§ Mr. FlightTo ask the Chancellor of the Exchequer with reference to Tax Bulletin Issue No 53,(a) in the context of taper, what the Inland Revenue defines as "security", (b) for what reasons the Inland Revenue regards not all debentures as securities and (c) what guidance has been issued to relevant inspectors of taxes when considering the question as to whether a particular instrument was a security. [9759]
§ Dawn Primarolo(a) For capital gains tax taper relief, "security" takes its ordinary meaning. In addition, certain earn-out rights under section 138A of the Taxation of Chargeable Gains Act 1992 may be treated as securities for the purposes of the whole Act, and thus for taper relief.
For planned changes to the meaning of "security" for the purposes of taper relief, I refer the hon. Gentleman to my written answer to his question on deemed securities.
(b) Whether a debenture is a security depends on the characteristics of the individual instrument.
(c) Tax Bulletin 53 states that the Inland Revenue will accept that any debt instrument which has the characteristics of a "debt on a security", as that term has been explained in judicial decisions, is a security for taper 841W purposes. Guidance on the meaning of the expression "debt on a security" is given in the Capital Gains Manual which is available to both tax offices and the public.
§ Mr. FlightTo ask the Chancellor of the Exchequer what plans he has to extend section 251 (6) of the Taxation of Chargeable Gains Act 1992 to apply as a definition of security in the context of taper relief. [9760]
§ Dawn PrimaroloIn order to simplify capital gains tax (CGT) and reduce uncertainty, especially in take-overs and company reconstructions, the Government will introduce legislation to provide that debentures that are deemed to be securities under section 251(6) of the Taxation of Chargeable Gains Act 1992 are also treated as securities for CGT taper relief.
The new provision will take effect for holding periods from 6 April 1998 and for disposals from 6 April 2001.