§ Mr. Peter BottomleyTo ask the Chancellor of the Exchequer whether the Income Tax (Building Societies) Regulations 1986 on composite tax rate for building societies raised additional taxation on(a) cash flow or (b) accruals.
§ Mr. DorrellThe regulations changed the way in which building societies accounted for composite rate tax. They included provision to ensure that accrued interest taken into account under the old system did not come into account again, when paid, under the new system. The Inland Revenue estimates that tax due in 1986–87, the first year of payment under the new rules, plus instalments of transitional tax due later, was about £100 million less than would have been due in that year had the old system 893W continued. This difference is a little greater than the figure of £76 million given to my hon. Friend in response to an earlier question—Official Report, 15 July 1992, column 40the Inland Revenue has corrected some errors in entering
Accounting periods ending Number of societies Amount of tax that would have been due in 1986–87 if old system had continued Amount of tax due in 1986–87 under new system plus instalments of transitional tax not due till later Increase or decrease in tax payable under new system £ million £ million £ million as percentage of old April 6 to 30 August (end of first complete quarter) 6 8 14 +6 +75 September to November 7 340 409 +69 +20 December to 5 April 131 2,596 2,421 -175 -7 Total 144 2,944 2,844 -100 -3 of which instalments due after 1986–87 35