§ Mr. Parkinsonasked the Chancellor of the Exchequer whether, when the deficit of a nationalised industry is written off or its assets written down by statute against its debts to the Government, any adjustment is made to its accumulated tax losses; and if he will make a statement.
§ Mr. Patrick JenkinThe treatment of accumulated tax losses of a nationalised industry following a reconstruction depends on the relationship between the loan or public dividend capital being written off on the one hand, and the deficit incurred or the expenditure on the assets written off on the other. Under existing law there would not necessarily be an adjustment in every case unless specific provision had been made in the legislation providing for the reconstruction.
In the view of my right hon. Friend it would be proper to ensure that, when a nationalised industry has its loans from the Government or its public dividend capital written down, its accumulated tax losses should also be reduced to the extent that deficits or assets have been written off. Accordingly, he intends in due course to introduce legislation to this end; it will apply to any reconstruction which is authorised during the current or any future Session. This legislation will not affect the tax liability of a nationalised industry until its profits for tax purposes exceed the balance of accumulated allowances or reliefs remaining after the adjustment.