§ Mr. Chapmanasked the Chancellor of the Exchequer if he will make a statement on the outcome of consultations on the "Provisional Statement of Practice" issued by the Inland Revenue on the tax treatment of exchange rate fluctuations.
§ Mr. Norman LamontFollowing the issue of the provisional statement of practice [SP3/85 (provisional)] and the invitation to comment on its scope and content, the Inland Revenue received 28 responses from the major representative bodies and other interested parties. These have been carefully considered, and in the light of these comments the Inland Revenue are now, with my approval, issuing a full statement of practice to replace the provisional statement. This is intended as a general statement on the taxation of exchange rate fluctuations within existing law. I am placing a copy of it in the Library of the House.
We hope the new statement of practice will provide a useful and practical guide for traders and their advisers. However, this is an area of taxation which is widely recognised as highly technical and complex. We are anxious to see if a better solution can be found through legislation. Interested parties are invited to submit detailed representations to the Inland Revenue. We have certainly not ruled out the possibility of major legislative reform, but before committing itself, the Government would need to be satisified that a scheme could be devised which could be applied effectively in practice and reflect a broad measure of agreement without entailing an unacceptable cost to the Exchequer.