§ Self-build societies
§ 341A.—(1) Where a self-build society makes a claim in that behalf for any year or part of a year of assessment during which the society was approved for the purposes of this section, rent to which the society was approved for the purposes of this section, rent to which the society was entitled from its members for the year or part shall be disregarded for tax purposes.
§ (2) Where a claim under subsection (1) of this section has effect, any adjustment of the society's liability to tax which is required in consequence of the claim may be made by an assessment or by repayment or otherwise, as the case may require.
§ (3) Where a self-build society makes a claim in that behalf for an accounting period or part of an accounting period during which it was approved for the purposes of this section, the society shall be exempt from corporation tax on chargeable gains accruing to it in the accounting period or part thereof on the disposal of any land to a member of the society.
§ (4) References in this section to the approval of a self-build society are references to its approval by the Secretary of State, and the Secretary of State shall not approve a self-build society for the purposes of this section unless he is satisfied—
- (a) that the society is, or is deemed to be, duly registered under the Industrial and Provident Societies Act 1965; and
- (b) that the society satisfies such other requirements as may be prescribed by or under regulations under subsection (6) below and will comply with such conditions as may for the time being so prescribed.
§ (5) An approval given for the purposes of this section shall have effect as from such date (whether before or after the giving of the approval) as may be specified by the Secretary of State and shall cease to have effect if revoked by him.
§ (6) The Secretary of State may by statutory instrument make regulations for the purpose of carrying out the provisions of this section; and a statutory instrument containing any such 1217 regulations shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
§ (7) Section 42 of the Taxes Management Act 1970 (procedure for making claims) shall not apply to a claim under this section, but such a claim shall be made to the inspector and shall be made not later than two years after the end of the year of assessment or accounting period to which, or to a part of which, it relates.
§ (8) Subject to subsection (9) below, no claim under this section shall have effect unless it is proved that during the year or accounting period, or part thereof, to which the claim relates—
- (a) no land owned by the association was occupied, in whole or in part and whether solely or as joint occupier, by a person who was not, at the time of his occupation, a member of the association; and
- (b) the association making the claim satisfies the condition specified in paragraph (a) of subsection (4) above and has complied with the conditions prescribed under paragraph (b) of that subsection and for the time being in force;
§ (9) Notwithstanding the provisions of subsection (8) above, where, on a claim under this section, the Board are satisfied that the requirements of paragraphs (a) and (b) of that subsection are substantially complied with, they may direct that the claim shall have effect; but if, subsequently, information comes to the knowledge of the Board which satisfies them that the direction was not justified, they may revoke the direction and thereupon the liability of the society to tax for all relevant years or accounting periods shall be adjusted by the making of assessments or otherwise.
§ (10) A claim under this section shall be in such form and contain such particulars as may be prescribed by the Board.
(11) In this section:
self-build society" has the same meaning as in Part I of the Housing Act 1974; and
rent" includes any sums to which a self-build society is entitled in respect of the occupation of any of its land under a licence or otherwise."—[Mr. Kaufman.]
§ Brought up, and read the First time.
§ The Under-Secretary of State for the Environment (Mr. Gerald Kaufman)
I beg to move, That the clause be read a Second time.
May I express my sympathy with all hon. Gentlemen in the predicament in which we find ourselves, including expressing my sympathy to myself, since we on the Government Front Bench are 1218 faced with the same difficulty as that which faces everyone else. If hon. Gentlemen feel that they are ill-prepared, perhaps they will accept that we are all in the same boat.
In moving new Clause 10 I would advise the House that this clause, by inserting a new Clause 341A into the Income and Corporation Taxes Act 1970, provides for self-build societies approved by the Secretary of State to obtain exemption from corporation tax on income from completed houses occupied by members and from tax on chargeable gains on transfer of the houses to members.
Self-build societies are housing associations set up by groups of people building their own houses. By their acting cooperatively, the work is facilitated. They gain some benefits which would not be available to them as individuals. Some operations requiring special skills not available within the group may be contracted out. A society almost invariably disbands when the houses are completed and occupied by the members.
Societies do not receive any of the subsidies available to housing associations providing accommodation for letting, nor have these societies been eligible for the benefits of the option mortgage subsidy such as co-ownership societies may receive if approved under Section 341 of the Income and Corporation Taxes Act 1970. Nor have self-build societies been eligible for tax relief on their mortgage loans on the cost of land and of building materials until the society dissolves and each member qualifies in his own right as an individual owner-occupier.
This has long been a subject of complaint. It was referred to in the evidence of the Cohen Report in 1970. This new clause is the first step towards putting self-builders on a better footing comparable with co-owners. It provides for the approval by the Secretary of State of self-build societies which comply with certain conditions to be established in regulations to be made.
Approved self-build societies will by the clause be exempt from corporation tax on income from members for land belonging to the company. Mostly this income will be from completed houses 1219 occupied pending completion of the rest. The clause will also exempt approved societies from tax on chargeable gains arising on disposal of the houses to members.
Since the land is in effect owned by the same people before and after the transfer, corporately before and individually after, the point of transfer is an appropriate point at which to assess and to tax capital gains. It is intended to amend the Bill in another sense to provide that self-build societies approved under the clause shall be eligible to benefit from the option mortgage subsidy, putting them on the same footing as co-ownership societies.
I hope that with that brief explanation, the House will accept this ameliorative new clause.
§ Mr. Rossi
We welcome from this side of the House any help which can be given to self-build societies and any initiative in voluntary housing which the Government can give by way of subsidy or in this case by way of tax relief.
In his explanation the Minister drew an analogy with co-ownership. During the Committee stage there was a discussion concerning the difficulties in which co-ownership schemes are at the moment. I have not had an opportunity, for reasons we also discussed a few moments ago, to go through the Order Paper to see whether the Minister has dealt with co-ownership societies in a way in which we were hoping in Committee he would. Perhaps he could indicate before we leave this new clause whether he will be dealing with it in another place.
§ Mr. Kaufman
I should declare an interest. Since the Committee stage I have become a member of a co-ownership organisation. [HON. MEMBERS: "Hear, hear."] I am glad that that meets with the approval of hon. Gentlemen. I like to please people. Therefore I have a special interest in this, though I would not dream of allowing my special interest to influence what goes on inside the Department. The answer to the hon. Gentleman is that we have not produced anything yet. We are still engaged in discussions.
§ Mr. Michael Latham (Melton)
May I ask one question of the Minister before he winds up this brief debate.
What is the present extent of the activities of self-build societies? How many have appeared? How many more does he expect to appear within the next year or so?
§ Mr. Kaufman
If the hon. Gentleman would care to put that question on the Order Paper we shall try to obtain the information. We had not previously thought it necessary to obtain that information.
§ Question put and agreed to
§ Clause read a Second time, and added to the Bill.