I did say that as currently drafted clause 56 only applies to capital allowance assets that are in the capital gains tax rules, which would have excluded most moveable plant and machinery and would therefore have been absurd. However, amendment No. 145 deals with that.

New subsection (3) rightly remedies the provision to cover all capital allowance assets and new subsections (4) and (5) seek to ensure that the subsection applies only where the assets remain in the charge to UK tax. That is a sensible condition, albeit one that may, regrettably—or may not—be challenged in due course under EU law. However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 144, in clause 56, page 49, line 7, after ''applies'', insert

'(or would apply but for section 140E(1)(d)).'.

No. 145, in clause 56, page 49, leave out lines 17 and 18 and insert—

'(3) For the purposes of subsection (1) an asset is a ''qualifying asset'' if—

(a) it is transferred to the SE as part of the merger forming it, and

(b) subsections (4) and (5) are satisfied in respect of it.

(4) This subsection is satisfied in respect of an asset if—

(a) the transferor is resident in the United Kingdom at the time of the transfer, or

(b) the asset is an asset of a permanent establishment in the United Kingdom of the transferor.

(5) This subsection is satisfied in respect of an asset if—

(a) the transferee SE is resident in the United Kingdom on formation, or

(b) the asset is an asset of a permanent establishment in the United Kingdom of the transferee SE on its formation.''.'.—[John Healey.]

Clause 56, as amended, ordered to stand part of the Bill.

Clauses 57 to 64 ordered to stand part of the Bill.