HC Deb 04 June 1964 vol 695 cc1310-3
The Financial Secretary to the Treasury (Mr. Alan Green)

I beg to move Amendment No. 49, in page 12, line 31, after "change", to insert: in the year 1964–65 or any subsequent year of assessment. This is a drafting Amendment. I believe that, even without the Amendment, it would have been clear that the Clause relates to transfers which take place on or after 6th April, 1964. However, one or two inquiries have been made and we thought that it would make sense to write the date into the Bill.

Amendment agreed to.

Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. John Diamond (Gloucester)

It would be appropriate to say one or two things as quickly as may be done having regard to the fact that rather more time than some of us expected has been taken up by an interesting debate on an earlier Clause.

Clause 14 arises from the fact that the structure of the Income Tax is a bad one and is completely out of date. Had the proposals which have come before the Committee on previous occasions from hon. Members on this side to have a system under which tax was collected on an actual basis instead of, as at present, on a previous-year basis—which is now explained in a White Paper which the Government have put forward, but which has not received any more than blessing for consideration—been accepted, we should not have needed any kind of detailed amending legislation to prevent anomalies arising. Clearly, anomalies have arisen. In a previous case under the Finance Act, 1954, we have accepted the principle of which the Clause is merely an extension. It follows, therefore, that we would not wish to resist this extension, which is a proper one.

There is, however, an aspect which has been recently drawn to my attention, which does not form the basis of an Amendment but which I might draw to the attention of the Financial Secretary to the Treasury in the hope that he will consider it so that at a later stage he might tell us the Government's views upon it. The matter has been drawn to our attention by the Agricultural Central Co-operative Association Ltd. and it affects co-operative societies. Before I get the wrong kind of reception from the benches opposite, may I say that I understand that this is a co-operative association on behalf of the National Farmers' Union and, therefore, is not something which necessarily bears a strong political content.

The question does not relate exclusively to the extension but relates to the principle involved in the relevant Section of the 1954 Act. The legislation as existing and as proposed would help to provide for the carry-forward of losses made in circumstances where an amalgamation or a take-over takes place and one is allowed to treat the new business as a continuing business and not as a cessation. In those circumstances, a company is protected. It has the right to continue its losses into the new ownership if it satisfies the terms of the earlier Section and of this proposed Clause. That relates to a company.

Companies, however, are not the only things which merge or take over for good, sensible business reasons. Co-operative societies do the same thing. A co-operative society cannot, however, take over in the same form as a company takes over, because a company is governed by the Companies Act and a co-operative society, or, at all events, a friendly society, is governed by the Industrial and Provident Societies Act, 1893. These societies are prevented from having the benefit of this legislation because when there is a merger of the kind which this legislation seeks to protect, it does not take the same form as is provided for here.

There is, I understand, a procedure whereby one goes before the Registrar and the liabilities of the transferor society are taken over by the transferee society. The transferor society ceases to exist and with the cessation goes the right to carry forward losses.

I hope that I have made the point clear. I shall be glad, if necessary, to hand to the Financial Secretary a document which gives further details. The question is of a technical nature and I have no desire to detain the Committee unnecessarily. The principle is clear. I merely ask the hon. Gentleman to give the matter consideration and to let us know his views at a later stage.

Mr. Green

I will willingly consider what the hon. Member has said. I agree with him that it would be unwise of me to attempt an answer off the cuff on what is a highly technical matter. I will look at what he has said as carefully as I can and endeavour to give the hon. Member an answer at a later stage.

Question put and agreed to.

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