Finance Bill 2002
Amendments 147-150
Amendment 147 Page: 304 Line: 28
Amendment 148 Page: 304 Line: 30
Amendment 149 Page: 304 Line: 36
Amendment 150 Page: 304 Line: 43
Mr Andrew Smith (Labour, Oxford East)
147
Schedule 25, page 304, line 28, leave out 'and'.
148
Schedule 25, page 304, line 30, at end insert ';and
(c) omit the word "and" immediately preceding paragraph (b)'.
149
Schedule 25, page 304, line 36, at end insert-
'(3A) At the end of paragraph (b) of that sub-paragraph add "; and
(c) 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.".'.
150
Schedule 25, page 304, line 43, leave out from beginning to second 'and' in line 44.
EXPLANATORY NOTE
SUMMARY
1. The purpose of the amendments is to ensure that rules for discounted securities issued by close companies do not apply
· in all cases where the holder is within the charge to corporation tax
· where the holder is a venture capital limited partnership.
DETAILS OF THE AMENDMENTS
2 The first three amendments, 147 to 149, insert a new paragraph 18(1)(c) in Schedule 9 FA 1996. Paragraph 18 is modified by paragraph 34 of Schedule 25 to the Bill.
3. The new paragraph 18(1)(c) ensures that the rule in paragraph 18 Schedule 9 FA 1996 which defers recognition of discount does not apply where a close company debtor has issued a security at a discount 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 18) and which are not.
4. Amendment 150 removes paragraph 18(1A)(b), inserted by paragraph 34(4) of Schedule 25 to the Bill. Paragraph 18(1A)(b) would have prevented the let out from paragraph 18 applying to a connected holder, even if that holder is within the scope of corporation tax and bringing the discount into account as it accrues. There is no need for such a rule.
BACKGROUND
5. 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.
6. These amendments take account of representations made in response to that note but which were inadvertently left out of the Bill as published.