§ Mr. Beaumont-Darkasked the Chancellor of the Exchequer if he will make a statement about the implications for Scottish partnerships of the composite rate scheme for bank interest introduced by the Finance Act 1984.
§ Mr. Ian StewartYes. The composite rate scheme introduced by the Finance Act 1984 comes into effect on 6 April 1985. From that date, banks and other deposit-takers are required to account to the Inland Revenue for190W tax at the composite rate on interest paid or credited on "relevant deposits". Broadly, these are deposits where the person beneficially entitled to any interest on them is an individual or, where two or more persons are so entitled, all of them are individuals.
The Inland Revenue has recently received legal advice to the effect that where interest arises on deposits belonging to a Scottish partnership, it is the partnership which is beneficially entitled to the interest, and not the individual partners, and the partnership is not "an individual". This means that the interest of a Scottish partnership would not be subject to composite rate tax, unlike interest belonging to partnerships of individuals elsewhere in the United Kingdom. As the intention is that the composite rate scheme should apply uniformly throughout the United Kingdom, we propose to put Scottish partnerships on to the same statutory footing as other partnerships for composite rate purposes, with effect from the start of the scheme on 6 April 1985.