Replacement of the LBRO company by LBRO

I beg to move Amendment No. 46, in schedule 2, page 43, line 30, leave out paragraph 3.

This is purely a probing amendment, so we seek not to delete, but to clarify. Paragraph 3 relates to matters of tax, including stamp duty land tax. Can the Minister tell us whether the effect of the paragraph is intended to be retrospective?

As the hon. Member for Hertford and Stortford says, the provision is about the tax treatment of the LBRO as it becomes a statutory body. We are keen to make the transfer from the operation as a private company to a statutory body as smooth as possible. The creation of LBRO as a company last year has enabled a lot of good preparatory work to be done to make it ready for that transition. However, the Bill needs to provide for transfers to the statutory corporation when it comes into existence, and that involves the transfer of property, which would have tax consequences, whether through income or corporation tax, or stamp duty.

The transfer of assets and liabilities from the LBRO company to the LBRO could result in inappropriate tax consequences for the transferor or transferee, which would arise solely because of the transfer. For example, property transferred for no consideration could be treated as transferred at market value for capital gains purposes. Paragraph 3 addresses those consequences by providing tax neutrality. It ensures that a transfer will not give rise to a tax change or confer a tax advantage on either the transferor or the transferee. This is about ensuring that the transition between the private company and a statutory body can operate without unintended tax consequences. In terms of retrospection, I am not clear what the hon. Gentleman is driving at, given that we are talking about a transfer that is to take place if the Bill is approved by Parliament. The schedule deals with the tax implications of the transfer at the point that it takes place.

My concern is that the LBRO company will engage in a series of activities, assets and so on, possibly including real estate, which would, on transfer  to the new body, create a potential tax liability—stamp duty land tax being the obvious example. Many of those taxes relate to the change in value from the original purchase. Does the measure address the liability at the point of transfer solely, or is it concerned with the tax matters since the incorporation of the LBRO company, and thus retrospective?

My understanding is that there should not be an issue with the change in value of assets that the hon. Gentleman describes. I am happy to give him further detail about that, but the schedule deals with assets at the point of transfer. That is the key point. The schedule seeks to avoid unintentional or unwelcome tax consequences that could arise as the result of a move from a private company to a statutory body.

It is a hideously complex prospect, but one that it is important to clarify. I am grateful to the Minister for offering to write to me and, I presume, the Committee members, to clarify the matter. I appreciate that it may be something that is beyond his immediate knowledge. On that basis, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clauses 3 and 4 ordered to stand part of the Bill.

Schedule 3 agreed to.