§ Mr. Tinnasked the Chancellor of the Exchequer whether a close company's development gains are to be treated as distributable and apportionable amongst the shareholders; and, if so, whether it will be possible for such a company to set off advance corporation tax against tax paid on development gains.
§ Mr. Joel BarnettMy right hon. Friend has decided that the development gains which accrue to a close company should be treated as distributable estate or trading income and accordingly apportionable amongst the participators in such a company. If they were not so treated these gains would be taxed only at the ordinary corporation tax rate. This is not sufficient and my right hon. Friend takes the view that the effective rate of tax ought to be near to that which would be paid if the gains had accrued directly to the participator in a close company. As a corollary to this decision, it is proposed to allow a company which is a close company, for the accounting period in question, to set off advance corporation tax against corporation tax charged on development gains.
322WNo. My right hon. Friend announced special support measures on beef and pigs on 25th March.