HC Deb 16 July 1980 vol 988 cc1678-80
Mr. Peter Rees

I beg to move amendment No. 161, in page 25, line 17, after 'and', insert 'where by virtue of subsection (3) of section 19 of the said Act of 1979 that consideration is deemed to be equal to the market value of the shares the amount of any loss on their disposal shall be treated as not exceeding what it would have been if that subsection had not applied to that consideration. (3A) For the purposes of this section'.

Mr. Deputy Speaker

With this it will be convenient to take amendment No. 22, in page 27, line 39, at end insert— '(13) This section shall not apply to give relief on an allowable loss on the disposal of shares unless the subscription for such shares is for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the avoidance of tax; except that this subsection shall not apply if before such a subscription the Board have, on the application of an individual, notified that individual that the Board are satisfied that the disposal will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangement as mentioned above.'.

Mr. Rees

I shall adopt the same procedure. I shall try to satisfy the House if any points occur to hon. Members.

Amendment agreed to.

Mr. Peter Rees

I beg to move amendment No. 146, in page 25, line 21, leave out 'are on the date of the disposal, or have previously' and insert 'have at any time in the relevant period'.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments:

No. 21, in page 25, line 22, leave out 'previously' and insert 'at any time since the relevant subscription'. Government amendments Nos. 147 and 150.

Mr. Rees

The amendments meet a legitimate argument advanced by my right hon. Friend the Member for Crosby (Sir G. Page) dealing with the date on which a company might or might not have been quoted. It relates to the relief for losses afforded by clause 37 on an investment in unquoted shares.

Sir Graham Page

I thank my hon. and learned Friend.

Amendment agreed to.

Amendment made: No. 147, in page 25, line 25, leave out 'that date' and insert 'the date of the disposal'.—[Mr. Peter Rees.]

Mr. Peter Rees

I beg to move amendment No. 148, in page 27, leave out lines 15 to 17 and insert— '"excluded company" means a company—

  1. (a) which has a trade which consists wholly or mainly of dealing in shares, securities, land, trades or commodity futures or is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised; or
  2. (b)which is the holding company of a group other than a trading group; "group" means a company which has one or more 75 per cent. subsidiaries together with that or those subsidiaries;'.

Mr. Deputy Speaker

With this we may also take Government amendments Nos. 149 and 151.

Mr. Rees

The amendments were tabled in response to a point raised by my hon. Friend the Member for Dorking (Mr. Wickenden) in Committee after he had observed that there might not be relief for losses on shares in a holding company, even though it was the parent company of a trading group. The amendments seek to meet that point.

Mr. Denzil Davies

Amendment No. 151 contains a definition of "trading group". It seems a strange definition because it states that it means a group the business of whose members, taken together, consist wholly or mainly in the carrying on of a trade". That seems loose drafting. Is the definition to be found somewhere else? I do not understand how one determines whether a group is a trading group. Does one look only at subsidiaries in respect of the word "members", and how many of those members have to be involved in the trade for it to consist wholly or mainly in the carrying on of a trade"? Presumably one member could be large and one small. I am in some difficulty because of the vague drafting. Will there be any difficulty in interpreting the definition?

Mr. Peter Rees

I hope that there will be no difficulty. I agree that the definition is novel. I do not think that there is an exact precedent for it in fiscal legislation. I am tempted to recall that in this situation the right hon. Member for Llanelli (Mr. Davies) would be tempted to say that this would be a matter for the courts. On that basis, I am happy to leave the matter there.

Amendment agreed to.

Amendments made: No. 149, in page 27, line 19, at end insert— '"holding company" means a company whose business consists wholly or mainly in the holding of shares or securities of one or more companies which are its 75 per cent. subsidiaries;'.

No. 150, in page 27, line 27, at end insert— '"relevant period" means the period ending with the date on which the shares in question are disposed of and beginning with the incorporation of the company, or, if later, one year before the date on which the shares were subscribed for;'.

No. 151, in page 27, leave out lines 35 to 37 and insert— '"trading company" means a company, other than an excluded company, which is—

  1. (a) a trading company within the meaning of paragraph 11 of Schedule 16 to the Finance Act 1972; or
  2. (b) the holding company of a trading group; "trading group" means a group the business of whose members, taken together, consists wholly or mainly in the carrying on of a trade or trades but for the purposes of this definition any trade carried on by a subsidiary which is an excluded company or not resident in the United Kingdom shall be treated as not constituting a trade.'.—[Mr. Peter Rees.]

Forward to