HC Deb 05 July 1960 vol 626 cc361-2
Mr. Barber

I beg to move, in page 31, line 17, to leave out subsection (2) and to insert: (2) Sections thirty-one and thirty-two of this Act shall apply in the case of any such change as aforesaid as if the trade, profession or vocation had been permanently discontinued: Provided that where the right to receive any sums to which the said section thirty-one applies is or was transferred, at the time of the change, to the persons carrying on the trade, profession or vocation after the change. tax shall not be charged by virtue of that section, but (except where the change took place before the sixth day of April, nineteen hundred and sixty) any sums received by those persons by virtue of the transfer shall be treated for all purposes as receipts to be brought into the computation of profits or gains of the trade, profession or vocation in the period in which they are received. This is a somewhat lengthy Amendment, but, as I shall seek to show the Committee, it is in part consequential on the last Amendment which the Committee has just passed.

Subsection (2) of Clause 33 as drafted deals with the case where on: .. a change in the persons engaged in carrying on … a business the predecessor transfers to a successor at the time when the business is discontinued the right to certain sums—for example, a debt written off for tax purposes—sums which would be within Clause 31 if the purchaser had kept the right to them.

Under the present law neither the predecessor nor the successor would be chargeable if the successor recovered a bad debt, a debt which had been written off in the computation of the pre- decessor's taxable profits. The existing subsection (2), which the Amendment seeks to delete, prescribes that such recoveries should be brought in as a trading receipt of the successor.

As the present subsection (2) is drafted, it seeks to secure this result by applying Clause 31. But the effect of the new subsection (1) which was introduced into Clause 32 a few minutes ago is to cut off from the purview of Clause 31 a person to whom the right to receive the sums to which it applies is transferred. The new subsection (2) explicitly states that if the right to sums to which Clause 31 applies is transferred to a successor at the time of the: …change in the persons carrying on… the business, then tax shall not be charged under Clause 31 but the sums received by the successor shall be treated for all purposes as receipts of his business.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.