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Clause 42

Finance Bill – in a Public Bill Committee at 9:15 am on 11th June 2009.

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Release of trade etc debts

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

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I wish to raise an issue about the clause. The changes in the clause enable transactions between rated parties so that, where there is a waiver of a property or trade debt, these releases will not be taxable in the debtor company nor will there be a tax relief in the creditor company. So, within the group these changes are tax-neutral.

However, there are other inter-company balances that arise other than through trade or property debts. It has been suggested that it might be helpful to enable long-standing inter-company balances to be written off and relief to be given, so that there is no taxable transaction taking place in the debtor company nor is the tax relief given in the creditor company. I just wonder whether the Government have thought about extending the relief to companies in those circumstances.

Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury

I am not sure that I have a direct answer to the hon. Gentleman’s question at this point in time. He will be aware of what we are trying to achieve through the clause. He will also be aware that the clause covers trade and property business debts. He asked why there could not be releases of any money debts between group members and he specifically made the point about the period of time. Covering other sorts of debts,  such as those relating to the management expenses of investment companies, would have made the clause considerably longer and more complicated, and the representations that have been made to the Government have not suggested that, in practice, such debts cause as many problems as trade debts. However, we have not ruled out the possibility of further changes in the future. We believe that we have covered most of what needs to be done, but we would be happy to receive further representations from business and the professions about any real life problems involving money debts that are not within the clause’s scope.

Question put and agreed to.

Clause 42 accordingly ordered to stand part of the Bill.

Clause 43 ordered to stand part of the Bill.