§ Mr. Flannery
asked the Chancellor of the Exchequer on what basis interest paid by a company will be allowable against North Sea income for corporation tax under the "ring fence" proposals in the Oil Taxation Bill.
§ Mr. Dell
Under Clause 11 of the Oil Taxation Bill interest will be allowable against North Sea income only to the extent that it is payable on money which was borrowed for the specific purpose of meeting expenditure incurred, or to be incurred, by the company in carrying on oil extraction activities or acquiring oil rights, and is secured on assets used in or to be produced by such activities carried on by the company. This rule is suitably modified to meet cases where external borrowings are on-lent within a group. I regret that in my speech on 325W the Second Reading of the Oil Taxation Bill I may have given a different impression.