HC Deb 03 July 2002 vol 388 cc247-9

'(1) The Treasury may by regulations extend the application of the provisions mentioned in subsection (2) to any market (specified by name or by description) that is not a recognised exchange but is prescribed by order under section 118(3) of the Financial Services and Markets Act 2000 (c.8).

(2) The provisions referred to in subsection (1) are—

(3) In subsection (1) "recognised exchange" means an EEA exchange, a recognised foreign exchange or a recognised foreign options exchange within the meaning of the provisions mentioned in subsection (2).

(4) Regulations under this section may provide for the application of the provisions mentioned in subsection (2) subject to any adaptations appearing to the Treasury to be necessary or expedient.

(5) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.'.—[Ruth Kelly.]

Brought up, and read the First time.

4.43 pm
The Financial Secretary to the Treasury(Ruth Kelly)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker(Sir Alan Haselhurst)

With this it will be convenient to discuss the following: Government amendments Nos. 19 to 24.

Government new schedule 1—Stamp duty: contracts chargeable as conveyances: supplementary provisions.

Ruth Kelly

New clause 20, amendments Nos. 19 to 24 and new schedule I all extend existing stamp duty exemptions and reliefs. New clause 20 extends the exemption from stamp duty and stamp duty reserve tax for recognised intermediaries and for stock lending while the amendments and the new schedule ensure that subsale relief applies to contracts brought into charge under clause 114.

At present, the stamp duty and stamp duty reserve tax exemptions for intermediaries and for repurchases and stock lending are available only to European Economic Area exchanges that run regulated markets listed under the investment services directive. That requirement excludes exchanges such as OFEX, which specialises in smaller companies but is not listed under the investment services directive. None the less, OFEX is regulated as a service company by the Financial Services Authority under the Financial Services and Markets Act 2000, and it is a prescribed market under the provisions to discourage market abuse contained in that Act.

The purpose of the stamp duty and stamp duty reserve tax exemptions is to encourage liquidity in well-regulated markets. We have therefore decided to extend the scope of the exemption to exchanges that are prescribed by the Treasury under the provisions to discourage market abuse in the Act. The extension of the exemptions in new clause 20 will help smaller companies that are seeking to raise capital, and investors in such companies. I am sure that the measure will be welcomed by Conservative Members, and I commend the new clause to the House.

4.45 pm

New schedule 1 and amendments Nos. 19 to 24 relate to clause 114 and respond to representations made to us about subsale relief. They meet the commitment I made during the Standing Committee debate to table measures to ensure that subsale relief continues to apply to contracts brought into charge under clause 114. The new schedule provides that subsales will continue to receive the benefit of relief where stamp duty has been paid on a contract under the clause and there is either a subsequent subsale or a subsequent conveyance. In those circumstances, stamp duty will be payable only if the subsequent subsale or conveyance is for a higher amount. The end result will be to ensure that the total amount of stamp duty paid for a deal that involves one or more subsales is equivalent to the duty that is payable under the current rules for subsale relief.

As I said in Committee, we did not intend that clause 114 should take away the benefits associated with subsale relief, and the new schedule and consequential amendments that we have tabled put that beyond doubt. There is no similar requirement to amend the clause to ensure that subsale relief continues to apply where no payment has been made on a contract under clause 114. We are content that subsection (2) already provides relief in the situation in which a property is conveyed directly to a sub-purchaser, as we regard that as a conveyance or transfer that is made in conformity with the original contract.

I should mention that the Inland Revenue will shortly publish guidance setting out how both clause 114 and the new schedule will be administered in practice. In many instances, it will be possible to make an application to the Stamp Office to extend the statutory 90-day period. That will apply both to an initial contract and to any subsequent subsales. In that way, stamp duty can be paid in due course on the conveyance in line with the commercial reality of the transaction.

The new schedule addresses the representations that called for subsale relief to continue to be available to contracts brought into charge by clause 114. I therefore commend it and the consequential amendments, Nos. 19 to 24, to the House.

Mr. Howard Flight (Arundel and South Downs)

We are pleased to welcome the Government's new clause, new schedule and amendments. Both of the territories with which they deal were raised by the Opposition in Committee, as the Minister will recollect. It was unreasonable that market makers on OFEX, which is of growing value to the British economy, did not have the same stamp duty exemption as other exchanges. We are pleased to see that the Government have introduced a belt and braces to ensure that subsale relief will continue, and that it will still apply to the sale of interests in land, which was the specific issue that we raised. We are pleased to see both provisions clearly dealt with in the Bill.

Mr. Edward Davey (Kingston and Surbiton)

I welcome the new clause and the related new schedule and amendments. I had discussions with OFEX prior to the Standing Committee—OFEX clearly did its job well by speaking to all the parties and the Government. It had a very strong case that there should be equal treatment of exchanges in terms of the granting of stamp duty exemptions. I am delighted that the Government have listened and acted so promptly.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Forward to