§ Mr. Powell
I beg to move, in page 22, line 46, after "holds", to insert:either directly or through a company or companies, or partly directly and partly through a company or companies".
§ The Deputy-Chairman (Sir Gordon Touche)
I think it would be convenient to discuss with this Amendment the remaining other Amendments to the Clause with the exception of the Amendment in page 23, line 28, and that in page 23, line 44.
§ Mr. Powell
This Clause deals with the technical machinery of the process that we have become accustomed to describe in these debates as "hiving off". It deals with it in the case where the company hived off is to be virtually a fully owned subsidiary of the parent company. As subsection (1) is drafted, however, provision is not made for the case where it might be desired, instead of hiving off the trading company directly, to set up a holding company subordinate to which there would be two or more overseas trade corporations.
The Amendment covers the case where the trading companies formed by hiving off will be the fully owned subsidiaries, whether directly or partly directly or indirectly or partly indirectly, of the principal company. There is no practical difference, but it enables a structure to be set up embodying a holding company, thus making possible the switch of resources between Overseas Trade Corporations through a parent holding Overseas trade corporation
§ Mr. Mitchison
The Financial Secretary keeps talking about these obscene litters as overseas trade corporations. I cannot see why there should be so many special provisions for doing things indirectly through a series of holding companies and the like. We were told earlier in the discussion that this was a first venture, and whenever we come to anything about the structure of companies the Government appear ready
§ to involve themselves in a mass of complications, and in spite of it to omit some of the more obvious points about subsidiaries, to one of which I had occasion to call the Financial Secretary's attention a short time ago. But complexity as such has no terrors for him. On the other hand, when it is a question of putting up a smoke-screen about some fictitious prices, only the simplest machinery is used, as being, I suppose, easier for the foreigners concerned in G.A.T.T. to understand and easier at the same time for those who are to be engaged in these transactions to no good purpose to find their way through.
§ I do not see why it is necessary to have a provision of this sort and why the advantages of the following subsections of the Clause should be extended beyond what is at the moment obvious and beyond what is necessary to give a fair trial to a new set-up in this matter. I cannot help feeling that the more O.T.Cs., parents, grandparents, uncles, aunts and what-nots of an O.T.C. that the Financial Secretary thinks about, the more pleasure it no doubt gives him, but the more complicated he makes the net and the easier to find holes in it. T therefore somewhat mistrust this Amendment.
§ Frankly, all of us, including the Board of Inland Revenue, have so little idea of how the whole of this Part will work and how many means and what means will be found by those who wish to do so of getting the advantages without incurring the conditions that I do not feel able to ask my right hon. and hon. Friends to divide on a small point of this sort, but I am bound to say that I do not see the need of the Amendment.
§ Mr. Ram Arbuthnot (Dover)
I rise for a moment to say "Thank you" to my right hon. Friend and to the Financial Secretary for having accepted in substance through this Amendment the purport of the Amendment which my hon. Friends and I have on the Order Paper. We are extremely grateful, and we feel that through this Amendment my right hon. Friend has righted what might 563 have been a wrong to people who came in this category.
§ Amendment agreed to.
Further Amendments made: In page 23, line 2, at end insert:
(b) the person carrying on a trade is a company and, as part of a scheme of reconstruction, part of the trade is transferred to an Overseas Trade Corporation and, as part of that scheme, a third company comes to hold either directly or through a company or companies, or partly directly and partly through a company or companies, not less than ninety-five per cent. of the shares in the first-mentioned company and in the Overseas Trade Corporation.
§ In line 28, leave out "or are".
§ In line 44, after "of", insert "the part of".
In page 24, leave out lines 15 to 17 and insert:
(5) In determining for the purposes of this section whether a person holds not less than ninety-five per cent. of the shares in a company, the provisions of Part I of the Fourth Schedule to the Finance Act. 1938, shall apply, taking references to ordinary share capital as including references to other kinds of share capital, and, where the share capital consists of more than one class of share, this section shall apply only if that person.—[Mr. Powell.]
§ Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
§ 10.45 p.m.
§ Mr. Mitchison
I regard this sort of Clause as capable of classification in various ways. It may be understandable, it may be incomprehensible, it may be understandable with difficulty but capable of only one meaning, and it may be understandable with difficulty and capable of a rich variety of meanings. I am inclined to think with some hesitation that this Clause comes into the fourth category, probably understandable with difficulty but capable of a rich variety of meanings.
The same applies with increasing force to the additions we have just made. I cannot view with any interest or approval in a scheme of this kind the supposed necessity for complications of this sort. If this is to be a workable scheme and workable without the prospect of comprehensive evasion, it ought to be possible to make it a great deal more simple than the Clause makes it in these matters.
When we do get to the tolerably clear and easy provisions they are demonstrably unworkable, not only from their 564 nature but from the report we have had on them from the Board of Inland Revenue. This kind of Clause and the further complications which the Chancellor's own Amendments have made at this stage simply make me think that this is too complicated to work properly, but not by any means too complicated for people to get round if they want.
§ Question put and agreed to.
§ Clause, as amended, ordered to stand part of the Bill.
§ Clause 30 ordered to stand part of the Bill.