TERRITORIAL EXTENSION OF CHARGE TO INCOME TAX, CAPITAL GAINS TAX AND CORPORATION TAX (Hansard, 10 July 1973)

§ Mr. Patrick Jenkin
I beg to move Amendment No. 48, in page 28, line 36, at end insert: '(4A) In relation to exploration or exploitation rights disposed of by a company resident in a territory outside the United Kingdom to a company resident in the same territory or in the United Kingdom, sections 273 to 275 and 278 to 279 of the Taxes Act (transfer within group and company ceasing to be member of group) shall apply as if in section 272 of that Act (definition of "group" etc.) subsections (1)(a) and (2) were omitted'. The amendment provides that, with appropriate modifications, the existing 1459 capital gains tax "roll-overs" available to groups of companies for transfers of assets within a group shall also be available to non-resident groups for transfers within the scope of Clause 38. If "carved-out royalties" or interests in the Continental Shelf are transferred between companies within a group in the circumstances specified, roll-over relief should be available in those cases.

§ Mr. Joel Barnett
The Treasury can find time to table amendments to help carved-out royalties but it will not help the Oldham Football Club and other amateur clubs more deserving of rollover relief. It is quite remarkable that the Treasury can find time for this.

§ Mr. Dalyell
How does this affect the oil industry?

§ Mr. Jenkin
With the leave of the House, this is to meet a case that was made by the oil industry and pressed in Committee. It was felt that if the tax jurisdiction were extended to cover the exploitation of oil in the North Sea it would be a bit hard to charge the capital gains if all that a group were doing was transferring a share in the licence or in some other royalty interest from one company in the group to another. We have to take account of the fact that some of these companies may be nonresident. The amendment provides for the roll-over relief to apply when we are dealing with ex-resident members of the group if they are both resident in the same overseas country. There is a danger otherwise that transfers will take place between a company which has a double tax convention with this country and a company and a country which does not. In that way capital gains tax would be avoided in circumstances in which it should not.

§ Mr. Dalyell
I have the suspicion that this matter might be a good deal more important, especially in the light of licences being given in the counties of Dunbartonshire, Lanarkshire, Stirling-shire and West Lothian to companies such as Candecca in circumstances without either the county convener or the county council being told about it. I will not regale the Treasury with these 1460 problems at this time of night, but it can expect some letters from me.