhood — Clause 126 - Circumstances in which group relief withdraw

Aye: 7 MPs

No: 14 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

It being after Five o'clock, The Chairman proceeded, pursuant to the Sessional Order D [28 June 2001] and the Order of the Committee [this day], to put forthwith the Questions necessary to dispose of the business to be concluded at that time.

Question put, That clauses 126 to 129 stand part of the Bill:—

The Committee divided: Ayes 13, Noes 9.

Division number 25 Adults Abused in Childhood — Clause 126 - Circumstances in which group relief withdraw

Aye: 13 MPs

No: 9 MPs

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Nos: A-Z by last name

Question accordingly agreed to.

Clauses 126 to 129 ordered to stand part of the Bill.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

May I thank all right hon. and hon. Members for their co-operation in making that motion much simpler than it might otherwise have been?

Photo of David Wilshire David Wilshire Conservative, Spelthorne

On a point of order, Mr. McWilliam. May I ask about the starred amendment—Government new clause 6?

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

That will be taken for voting at the point on the amendment paper where it occurs, and it will be unstarred by that stage, so it is not affected.

Adjourned at five minutes past Five o'clock till Thursday 12 June at five minutes to Nine o'clock.