§ Sir William Clarkasked the Chancellor of the Exchequer whether he will make a statement about the consultations that have been taking place concerning the date on which capital expenditure is deemed to have been occurred for capital allowance purposes.
§ Mr. LawsonThe consultations announced by my hon. Friend the Financial Secretary at Report stage of the Finance Bill on 11 July 1984 at column 1082 have been completed. In the light of those exchanges, I propose to bring the date on which expenditure is incurred for the purpose of capital allowances into line with the date on which it is treated as incurred for normal accountancy purposes. Broadly speaking, this will mean that allowances will be due to the purchaser of an asset on the date on which the obligation to pay arises, and at the rate prevailing on that date, which will normally be the date when title passes to him. There will, however, be a rule to prevent this basis being exploited for the purpose of artificially accelerating entitlement. The existing provisions, under which allowances may in certain circumstances be available earlier (for example, in the case of stage payments or deposits) will be retained. Legislation to this effect will be included in the next Finance Bill. Where accounts for past periods have been drawn up in accordance with normal accountancy practice, the Inland Revenue will not seek to adjust them, whether or not the assessments are still open.