§ Mr. Tim SmithTo ask the Chancellor of the Exchequer what assessment he has made of the cost of complying with the accrued income scheme following the introduction of the loan relationships legislation; and what is the average annual yield from the accrued income scheme from personal taxpayers. [13797]
§ Mr. Jack[holding answer 8 February 1996]: The loan relationship provisions contained in the current Finance Bill will materially reduce the costs of compliance with the accrued income scheme, since companies will no longer be subject to it. So far as individuals are concerned, no yield is necessarily to be expected from the scheme, since it affords relief from tax as readily as it brings additional income into charge. The limited figures available suggest that the scheme does in practice generate a small net yield. its main purpose, however, is 387W to avoid the much larger loss of revenue which would arise in its absence, from tax-motivated "bond washing" transactions.