§ The Solicitor-General (Sir Peter Rawlinson)
I beg to move, in page 15, line 35, to leave out subsection (5) and to insert:(5) Where the deduction by way of income tax relief mentioned in subsection (1)(a) of 1305 this section is a deduction in computing profits or gains or losses of a trade, profession or vocation, or arising from woodlands, and any part of the payments made under the lease by the person obtaining the capital sum is a payment in respect of which a deduction is not allowed for the reason that the whole or any part of the period in which the payment would fall to be allowed is not a period on the profits or gains of which income tax falls to be computed in respect of the trade, profession or vocation, for the reference in the proviso to the said subsection (1) to the amount of the capital sum there shall be substituted a reference to that amount after deducting the amount of the payment in respect of which a deduction is not allowed for that reason.The House will recollect that Clause 16 was a tax avoidance Clause. The original subsection (5) was found on examination to be not wholly equitable. It was designed to deal with the special position of a lease which fell within the ambit of the Clause and was assigned for a capital sum towards the end of a business which was ceasing. The Clause as drafted could lead to charging a taxpayer on a capital sum by reference to a notional tax relief which had never been obtained. The true answer where it is a ceasing business is in each case that the charge on the capital sum should be cut down by the amount of rental payment for which tax relief has not been given.
The Amendment provides that there should be subtracted from the capital sum received any rental payment for which tax relief has not been given because of the cessation provision. This secures the right answer both for the Revenue and the taxpayer. There is a consequential Amendment to Schedule 7.
§ Amendment agreed to.
§ The Solicitor-General
I beg to move, in page 15, line 46, after "allowable", to insert "or made".
This and the following Amendment are drafting and correct the scope of subsection (6). They are needed because subsection (2), which is amplified by subsection (6), relates also to a deduction "allowable" and to a deduction "made" and it is necessary that both these words should be inserted.
§ Amendment agreed to.
§ Further Amendment made: In page 16, line 1, at end insert "or made".—[The Solicitor-General.]