Clause 123

Finance Bill – in a Public Bill Committee at 2:15 pm on 25th June 2009.

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Mutual societies: tax consequences of transfers of business etc

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

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I wish to put just a brief question to the Minister. We have debated in other arenas the transfers of mutuals, but we have never discussed the impact on taxation of those transfers. Clearly, these are all enabling powers because regulations will be made. How far have the Government progressed with the consultation on these regulations?

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Subsection (6), on page 63, states:

“Regulations under this section are to be made by statutory instrument.”

Normally, it says whether the SI will be passed by the affirmative or the negative procedure. I do not know whether it is clarified in subsection (7), but it is usually defined on the first mention of the statutory instrument. Will the Minister clarify that for us now?

Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury

I am looking sideways rather than askance to confirm the answer to the point raised by the hon. Member for Wellingborough. I am informed that the statutory instrument will be passed by the negative procedure.

As the hon. Member for Fareham notes, the clause introduces a power for the Treasury to make regulations relating to tax consequences on the transfer of business by mutual societies. Again, the intention is to ensure, as far as is possible, a level playing field for future mutual society transfers. The power will have an effect on transfers of business from 22 April 2009. The precise scope of the regulations is still under discussion. I cannot be specific about when the regulations will be introduced, but it will be as soon as possible. We want to allow mutual societies to take full advantage of the new transfer rules.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I am not quite sure about the timing of the transfer of Britannia building society to Co-operative Financial Services. Will there be uncertainty in the tax treatment of that transfer until the regulations have been laid?

Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury

I do not believe that there is uncertainty. The clause provides the basis for removing uncertainty from mutual societies and delivers on our commitment to facilitate transfers under the Finance Act 2007. As such, we believe that it should encourage expansion in the sector. That is why we want to see the clause as part of the Bill. I am happy to consider further the point that the hon. Gentleman makes about Britannia. Clearly, we do not want to see any uncertainty. That transfer has been approved by shareholders. Other building society mergers and takeovers have also taken place prior to this legislation, and we do not believe that there is problem with any of them.

Question put and agreed to.

Clause 123 accordingly ordered to stand part of the Bill.

Clause 124 ordered to stand part of the Bill.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham 2:30 pm, 25th June 2009

We now move to the new clauses. Hon. Members may remember that they debated new clause 3 on Thursday 14 May. As a result, I think that the Opposition requested a Division on it.