HC Deb 15 July 1991 vol 195 cc174-5

Amendments made: No. 2, in page 158, line 11, at end insert 'but nothing in the preceding provisions of this sub-paragraph shall prevent deductions being made in respect of losses accruing in a year of assessment in which the conditions mentioned in paragraph 1(1)(a) to (d) and (f) above are fulfilled as regards the settlement.'.

No. 3, in page 159, line 7, leave out sub-paragraph (4).

No. 4, in page 159, line 32, at end insert— '(8) In sub-paragraph (3) above "child" includes a stepchild. (9) For the purposes of sub-paragraph (3) above the question whether a company is controlled by a person or persons shall be construed in accordance with section 416 of the Taxes Act 1988; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company. (10) For the purposes of sub-paragraph (3) above the question whether one company is associated with another shall be construed in accordance with section 416 of the Taxes Act 1988; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company. (11) In sub-paragraphs (9) and (10) above "participator" has the meaning given by section 417(1) of the Taxes Act 1988.'.

No. 5, in page 161, line 39, leave out '(a)'.

No. 6, in page 161, line 41, at end insert 'but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company.'

No. 7, in page 161, leave out line 42 and insert— '(9A) In this paragraph "participator" has the meaning given by section 417(1) of the Taxes Act 1988.'.

No. 8, in page 162, line 9, leave out 'by way of a bargain made' and insert 'under a transaction entered into'.

No. 9, in page 162, line 11 at end insert 'but if the settlement's expenses relating to administration and taxation for a year of assessment exceed its income for the year, property or income provided towards meeting those expenses shall be ignored for the purposes of this condition if the value of the property or income so provided does not exceed the difference between the amount of those expenses and the amount of the settlement's income for the year.'.—[Mr. Maude.]

Mr. William Cash (Stafford)

I beg to move amendment No. 49, in page 162, line 12 at end insert 'and (c) otherwise than in respect of the expenses of the trustees'. The amendment complements Government amendment No. 9, but it takes it a little further. It comes from consultations between a number of tax practitioners, one of whom is operating as a consultant. The problem with the Government amendment is that it provides only a partial solution to dealing with settlement expenses. In a nutshell, the capital-related expenses are paid out of income. The amendment will amount to an addition to the settlement by a life tenant, which will bring the trust within the new rules covered by the schedule.

Mr. Maude

We have accepted that there is a case for allowing the expenses properly chargeable for an existing trust to be met without bringing it within the new provisions. Government amendment No. 9, with which we have just dealt, covers the situation. I cannot accept amendment No. 49, essentially on the basis that it goes wider than is necessary or desirable for the purpose.

Mr. Cash

I beg to ask leave to withdraw the amendment.

Amendment by leave, withdrawn.

Amendments made: No. 10, in page 162, line 27, leave out 'at matters before that date) might be expected to enjoy' and insert 'only at the terms of the settlement immediately before 19th March 1991) would be capable of enjoying'. No. 11, in page 162, line 39, leave out sub-paragraph (8) and insert— '(8) In sub-paragraph (7) above "child" includes a stepchild. (9) For the purposes of sub-paragraph (7) above the question whether a company is controlled by a person or persons shall be construed in accordance with section 416 of the Taxes Act 1988; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company. (10) For the purposes of sub-paragraph (7) above the question whether one company is associated with another shall be construed in accordance with section 416 of the Taxes Act 1988; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 416(6) if he is not a participator in the company. (11) In sub-paragraphs (9) and (10) above "participator" has the meaning given by section 417(1) of the Taxes Act 1988. No. 12, in page 163, line 4, leave out 'by way of a bargain made' and insert 'under a transaction entered into'. No. 13, in page 164, line 36, leave out 'any provision other than the paragraph concerned' and insert 'the paragraph concerned or of any other provision'. No. 14, in page 164, line 44, leave out 'any provision other than the paragraph concerned' and insert 'the paragraph concerned or of any other provision'.—[Mr. Maude.]

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