HC Deb 15 July 1969 vol 787 cc532-4

  1. (1) This section has effect as respects relief under section 19 of this Act or sections (' loan applied in acquiring interest in close company '), (` loan applied in acquiring interest in a partnership '), (' loan to purchase machinery or plant used by a partnership '), (' loan to pay estate duty ') and (' loans made on or before 15th April, 1969') of this Act (in this Act referred to, together with this section, as the sections of this Act giving relief in respect of interest ').
  2. (2) Where credit is given for any money due from the purchaser under any sale, that shall be treated for the purposes of the said sections as the making of a loan to defray money applied by the purchase in making the purchase.
  3. (3) If interest is paid at a rate in excess of a reasonable commercial rate, so much of any payment as represents such an excess shall not be eligible for relief under any of the said sections.
  4. (4) Where the whole of a debt does not fulfil the conditions required by any one of the said sections, relief shall be given under the section only in respect of the proportion of any payment of interest equal to the proportion of the debt fulfilling those conditions at the time of the application of the money in question.
    5. 533
  5. (5) The relief shall only be given on the making of a claim to which section 9 of 01.; Income Tax Management Act, 1964 shall apply, and an appeal on the claim shall be to the General Commissioners unless the appellant elects that it shall lie instead to the Special Commissioners.
  6. (6) If relief is given in respect of any interest under any of the said sections, the interest shall not be allowable as a deduction for any other purpose of the Income Tax Acts.
  7. (7) No relief shall be given against income chargeable to corporation tax, or any other income of a company.
  8. (8) No relief shall be given in respect of—
    1. (a) interest which is payable under deduction of tax by virtue of section 169 or section 170 of the Income Tax Act, 1952, except where paid without deduction of tax to a bank carrying on a bona fide banking business in the United Kingdom, or
    2. (b) interest in respect of which relief may be given under section 200 or section 445(3)(b) of that Act, or
    3. (c) interest paid before 6th April. 1969.—[Mr. Diamond.]

Brought up, and read the First time.

Mr. Diamond

I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker(Mr. Sydney Irving)

With this new Clause we can take the Amendment to the new Clause, in subsection (2) after ' given ', insert:' (other than on the normal course of apportionment of income, outgoings and deposits)' and Government Amendment 214.

Mr. Diamond

I hope that it will be for the convenience of the House if I speak very shortly to this new Clause. It provides for relief of payment of interest, and the provisions are purely technical. I can deal with any one of them if the House wishes. They do not raise any principles of the kind we have been discussing in the previous Clauses.

I turn to Amendment No. 214.

Mr. Patrick Jenkin

We on the Opposition Front Bench are grateful that we had notice that the Amendment would be taken with the new Clause. However, for the benefit of other hon. Members, it would be helpful if we could be told the page on which it appears because it is a good many pages ahead and it is very difficult to find.

Mr. Diamond

It is on page 6754 of the Amendment Paper. It gives relief on interest for which the provisions of Schedule 13 are relevant.

I think that it would be convenient if I left the matter there. I expect that the hon. Member for Crosby (Mr. Graham Page) will wish to address me. I shall listen with my usual care to what he says.

Mr. Graham Page

I refer to the Amendment to new Clause 29, which appears on page 6722 of the Amendment Paper. Subsection (2) of new Clause 29 provides: Where credit is given fir any money due from the purchaser under any sale, that shall be treated for the purposes of the said sections as the making of a loan to defray money applied by the purchaser in making the purchase. That wording seems to me to cover the normal apportionments which are almost invariably made in the completion of a purchase—the apportionments of outgoings and of monies paid out in advance and, indeed, giving credit to the purchaser for the deposit he has paid.

I am sure that it cannot be intended to cover items of that sort, but the drafting would seem to bring them into account. If they are brought into account it will cause great trouble and inconvenience to the purchaser and vendor in a normal purchase and sale. I should have thought that to make the position clear the words in parenthesis in my Amendment might be included in the new Clause.

Mr. Diamond

I hope that I understand the point which the hon. Gentleman makes. He refers to the usual apportionment items. So far as my experience goes—and I should have thought that his experience would confirm this—none of these items attracts interest. Therefore, they would be wholly disregarded in the calculation. I am bound to say that I agree with the hon. Gentleman that the Amendment is unnecessary for the reason which I have given.

Question put and agreed to.

Clause read a Second time, and added to the Bill.