BENEFICIAL LOAN ARRANGEMENTS (Hansard, 17 July 1980)

§ Mr. Lawson
I beg to move amendment No. 197, in page 35, line 25 at end insert— '(2) Where the amount of interest paid on a loan for the year of assessment in which it is made is not less than interest at the official rate applying for that year for the purposes of section 66 of the said Act of 1976 and the loan is made—

(a) for a fixed and unvariable period; and

(b) at a fixed and unvariable rate of interest,
subsection (1) of that section shall not apply to the loan in any subsequent year by reason only of an increase in the official rate since the year in which the loan was made. (3) Where a loan was made at any time before 6 April 1978—

(a) for a fixed and unvariable period; and

(b) at a fixed and unvariable rate of interest,
1815 subsection (1) of the said section 66 shall not apply to the loan if it is shown that the rate of interest is not less than such rate as could have been expected to apply to a loan on the same terms (other than as to the rate of interest) made at that time between persons not connected with each other (within the meaning of section 533 of the Taxes Act) dealing at arm's length.'.

Mr. Deputy Speaker
With this it will be convenient to take the following amendments:
No. 54, in page 35, line 25, at end insert— '(1A) Where a loan otherwise within section 66 (1) of the Finance Act 1976 was excluded therefrom for the year in which the loan was made because subsection (1)(b) was satisfied, then, if that loan was made for a fixed and unvariable period of time at affixed and unvariable rate of interest, no charge shall arise under the said section 66 and Schedule E for a later year if the said subsection (1)(b) ceases to be satisfied merely because the official rate of interest as defined in the said section 66 exceeds that prevailing for the year in which the loan was originally made.'. No. 55, in page 35, line 25, at end insert— '(1B) Where a loan was made before subsection (1) of section 66 of the Finance Act 1976 came into effect and it would otherwise be within that sub-section then if:—

(a) the loan was made for a fixed and unvariable period of time at a fixed and unvariable rate of interest, and

(b) it is shown that that rate of interest is not less than the rate that would have applied to a loan between independent persons not connected within the meaning of section 533 of the Taxes Act dealing at arm's length made at the time of the loan first above mentioned was made and containing the same terms, except the rate of interest, as that loan,
the said sub-section shall no longer apply in respect of that loan'.

§ Mr. Lawson
It be for the convenience of the House if I reply to the debate on these amendments.

§ Mr. Allan Stewart
I thank my hon. Friend for moving Government amendment No. 197. My name is attached to amendments Nos. 54, and 55. These are technical points about the effect of section 66 of the Finance Act 1976. It may be for the convenience of the House if I assure my hon. Friend that Government amendment No. 197 meets the points in my two amendments. The House will doubtless also be grateful to the Minister 1816 because his amendment absolves me from the need to make a speech. I should like the Minister to pass on my thanks to the civil servants involved who met the point very quickly. The matter was brought to my attention and the amendments were tabled only recently.

§ Mr. Lawson
I am grateful to my hon. Friend, who shrewdly spotted a defect in the Bill. I, too, pay tribute to the officials who worked hard on the matter. We found a way of meeting the point which we felt did not have some of the problems posed by my hon. Friend's amendments. I am glad that my hon. Friend accepts that the Government amendment meets his point.