§ Mr. BurnsTo ask the Chancellor of the Exchequer what assessment he has made of the current legislation which prevents companies in a group from sheltering chargeable gains with losses which are brought in by a company joining the group.
§ Mr. DorrellTwo defects in the provisions which restrict the set-off of pre-entry capital losses have been identified. The first defect allows groups of companies to side-step the provisions by transferring within the group any assets with unrealised losses which have been brought into the group. The second defect may allow one group to avoid the provisions by buying a company with an unrealised loss, carrying out a series of transactions within the group and then selling the company to a second group before the loss is realised.
The Government have tabled a new clause to the Finance Bill to correct these two defects. The new rules will apply to disposals made on or after today.