HC Deb 13 July 1988 vol 137 cc503-4

5A—(1) Where, in connection with the transfer, qualifying benefits are conferred by the society or the successor company on members of the society, the conferring of those benefits shall not be regarded as either—

  1. (a) the making of a distribution, within the meaning of the Corporation Tax Acts; or
  2. (b) the payment or crediting of a dividend for the purposes of section 476 of the Taxes Act 1988 or any regulations under that section (building society interest etc.).

(2) Sub-paragraph (1) above does not preclude any qualifying benefit (and in particular, any qualifying benefit which in the hands of the recipient would, apart from that sub-paragraph, constitute income for the purposes of income tax) from from being a capital distribution for the purposes of section 72 of the Capital Gains Tax Act 1979, and in that section "distribution" shall be construed accordingly.

(3) In this paragraph "qualifying benefits" means—

  1. (a) any such rights as are mentioned in paragraph 5(1)(a), (b) or (c) above, and any property obtained by the exercise of those rights;
  2. (b) any shares issued or disposed of as mentioned in paragraph 5(2) above;
  3. (c) any shares issued or disposed of, or to which a member becomes entitled, as mentioned in paragraph 5(3) or (4) above, and any interest in the settled property constituted by those shares;
  4. (d) any payment in lieu of a qualifying benefit falling within paragraphs (a) to (c) above;
  5. (e) any distribution made in pursuance of section 100(2)(b) of the Building Societies Act 1986.

(4) "Member" has the same meaning in this paragraph as in paragraph 5 above.'.—[Mr. Norman Lamont.]

Mr. Chris Smith

This amendment brings a substantial new section into schedule 10. It relates to the provisions for the transfer of building societies from mutual societies into public limited companies. As I made plain some hours ago, the Opposition remain deeply unhappy about the prospects of building societies converting and we remain strongly opposed to the rush with which one society, the Abbey National, has decided to propose conversion to its members.

However, one of the points that we made in Committee was that the same fiscal arrangements ought to apply to the issuing of free shares in a created public limited company upon conversion, as the Government were originally proposing. The Government have accepted that point and are including within the provisions, by means of the amendment, the issuing of free shares. That is a sensible move. Although we remain deeply sceptical about the entire process of conversion, we none the less think that within that process the Government's proposal in the amendment is sensible.

Amendment agreed to.

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