§ Mr. J. Foster
asked the Chancellor of the Exchequer what steps he proposes to take regarding the operation of the new provisions relating to the taxation of profits arising from sales between associated persons with a view to avoiding as far as possible any reduction in the export trade through firms deciding to change over the production of machinery or goods for their associated or subsidiary companies overseas from this country to their associated factories overseas; and whether consultations as to the principles involved will take place between his Department and the Commissioners of Inland Revenue, with a view to ensuring the minimum damage to the export trade.
§ Mr. Jay
I see no reason to fear that Section 37 of the Finance Act would have any adverse effect on export trade.
§ Mr. Jenkins
asked the Chancellor of the Exchequer whether he can now give the names and terms of reference of the advisory panel in connection with Section 36 of the Finance Act, 1951.
§ Mr. Gaitskell
The following have kindly agreed to serve on the Advisory Panel: Lord Kennet (Chairman), Sir Kenneth Swan, K.C., and Mr. B. H. Binder.
In their consideration of matters referred to them I have asked them to take into account the significance of any new factors or circumstances which are represented to require the proposed change, and any compelling reasons for such applications based on the efficiency and development of the applicants' operations. They will weigh against considerations of this kind the prospective loss of revenue or of foreign exchange to this country which the transaction, if permitted, would entail; and they will inform me whether, on the balance of considerations, it would in their opinion be in the national interest that permission should be granted.
§ Mr. Gaitskell
The Treasury are giving consent generally, in accordance with Subsection (4,a) of Section 36 to the following classes of transaction:
1. Transactions falling within paragraphs (a) and (b) of subsection (1) where:
- (a) the body corporate resident in the United Kingdom is incorporated after the passing of the Act for the purpose of carrying on a new trade or business not theretofore carried on by any person; and
- (b) more than 50 per cent. of the issued share capital of that body corporate in existence at the time of the transactions in question, or, if there is then in existence issued share capital of the body corporate of more than one class, more than 50 per cent. of the issued share capital thereof of each class is then, and was when it was issued, in the beneficial ownership of persons not ordinarily resident in the United Kingdom.
2. A transaction falling within paragraph (c) of subsection (1) which consists of the issue, by a body corporate not resident in the United Kingdom over which a body corporate resident in the United Kingdom has control, of shares for full consideration paid in cash to the body corporate issuing the shares or in or towards payment for any business, undertaking or property acquired for full consideration, unless either:—
- (a) the shares are redeemable preference shares; or
- (b) the shares are issued to, or to trustees for, a body corporate not resident in the United Kingdom over which the body corporate resident in the United Kingdom has control or to, or to trustees for, an individual or individuals who has or have control over the last-mentioned body corporate; or
- (c) the effect of the transaction is that the last-mentioned body corporate will no longer have control over the body corporate not resident in the United Kingdom.
3. A transaction falling within paragraph (d) of subsection (1) which consists of the transfer of shares to a body corporate resident in the United Kingdom unless the effect of the transaction is that the body corporate resident in the United Kingdom which transfers the shares or causes or permits the shares to be transferred will no longer have control over the body corporate not resident in the United Kingdom.
Unless and until the general consent for these classes of transaction is revoked, individual applications to the Treasury for transactions of the kind covered will not be required. Naturally, individual applications will be necessary for transactions which are excluded by the exceptions specified in respect of each class.