ASSETS HELD ON 31 MARCH 1982 (Hansard, 13 July 1988)

§ Sir William Clark
I beg to move amendment No. 106, in page 78, line 17, at end insert— '(1A) That person may elect whether the asset shall be taxed by reference to the provisions of subsection (1B) or subsection (2) below and such election shall be made by notice in writing to the inspector given within two years from the end of the year of assessment or accounting period of a company in which the disposal is made or such further time as the Board may by notice in writing allow. (1B) Where an election for treatment under this subsection is made under the provisions of subsection (1A) above the amount of the gain on the relevant disposal shall be calculated under the rules in paragraph 11 of Schedule 5 to the Capital Gains Tax Act 1979 as if references therein to 6th April 1965 where references to 31st March 1982.'. I need not detain the House for long, but this is an important point. We have a time apportionment amendment to ascertain the value of property, shares or investments on 31 March 1982. The Revenue will say that that is difficult because a valuation in those circumstances would involve the long delay since the asset values in 1982. Earlier, my right hon. Friend said that the Revenue did not have records for rollover relief. I said on Second Reading that I could not understand that. When capital gains tax 496 was introduced in 1965 the taxpayer had the option of a 1965 valuation or the historical cost to 1985 on time apportionment.
I cannot see why we should not do the same for 1982. One can easily determine the value of a share in 1982, but it is terribly difficult to ascertain the value of property and other assets six years ago. Will my right hon. Friend consider whether it might be much better to have a straight line valuation, from the historical cost up to 1982 and then up to now? That would be much easier for the Inland Revenue and taxpayers alike.

§ Mr. Brooke
My hon. Friend has identified the issue of time apportionment. At this time of the evening I shall put to him a case of how it would work: an acquisition cost of shares in 1972 of £10,000, a market value in 1982 of £30,000 and disposable proceeds in 1992 of £100,000. Under the Bill, the gain, ignoring indexation, is £70,000. Again ignoring indexation, with time apportionment the gain would be £45,000—half the difference between £100,000 and £10,000.
A considerable cost to the Exchequer would arise out of my hon. Friend's proposal. In fact, the sheer cost to the Exchequer would be sufficient grounds for rejecting it.

§ Sir William Clark
It is easy to quote a case of defining the value of shares in 1982, or whenever one bought them. But the valuation of investment property in 1982 cannot be defined as clearly as my right hon. Friend has said. He is oversimplifying the problem. The amount of work and expense to which people will be put in trying to determine a 1982 valuation will be tremendous. The burden of valuation will be put on the potential capital gains taxpayer. I hope that my right hon. Friend will re-examine —not necessarily now, but at some later stage—the possibility of alleviating the liability, responsibility and expense that will be put on the taxpayer.

§ Dr. Marek
Can the Paymaster General estimate the size of the concession that the Member for Croydon, South (Sir W. Clark) is asking for? The Opposition see no excuse for it—especially at this time in the morning.

§ Mr. Brooke
The cost of the relief is unquantifiable, but it could well be as high as £100 million.
To answer my hon. Friend the Member for Croydon, South (Sir W. Clark), practical experience of the time apportionment option for 1965 suggests that many taxpayers would feel it necessary to undertake an additional set of computations to see whether they would be better off with time apportionment or with 1982 market values. For those people, there would be an extra compliance burden.
Secondly, over the years a number of people have complained by letter that when they decided which basis to adopt, they did not fully appreciate the implications and made the wrong choice.

§ Sir William Clark
My right hon. Friend's reply was very disappointing, but because of the lateness of the hour, and because I will pursue it on the next Budget, I beg to ask leave to withdraw the amendment.