§ Mr. Nicholas Baker
asked the Chancellor of the Exchequer what is his policy on whether the Inland Revenue will use section 38 of the Finance Act 1976 to deny an interest reduction where the debt is created solely as a result of the unwinding of a dual resident company as a result of the provisions of the Finance (No. 2) Bill affecting such companies.
§ Mr. Norman Lamont
[pursuant to his reply, 17 July 1987]: The rearrangement of financing, to transfer the borrowing of a dual resident investing company (as defined by clause 63 of the Finance Bill) to a company resident only in the United Kingdom, would not by itself lead the Inland Revenue to seek to apply section 38 of the Finance Act 1976. If there were any other tax effects of the rearrangement, these would also be taken into account in determining whether section 38 should be applied.