§ 10.15 p.m.
§ Mr. Kaufman
I beg to move Amendment No. 16, in page 10, line 30, leave out "or an unregistered self-build society".
Its purpose is in effect to provide that when the corporation disposes of land to a self-build society, the corporation is to pay any tax arising on gains in the value of the land.
The clause, by inserting a new Section 342A into the Income and Corporation Taxes Act 1970, provides relief from tax on chargeable gains. Together with Section 342 of that Act, the combined effect is to treat the corporation and registered housing associations, for the purposes of tax on chargeable gains, in a way somewhat akin to a company and its group of subsidiaries.
Transfers of property within the group are treated as giving rise to neither a gain nor a loss. The group is regarded as a single entity and the tax becomes chargeable only when an asset is disposed of to some outside person or body. The gain is then calculated by reference to the cost of the asset when it was first acquired by any member of the group, together with any expenditure on it since. 1352 The corporation is required when it disposes of land normally to do so at the market value.
The effect of the clause on disposals by the corporation to self-build societies would be that the corporation would be relieved of tax on those disposals, but when the society came to dispose of the land and dwellings on it to its members, the society would have to pay tax on the full amount of the gain in value since the land was first acquired by the group.
Since self-build societies are normally transient affairs whose object is to wind up as soon as they have completed their dwellings, there is little point in registering them and it is unlikely that any will be registered. It is thus more appropriate to treat them as outside the group of registered associations and the corporation for tax purposes, and the amendment has the effect of putting them outside. The corporation will pay any tax arising on the disposal of land to a self-build society.
§ Amendment agreed to.