HC Deb 15 July 1991 vol 195 cc38-40W
Mr. Peter Bottomley

To ask the Chancellor of the Exchequer what would be the effect of the removal of clause 52 of the Finance Bill on the ability of the Inland Revenue to retain certain disputed tax paid by building societies.

Mr. Maples

Whether or not tax paid under the transitional provisions in the 1986 Building Societies Regulations is repayable would, in the absence of clause 52, depend on the particular facts of each case.

Mr. Peter Bottomley

To ask the Chancellor of the Exchequer pursuant to the replies to the hon. Member for Eltham, on 15 April,Official Report, columns 9–10, 22 April, Official Report columns 300–1, and 8 July, Official Report, column 258, if he will make clear to the House by Monday 15 July when and how Treasury Ministers first explicity informed the House that it intended to lay regulations that would have the effect of obtaining tax payments from building societies for the year 1985–86 for which payments had been made to the Inland Revenue satisfying in full the liability for that year; and if he will give the range of estimate and the best estimate made by the Inland Revenue and the Treasury of the revenue effect at that time.

Mr. Maples

Authority for the Revenue to make regulations was included in clause 38 of the 1985 Finance Bill and referred to in the Revenue press release issued on 15 March 1985 which also referred to transitional provisions. The regulations were laid before Parliament on 14 March 1986 and included provisions for building societies to account for tax on payments of interest and dividends made in the period between the end of their accounting years in 1985–86 and 5 April 1986 which had not previously been brought into account for tax. No estimate was made of the revenue arising from tax on interest accruing between the end of societies accounting periods ending in 1985–86 and paid before the end of that tax year. However, at the time of the 1985 Budget it was estimated that the proposal to move from an accruals to a paid basis of accounting for tax on building society interest would reduce receipts of income tax in 1986–87 by about £25 million. This estimate assumed that all transitional payments of tax would be received in 1986–87.

Mr. Peter Bottomley

To ask the Chancellor of the Exchequer, pursuant to his letter of 11 July, if he will list all other newspaper reports or any parliamentary or ministerial reports before 29 July 1985 that made explicit reference to a proposal to claim tax from building societies

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 13 +5 +62
September to November 7 340 432 +92 +27
December to 5 April 131 2,596 2,423 –173 –7
Total 144 2,944 2,868 –76 –3
of which instalments due after 1986–87 35

The tax due from societies with accounting periods ending in September to November includes amounts subsequently repaid as a result of decisions by the courts and amounts which were withheld pending these decisions.

in relation to any period from their year end to the end of the financial year 1985–86, separate from the tax payment that had satisfied the liability for that full financial year.

Mr. Maples

This information is not readily available and could not be provided without disproportionate cost.

Mr. Peter Bottomley

To ask the Chancellor of the Exchequer, pursuant to his letter of 11 July, if either the Treasury or the Inland Revenue responded in public at the time toThe Daily Telegraph report, 29 July 1985, headed "Societies Fight £500 million Double Tax Demand" written by Richard Northedge.

Mr. Maples

I am not aware of any such response.

Mr. Peter Bottomley

To ask the Chancellor of the Exchequer if he will estimate the three most significant causes for the increase between 1984–85 and 1985–86 in the tax receipts from building societies.

Mr. Maples

Tax receipts from building societies depend upon a number of factors including interest rates, tax rates and the level of deposits.

Mr. Peter Bottomley

To ask the Chancellor of the Exchequer if he will, for the groups of building societies with their year end in each quarter, estimate the gains and/or losses, respectively, from(a) the transitional arrangements and (b) the change to the new tax system in 1986–87.

Mr. Maples

Available information is shown in the table: