§ Sir E. Boyle
I beg to move, in page 39, line 3, after "varied)", to insert:conferred on the body corporate a right or".It might be for the convenience of the House if we considered, with this Amendment, the remaining Government Amendments in page 39, in lines 5, 10, 12, 17 and 19.
This group of Amendments meets a point which my hon. and learned Friend the Solicitor-General undertook to consider in Committee, namely, whether the scope of the exemption granted by subsection (5) to premiums payable upon the redemption of redeemable preference shares issued before 16th April, 1947, should be extended so as to cover certain types of share which were not covered by the subsection as drafted. The Amendments extend the exemption in two ways. First, they modify subsection (5) so as to cover cases where pre-1947 terms of issue of redeemable preference shares of a company confer upon the company a right, but do not make it obligatory, to redeem the shares at a premium.
Secondly, the new subsection (6) makes provision for similar treatment in cases where pre-1947 rights attached to issues of shares—other than redeemable preference shares—include a right of priority as respects capital for a sum in excess of the nominal amount of the shares. It is a technical point, but we have looked into it carefully.
Mr. H. Wilson
These Amendments appear to be reasonable on the whole, in so far as we understand them, but I should like to ask the hon. Member if he will seek to secure the leave of the House to speak for a second time in relation to the last Amendment in the group. Is he absolutely satisfied that this does not widen too greatly the concession which he had in mind? If I remember rightly, the whole Clause stems from the case of the Universal Grinding Wheel Company, where the Board of Inland Revenue, as one gathers, was rather surprised by the decision of the court and has now, by means of the Clause, attempted to close the loophole.
No Law Officers are present, but I am sure that their advice has been taken. Is the Chancellor quite sure that this concession would not allow either the Universal Grinding Wheel Company, in the case which was before the courts, or any other company in similar circumstances, to take advantage of the Clause, and thus defeat what the Government had in mind, namely the prevention of this rather minor form of legitimate tax avoidance?
§ Sir E. Boyle
Perhaps I may reply, by leave of the House. I honestly do not think that that is so. I shall try to explain to the right hon. Gentleman the very narrow point which is covered by subsection (6). The provisions at the end of the first paragraph of the new subsection, regarding shares issued at a premium for cash, have been put in simply to ensure that in such cases the same amount is not deducted twice in computing distributions for Profits Tax purposes on a liquidation. I assure the right hon. Gentleman that the Amendment will do no more than that.
§ Amendment agreed to.
§ Further Amendments made: In page 39, line 5, after "that", insert "right or".
In line 10, leave out "by that" and insert:
in pursuance of that right or".
§ In line 12, after "said", insert "right or".
In line 17, leave out "by the said" and insert:
in pursuance of the said right or".
In line 19, at end insert:
(6) Where immediately before the sixteenth day of April, nineteen hundred and forty-seven, the rights attached to any issued shares
of a body corporate included any right of priority as respects capital for a sum in excess of the nominal amount of the shares (not being, in the case of redeemable preference shares, a right only to a premium on redemption), and by virtue of that right a sum in excess of the said nominal amount is paid in respect of the shares, then for the purposes of subsection (1) of this section or of subsection (1) of section thirty-five of the Finance Act, 1947, those shares shall be taken as being of a nominal amount equal to the sum so paid but for the purposes of subsection (1) of the said section thirty-five the excess of that sum over the nominal amount of the shares shall, if those or any other shares were or are issued by the body corporate at a premium for cash, be deducted from the amounts of the premiums:
Provided that, where the rights as respects capital attached to the shares are or have been varied on or after the said sixteenth day of April, this subsection shall not apply so as to treat them as being of a nominal amount greater than the least amount for which a right of priority shall have attached thereto on that day or at any time subsequently.—[Sir E. Boyle.]