Clause 48 - Loan relationships: miscellaneous amendments

Finance Bill – in a Public Bill Committee at 9:30 am on 13th May 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

This, which introduces schedule 8, and the next few clauses are what I would describe as accountants' territory. Some 35 years ago, I could not face training as an accountant and went to business school instead. Accountants are very dry.

The clause introduces amendments to the loan relationship rules, which we shall come to when we consider schedule 8. Three main areas are covered. The first is a new rule that provides for an exit charge when loan relationships assigned between connected parties are taken out of the UK tax net. I shall comment on our concerns that the arrangements proposed will not work in the UK following the de Lasteyrie ruling.

Secondly, there are amendments to the late interest rules. They are intended to prevent companies in certain circumstances from claiming an accruals tax deduction for interest not paid within the 12-month period. Here we have concerns that the Government have not fully addressed some of the underlying problems. Thirdly, there are amendments to the bad debt relief rules that clarify the position of the parties in various stages of insolvency proceedings. In the main, those arrangements will work satisfactorily.

Question put and agreed to.

Clause 48 ordered to stand part of the Bill.