HC Deb 06 December 1989 vol 163 c235W
Mr. Chris Smith

To ask the Chancellor of the Exchequer if he will indicate what general guidance is given to banking institutions in the United Kingdom about the total proportion of Third world debt which would be appropriate for them to consider as irrecoverable for taxation purposes, as defined in his answer of 15 November,Official Report, column 330, when writing off amounts of such debt in any one year.

Mr. Lilley

The Inland Revenue issued a statement of practice on 25 January 1983, a copy of which is in the Library, setting out the general principles which it regarded as applying in law to the tax treatment of sovereign and commercial debt. As to the amount, the Bank of England has issued a matrix to the banks to assist them in the process of setting provisions for supervisory purposes; the Inland Revenue has indicated that this should provide relevant material for considering the extent to which specific provisions are properly deductible for tax purposes.