Clause 37 - Roll-over relief

Part of Finance Bill – in a Public Bill Committee at 9:45 am on 14 June 2012.

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Photo of David Gauke David Gauke The Exchequer Secretary 9:45, 14 June 2012

As we have heard, clause 37 preserves the ability of farmers to defer tax in relation to the transfer of rights to single payment scheme payments following administrative changes to the EU scheme. It also provides that similar routine changes can in future be implemented outside of a Finance Bill. The revisions in the measure will be retrospective and have effect from on or after 1 January 2009.

By way of background, where a business realises gains on the disposal of certain types of business assets and reinvests the proceeds in new business assets, tax on those gains can be deferred or rolled over until the disposal of the new asset. Rights to payments under the single payment scheme—the principal agricultural subsidy scheme in the European Union—have been among the assets that qualify for such relief, but the EU directive under which single payment scheme payments are made was republished and renumbered in 2009. As a result, the roll-over relief provisions need amending to ensure that relief continues to be available in relation to rights to payment under the scheme.

The clause does two things. First, it restores the availability of roll-over relief for farmers by ensuring that relief is available whether rights arise under the old directive or the new one. Secondly, where future legislative change is needed to preserve the availability of roll-over relief, it provides that such changes can be effected through secondary legislation. That power can be used only to the advantage of taxpayers. It cannot be used to narrow the scope of relief. I stress that the measure preserves the existing treatment and that no costs are incurred as a consequence of the changes. I am pleased to reassure the hon. Member for Newcastle upon Tyne North that there are no EU implications or requirements in that respect.

In conclusion, the clause preserves the ability of farmers to acquire and dispose of rights to single payment scheme payments without incurring an immediate tax charge and makes sensible provision for legislating further changes of this sort. I hope that the clause will stand part of the Bill.