Finance Bill 2002
Amendment 130
Page: 294
Line: 9
Mr Andrew Smith (Labour, Oxford East)
130 Schedule 25, page 294, line 9, at end insert-
?and the debt is not one that is owed to, or to persons acting for, a limited partnership which is a collective investment scheme within the meaning of section 235 of the Financial Services and Markets Act 2000.?.
EXPLANATORY NOTE
SUMMARY
1. The purpose of the amendment is to ensure that rules for interest paid late on debt owed by close companies do not apply where the creditor is a venture capital limited partnership.
DETAILS OF THE AMENDMENT
2. The amendment adds words to the end of paragraph 2(1B) Schedule 9 FA 1996. Paragraph 2(1B) is inserted by paragraph 22(3) Schedule 25 to the Bill.
3. The new words ensure that the rule in paragraph 2 Schedule 9 FA 1996 which defers recognition of interest paid late does not apply where a close company debtor owes interest to a limited partnership which carries on an investment business and is treated as a collective investment scheme. The reason for this exclusion is that it will be extremely difficult for a debtor to know which of the partners are within the charge to corporation tax (and so fall outside the operation of paragraph 2) and which are not.
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. This amendment takes account of representations made in response to that note but which were inadvertently left out of the Bill as published.