Finance Bill 2002
Amendment 16 Page 437 Line 39
Amendment 17 Page 438 Line 16
Mr Chancellor of the Exchequer
Page 437, line 39 [Schedule 29], leave out sub-paragraph (3) and insert-
'(3) If the asset-
(a) was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and
(b) is a chargeable intangible asset immediately after the beginning of that period,
it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
Page 438, line 16 [Schedule 29], leave out sub-paragraph (4) and insert-
'(4) If the asset-
(a) was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and
(b) is a chargeable intangible asset immediately after the beginning of that period,it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
EXPLANATORY NOTE
SUMMARY
1. These amendments clarify the drafting of two provisions in Schedule 29 of the Bill, concerned with the proposed tax rules for intangible assets. They ensure that reinvestment relief under the Schedule is not unintentionally restricted in cases involving the disposal of certain telecommunications rights and of syndicate capacity at Lloyd's.
DETAILS OF THE AMENDMENTS
2. The amendments address essentially the same drafting point, which arises both in relation to paragraph 127 of the Schedule and in relation to paragraph 128. These paragraphs bring within the rules of Schedule 29 certain existing telecommunication rights and Lloyd's syndicate capacity, as an exception to the general rule that only assets acquired from April 2002 are within the Schedule.
3. Generally, a company cannot qualify for full reinvestment relief to defer a profit on the realisation of an asset within the Schedule unless the asset is subject to the new rules throughout the period the company held the asset. In the terms of the Schedule the asset needs to be 'chargeable intangible asset' throughout the period it is held. Paragraphs 127(3) and 128(4), however, are intended to ensure that reinvestment relief is not restricted in relation to telecommunications rights and Lloyd's syndicate capacity just because part of the period during which the company held the asset fell before the time when the Schedule takes effect.
4. The amendments ensure that these sub-paragraphs work as intended by replacing the existing text with revised wording. The revised wording makes it clear that, so long as the asset is in fact a 'chargeable intangible asset' as soon as the Schedule can apply to it, it is regarded as such an asset for the period from its acquisition to that date.
BACKGROUND NOTE
5. Opposition Amendment 197, debated in Committee, drew attention to the difficulties over the wording of these provisions (in the context of paragraph 128, concerned with syndicate capacity at Lloyd's).