Amendments made: No. 91, in page 148, line 34, leave out 'If' and insert
'Subject to paragraph 6A(4) below, if.
No. 92, in page 148, line 38, at end insert—
'6A.—(1) Where a valuation has been produced under paragraph 5 above, the Board may serve on the administrator of the scheme a notice requiring him to furnish the Board, within a prescribed period, with such particulars relating to the valuation as may be specified in the notice.
(2) Where a certificate has been given under paragraph 5 above, the Board may serve on the administrator of the scheme a notice requiring him to produce to the Board, within a prescribed period, a written valuation such as is mentioned in paragraph 5(2) above.
(3) Where a valuation has been produced in compliance with a notice served under sub-paragraph (2) above, the
Board may serve on the administrator of the scheme a further notice requiring him to furnish the board, within a prescribed period, with such particulars relating to the valuation as may be specified in the notice.
(4) Where a notice is served on the administrator of a scheme under sub-paragraph (1) or (2) above, paragraph 6(1) and (5) above shall cease to apply.
(5) In section 98 of the Taxes Management Act 1970 the following shall be inserted at the end of the first column of the Table—
Paragraph 6A of Schedule 12 to the Finance Act 1986".
6B. —(1) Where particulars have been furnished under paragraph 6A above, or a valuation has been produced under that paragraph, the Board shall, within a prescribed period, serve on the administrator of the scheme a notice—
(2) For the purposes of sub-paragraph (1)(b) above, the relevant time is the time specified in the valuation produced under paragraph 5 or 6A above as the time by reference to which the values of the assets and liabilities are determined.
(4) If the administrator of the scheme fails to submit proposals to the Board within the period mentioned in sub-paragraph (3) above, or if proposals submitted to them within that period are not approved by the Board within a further prescribed period, paragraph 8 below shall apply.'.
§ No. 94, in page 148, line 40, after '6(1)' insert 'or 6B(3)'.
§ No. 95, in page 148, line 41, after '6(5)' insert 'or 6B(4)'.
No. 96, in page 149, line 9, after 'specified' insert—
No. 97, in page 149, line 10, after 'above' insert—
', or (b) where a valuation has been produced under paragraph 6A above, in that valuation,'.
No. 98, in page 149, at end insert—
'(3A) Sub-paragraphs (3B) to (3E) below shall apply where a percentage has been so specified, securities are transfered in the relevant period, and the transferor or transferee is such that, if he became entitled to any interest on them, exemption could be allowed under section 21(2) of the Finance Act 1970.
(3B) Paragraph 32(1) and (2) of Schedule 23 to the Finance Act 1985 (accrued income scheme) shall not apply.
(3C) Where, in consequence of sub-paragraph (3B) above, section 73(2)(a) or (3)(b) of the 1985 Act applies, the sum concerned shall be treated as reduced by an amount equal to the specified percentage of itself.
(3D) Where, in consequence of sub-paragraph (3B) above, section 73(2)(6) or (3)(a) of the 1985 Act applies, the relief concerned shall be treated as reduced by an amount equal to the specified percentage of itself. (3E) For the purposes of section 74(5) of the 1985 Act, the amount of interest falling to be reduced by the amount of the allowance shall be treated as the amount found after applying section 21(2) of the Finance Act 1970.
(3F) In sub-paragraphs (3A)) to (3E) above expressions which also appear in Chapter IV of Part II of the 1985 Act have the same meanings as in that Chapter.'.
No. 100, in page 149, line 27, leave out 'sub-paragraph (3) above' and insert 'this paragraph'.
No. 101, in page 149, line 32, at end insert—
'9.—(1) The Board may make regulations providing that an appeal may be brought against a notice under paragraph 6B(1)(b) above as if it were notice of the decision of the Board on a claim made by the administrator of the scheme concerned.
(2) Regulations under this paragraph may include—
'subsection (1A)(which was inserted by the Finance Act 1985 and enables the Board to make regulations requiring societies to account for amounts representing income tax on certain sums) shall have effect and be deemed always to have had effect with the insertion after the words "in accordance with the regulations" of the words "(including sums paid or credited before the beginning of the year but not previously brought into account under subsection (1) above or this subsection)".
(2) In subsection (2) of that section'.
§ As my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) has tabled an amendment to amendment No. 18, I shall introduce the amendment briefly so that I can listen to his comments.
§ Amendment No. 18 clarifies a technical point arising from the Income Tax (Building Societies) Regulations 1986, which were laid by the Board of Inland Revenue last March under powers conferred by section 40 of the Finance Act 1985. They set out the detailed rules for the new composite rate scheme for building societies which came into force earlier this year.
§ Doubts have been expressed about the validity of the regulations. The Government's legal advice has been and still is that the power conferred by last year's legislation is adequate and that the regulations are validly made. To avoid prolonged uncertainty, however, I am proposing the amendment to make it clear once and for all that section 40 of the Finance Act 1985 achieves the intended result.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
I beg to move amendment (a) to the proposed amendment, in line 6, leave out 'brought into account' and insert 'charged to tax'.
I am grateful to my hon. Friend the Economic Secretary to the Treasury for explaining the purpose of Government amendment No. 18. I hasten to say that some of the criticism about the amendment is to my mind misconceived. There is only one issue on which it is right to question the Treasury Bench — the issue of double taxation, or the raising of additional revenue by subjecting the same stream of income of building societies to taxation twice over.
I agree with my hon. Friend about retrospective legislation. It is perfectly legitimate to correct a potential misdrafting of a power in an earlier Finance Act to restore the law to what was intended. Nor do I accept that there is anything improper in trying to make unnecessary legal proceedings which are intended to show that the regulations are ultra vires.
The only question is whether the Government, when shifting from the previous to the new system of taxing interest on deposits, are instituting double taxation. I should like to emphasise the Chancellor's original intention when he wanted to put the building societies on 1282(3) The power to make regulations under this paragraph shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.'.—[Mr. Ian Stewart.]