HC Deb 15 July 1976 vol 915 cc1119-21
Mr. Denzil Davies

I beg to move Amendment No. 196, in page 83, line 29, leave out subsection (6) and insert— '(6) Subsection (1) above shall not apply in relation to the use of property where the borrower is a body corporate if—

  1. (a) it is not a close company; or
    2. 1120
  2. (b) not less than 90 per cent. in nominal value of its issued ordinary shares are shares to which the lender or his spouse is beneficially entitled; or
  3. (c) it is not an investment company and either—
    1. (i) the lender or his spouse is a participator in the company or its holding company or has been such a participator at any time during the year or either of the two preceding years; or
    2. (ii) the leader's spouse died during the year or either of the two preceding years and was at any time during the three years ending with the year in which he died a participator in the company or its holding company.
(6A) Subsection (1) above shall not apply in relation to the use of property where the borrower is a firm if—
  1. (a) the lender or his spouse is a partner or has been a partner at any time during the year or either of the two preceding years; or
  2. (b) the lender's spouse died during the year or either of the two preceding years and was a partner at any time during the three years ending with the year in which he died.
 (6B) Subsection (1) above shall not apply in relation to a loan in respect of which any person is chargeable to income tax under Schedule E by virtue of section 61(1) above.'.

Mr. Deputy Speaker

With this amendment we may take Government Amendments Nos. 197 and 198.

Mr. Davies

These amendments fulfil a number of commitments given by my right hon. Friend the Chief Secretary during Committee stage debates on the charge on "free loans". In some respects the amendments go further than the Chief Secretary's undertakings—they are nowhere less generous than those undertakings. The main changes the amendment makes are to exempt from the charge on free loans to companies the following types of loan: a loan to an investment company where the lender or his spouse owns 90 per cent. of the shares; a loan to a non-investment company by the participator's spouse; a loan to a subsidiary company or sub-subsidiary by a participator in the parent company, or his spouse; a loan to a non-investment company—including in appropriate circumstances a subsidiary—by a participator's widow or widower for two full tax years following the participator's death.

Mr. Graham Page

I thank the Minister for going a little further than the undertaking given by his right hon. Friend the Chief Secretary.

Amendment agreed to.

Amendments made: No. 197, in page 84, line 5, at end insert 'holding company' has the same meaning as in section 154 of the Companies Act 1948;".

No. 198, in page 84, line 9, at end insert 'ordinary shares' has the same meaning as in paragraph 13 of that Schedule;".— Mr Denzil Davies.]

Forward to