The clause inserts new section 561A into the Capital Allowances Act 2001 to ensure that there is no clawback of capital allowances on the transfer of assets which occurs during the formation of an SE by merger—that is, where there is not a deemed disposal of market value of the fixed assets transferred to the SE during the merger so as to cause a balancing charge or allowance. As drafted, the provision applies only to capital allowance assets that fall within the scope of the Taxation of Chargeable Gains Act 1992, whereas some assets, such as chattels, are assets in respect of which capital allowances can be claimed but are not within the scope of that Act. Furthermore, it will not apply if the formation of an SE by merger falls within the usual relief under UK tax law for reorganisations of section 139 of the 1992 Act. We see no policy reason for that.

The Government amendments essentially cover the point that I am trying to make. I merely seek a further explanation from the Minister to clarify the point.