Finance Bill 2002
Amendment 127
Page: 286 Line: 7
Mr Andrew Smith (Labour, Oxford East)
127
Schedule 25, page 286, line 7, leave out sub-paragraph (4).
EXPLANATORY NOTE
SUMMARY
1. The purpose of the amendment is to correct a provision that would have resulted in inappropriate timing of the recognition of gains and losses arising from loan relationships.
DETAILS OF THE AMENDMENT
2. Paragraph 5(4) of Schedule 25 to the Bill would have inserted a new sub-section into section 85 of Finance Act 1996. This new sub-section appeared in the draft clauses attached to an Inland Revenue Technical Note of 19 December 2001. Responses to that Technical Note helped establish that the proposed change would result in inappropriate timing of the recognition of gains and losses arising from loan relationships.
3. The amendment restores the correct timing of recognition of gains and losses.
BACKGROUND
4. The measures included in the Finance Bill as Schedule 25 represent the outcome of a major consultative process between the Government and representatives of, and advisers to, business. Two Consultative documents and a Technical Note have been produced, and two rounds of draft clauses have been published, most recently on 19 December 2001.
5. Responses to the Technical Note of 19 December 2001 helped establish that the measure deleted by this amendment would have resulted in inappropriate recognition of gains and losses. But the measure was inadvertently included in the published Bill. The amendment corrects the position to achieve the intended effect.