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House of Commons
Session 2005 - 06
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House of Commons Votes and Proceedings
Wednesday 25th May 2005

The House met at half-past Eleven o'clock. PRAYERS.

1    Private Bills,—The Orders of 19th May relating to HBOS Group Reorganisation Bill and London Local Authorities and Transport for London Bill being read;

    HBOS Group Reorganisation Bill,—A Bill to make new provision for the regulation and management of the Governor and Company of the Bank of Scotland upon its registration as a public company under the Companies Act 1985; to provide for the transfer of the undertakings of Capital Bank plc, Halifax plc and HBOS Treasury Services plc to the Governor and Company of the Bank of Scotland; to provide for the transfer of the assets of the Clerical, Medical and General Life Assurance Society to Clerical Medical Investment Group Limited; and for connected purposes, was read the first and second time and referred to the Examiners.

    London Local Authorities and Transport for London Bill,—A Bill to confer further powers upon local authorities in London and upon Transport for London; and for related purposes, was read the first time; and ordered to be read a second time.

2    Identity Cards Bill,—Mr Secretary Clarke, supported by the Prime Minister, Mr Secretary Prescott, Mr Chancellor of the Exchequer, Mr Secretary Straw, Secretary Margaret Beckett and Mr Tony McNulty, presented a Bill to make provision for a national scheme of registration of individuals and for the issue of cards capable of being used for identifying registered individuals; to make it an offence for a person to be in possession or control of an identity document to which he is not entitled, or of apparatus, articles or materials for making false identity documents; to amend the Consular Fees Act 1980; to make provision facilitating the verification of information provided with an application for a passport; and for connected purposes: And the same was read the first time; and ordered to be read a second time to-morrow and to be printed [Bill 9].

    Ordered, That the Explanatory Notes relating to the Identity Cards Bill be printed [Bill 9-EN].

3    Regulation of Financial Services (Land Transactions) Bill,—Mr Ivan Lewis, supported by the Prime Minister, Mr Secretary Prescott, Mr Chancellor of the Exchequer, Mr Secretary Blunkett, Mr Secretary Darling, Mr Secretary Hain, Mr Des Browne, Dawn Primarolo and John Healey, presented a Bill to enable activities relating to certain arrangements involving the acquisition or disposal of land to be regulated under the Financial Services and Markets Act 2000: And the same was read the first time; and ordered to be read a second time to-morrow and to be printed [Bill 7].

    Ordered, That the Explanatory Notes relating to the Regulation of Financial Services (Land Transactions) Bill be printed [Bill 7-EN].

4    Queen's Speech (Motion for an Address),—The Order of the day being read, for resuming the adjourned Debate on the Question proposed on 17th May, That an humble Address be presented to Her Majesty, as follows:

    Most Gracious Sovereign,

    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament;

    And the Question being again proposed:—The House resumed the adjourned Debate.

    Another Amendment was proposed to the Question, at the end, to add the words 'but regret that the Gracious Speech does not contain measures to address the major challenges the British economy now faces to ensure its competitiveness in the light of unprecedented global competition; further regret the absence of measures to bridge the skills gap so that the UK has the right skills for tomorrow's economy; deplore the failure to include in the Gracious Speech a credible programme for cutting the burden of regulation which stifles business and holds back entrepreneurs; condemn the absence of measures to ensure value for taxpayers' money in order to improve public services and remove the need for further tax increases; and further regret the absence of measures in the Gracious Speech to tackle the pensions crisis to which Government policy has contributed, or to encourage savings to help give people greater security and dignity in retirement'.—(Mr George Osborne.)

    And the Question being put, That the Amendment be made;

    The House divided.

      Tellers for the Ayes, Mr Peter Atkinson, Gregory Barker: 241.

      Tellers for the Noes, Joan Ryan, Kevin Brennan: 335.

    So the Question was negatived.

    Another Amendment was proposed to the Question, at the end, to add the words 'but regret that the Gracious Speech contains no commitment to introduce legislation to reform the voting system and ensure that the composition of this House reflects the wishes of the electorate; further regret that the Gracious Speech proposes the introduction of a costly and ineffective system of compulsory identity cards instead of providing for more police on the street; further regret the absence of proposals to introduce a fair system of local income tax, related to the individual's ability to pay; deplore the absence of measures to ensure that the elderly receive free long term care; further regret the absence of proposals to end the complex means-tested pensions system, which has deterred saving, has left many pensioners in poverty, and disproportionately disadvantages women; further regret the absence of legislation to reverse the punitive system of tuition fees and top-up fees that mean students could begin their careers with mortgage-level debts by 2010; further deplore the absence of specific measures to tackle the serious threat from climate change; and are concerned that there is still no commitment to introduce legislation to clarify the responsibility of the Prime Minister to Parliament, particularly in relation to the prerogative powers and the role of Parliament in matters of war and peace'.—(Andrew Stunell.)

    And the Question being put forthwith, pursuant to Standing Order No. 33 (Calling of amendments at end of debate);

    The House divided.

      Tellers for the Ayes, Richard Younger-Ross, Bob Russell: 67.

      Tellers for the Noes, Joan Ryan, Kevin Brennan: 327.

    So the Question was negatived.

    And the Main Question being put;
The House divided.

      Tellers for the Ayes, Joan Ryan, Kevin Brennan: 322.

      Tellers for the Noes, Andrew Selous, Michael Fabricant: 246.
So the Question was agreed to.

    Resolved, That an humble Address be presented to Her Majesty, as follows:

    Most Gracious Sovereign,

    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

    Address to be presented to Her Majesty by such Members of this House as are of Her Majesty's most honourable Privy Council or of Her Majesty's Household.

5    Business of the House,—A Motion was made, and the Question being put forthwith, pursuant to Standing Order No. 15 (Exempted business), That, at this day's sitting, proceedings relating to Ways and Means in the name of Mr Chancellor of the Exchequer may be proceeded with, though opposed, until any hour—(Gillian Merron):—It was agreed to.

6    Ways and Means,—Amendment of the Law,—Resolved,—

    (1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

    (2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

      (a) for zero-rating or exempting a supply, acquisition or importation;

      (b) for refunding an amount of tax;

      (c) for any relief, other than a relief that—

      (i) so far as it is applicable to goods, applies to goods of every description, and

      (ii) so far as it is applicable to services, applies to services of every description.—(Dawn Primarolo.)

    The Speaker then, pursuant to paragraph (3) of Standing Order No. 51 (Ways and means motions), put forthwith the Questions necessary to dispose of the further Motions which were made by Mr Chancellor of the Exchequer.

    2. Value added tax (goods subject to warehousing regime)

    Resolved, That provision may be made for the purposes of value added tax in connection with goods subject to a warehousing regime.

    3. Value added tax (fuel for private use)

    Resolved, That provision may be made for and in connection with amending section 57 of the Value Added Tax Act 1994.

    4. Value added tax (overstated or overpaid amounts)

    Resolved, That—

    (1) Section 80 of the Value Added Tax Act 1994 shall be amended as follows.

    (2) For subsection (1) there shall be substituted—

      "(1) Where a person—

          (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and

          (b) in doing so, has brought into account as output tax an amount that was not output tax due,

          the Commissioners shall be liable to credit the person with that amount.

      (1A) Where the Commissioners—

          (a) have assessed a person to VAT for a prescribed accounting period (whenever ended), and
that was not output tax due,

          they shall be liable to credit the person with that amount.

      (1B) Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of—

          (a) an amount that was not output tax due being brought into account as output tax, or

          (b) an amount of input tax allowable under section 26 not being brought into account,

          the Commissioners shall be liable to repay to that person the amount so paid.".

    (3) In subsection (2) before "repay" there shall be inserted "credit or".

    (4) After subsection (2) there shall be inserted—

      "(2A) Where—

          (a) as a result of a claim under this section by virtue of subsection (1) or (1A) above an amount falls to be credited to a person, and

          (b) after setting any sums against it under or by virtue of this Act, some or all of that amount remains to his credit,

          the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains.".

    (5) In subsection (3) for "under this section, that repayment" there shall be substituted "under this section by virtue of subsection (1) or (1A) above, that the crediting".

    (6) For subsection (3A) there shall be substituted—

      "(3A) Subsection (3B) below applies for the purposes of subsection (3) above where—

          (a) an amount would (apart from subsection (3) above) fall to be credited under subsection (1) or (1A) above to any person ("the taxpayer"), and

          (b) the whole or a part of the amount brought into account as mentioned in paragraph (b) of that subsection has, for practical purposes, been borne by a person other than the taxpayer.".

    (7) In subsection (3B), in paragraph (a), for "repayment" there shall be substituted "crediting".

    (8) For subsection (4) there shall be substituted—

      "(4) The Commissioners shall not be liable on a claim under this section—

          (a) to credit an amount to a person under subsection (1) or (1A) above, or

          (b) to repay an amount to a person under subsection (1B) above,

          if the claim is made more than 3 years after the relevant date.

      (4ZA) The relevant date is—

          (a) in the case of a claim by virtue of subsection (1) above, the end of the prescribed accounting period mentioned in that subsection, unless paragraph (b) below applies;

          (b) in the case of a claim by virtue of subsection (1) above in respect of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

          (c) in the case of a claim by virtue of subsection (1A) above in respect of an assessment issued on the basis of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

          (d) in the case of a claim by virtue of subsection (1A) above in any other case, the end of the prescribed accounting period in which the assessment was made;

          (e) in the case of a claim by virtue of subsection (1B) above, the date on which the payment was made.

          In the case of a person who has ceased to be registered under this Act, any reference in paragraphs (b) to (d) above to a prescribed accounting period includes a reference to a period that would have been a prescribed accounting period had the person continued to be registered under this Act.

      (4ZB) For the purposes of this section the cases where there is an erroneous voluntary disclosure are those cases where—

          (a) a person discloses to the Commissioners that he has not brought into account for a prescribed accounting period (whenever ended) an amount of output tax due for the period;

          (b) the disclosure is made in a later prescribed accounting period (whenever ended); and

          (c) some or all of the amount is not output tax due.".

    (9) For subsections (4A) and (4B) there shall be substituted—

      "(4A) Where—

          (a) an amount has been credited under subsection (1) or (1A) above to any person at any time on or after 26th May 2005, and

          (b) the amount so credited exceeded the amount which the Commissioners were liable at that time to credit to that person,

          the Commissioners may, to the best of their judgement, assess the excess credited to that person and notify it to him.".

    (10) For subsection (7) there shall be substituted—

      "(7) Except as provided by this section, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them.".

    (11) The side-note to the section shall accordingly become "Credit for, or repayment of, overstated or overpaid VAT".

    (12) In consequence of those amendments the Value Added Tax Act 1994 shall be amended as follows.

    (13) In section 78, in subsection (1)(a) for "and which they are in consequence liable to repay to him" there shall be substituted "and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him,".

    (14) In section 80A—

      (a) in subsection (2)(a), for "repayment" there shall be substituted "crediting";

      (b) in subsection (2)(b), for "the cost of the original payment of that amount to the Commissioners" there shall be substituted "the amount brought into account as mentioned in paragraph (b) of subsection (1) or (1A) of that section";

      (c) in subsection (3)(a), for "repayment" there shall be substituted "crediting of the amount";

      (d) for subsection (3)(b) there shall be substituted—

          "(b) provision for cases where an amount is credited but an equal amount is not reimbursed in accordance with the arrangements;";

      (e) in subsection (3)(c), for "repaid" there shall be substituted "paid (or repaid)";

      (f) in subsection (4)(a), for "to make the repayments to the Commissioners that they are required to make" there shall be substituted "to make the repayments, or give the notifications, to the Commissioners that they are required to make or give";

      (g) in subsection (7)—

          (i) for "repayment", in the first place, there shall be substituted "credit";

          (ii) for "the making of any repayment" there shall be substituted "the crediting of any amount".

    (15) In section 80B after subsection (1) there shall be inserted—

      "(1A) Where—

          (a) an amount ("the gross credit") has been credited to any person under subsection (1) or (1A) of section 80,

          (b) any sums were set against that amount, in accordance with subsection (2A) of that section, and

          (c) the amount reimbursed in accordance with the reimbursement arrangements was less than the gross credit,

          subsection (1B) below applies.

      (1B) In any such case—

          (a) the person shall cease to be entitled to so much of the gross credit as exceeds the amount so reimbursed, and

          (b) the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him,

          but an amount shall not be assessed under this subsection to the extent that the person is liable to pay it to the Commissioners as mentioned in subsection (1) above.

      (1C) In determining the amount that a person is liable to pay as mentioned in subsection (1) above, any amount reimbursed in accordance with the reimbursement arrangements shall be regarded as first reducing so far as possible the amount that he would have been liable so to pay, but for the reimbursement of that amount.

      (1D) For the purposes of this section, nil is an amount.

      (1E) Any reference in any other provision of this Act to an assessment under subsection (1) above includes, if the context so admits, a reference to an assessment under subsection (1B) above.".

    (16) In section 83—

      (a) in paragraph (t), before "repayment" there shall be inserted "crediting or";

      (b) in paragraph (ta), after "80B(1)" there shall be inserted "or (1B)".

    (17) The amendments made by this Resolution shall have effect in any case where a claim under section 80(2) of the Value Added Tax Act 1994 is made on or after 26th May 2005, whenever the event occurred in respect of which the claim is made.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

      5. Value added tax (gas and electricity supplied by persons outside UK)

    Resolved, That—

    (1) In paragraph 8 of Schedule 6 to the Value Added Tax Act 1994—

      (a) after "8" there shall be inserted ", or any supply of goods is treated by virtue of section 9A,", and

      (b) after "the services" there shall be inserted "or goods".

    (2) This Resolution shall have effect in relation to supplies made on or after 17th March 2005.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    6. Donations to charity by individuals

    Resolved, That provision may be made amending section 25 of the Finance Act 1990.

    7. Employee securities

    Resolved, That provision (including provision having retrospective effect) may be made in relation to securities acquired pursuant to a right or opportunity available by reason of employment.

    8. Scientific research organisations

    Resolved, That provision may be made amending sections 82B and 508 of the Income and Corporation Taxes Act 1988 and section 88 of the Income Tax (Trading and Other Income) Act 2005.

    9. Unit trusts and open-ended investment companies

    Resolved, That provision may be made about the taxation of unit holders in authorised unit trust schemes and shareholders in open-ended investment companies.

    10. Corporation tax (counteracting tax arbitrage)

    Resolved, That provision (including provision having retrospective effect) may be made for the purposes of corporation tax about—

      (a) amounts that are not to be allowed as deductions for the purposes of the Corporation Tax Acts; and

      (b) contributions to the capital of any company that are to be treated as income arising to the company.

      11. Chargeable gains

    Resolved, That provision (including provision having retrospective effect) may be made amending, or making amendments connected with, the Taxation of Chargeable Gains Act 1992.

    12. Accounting practice

    Resolved, That provision (including provision having retrospective effect) may be made with respect to matters connected with accounting practice.

    13. Charges on income

    Resolved, That provision (including provision having retrospective effect) may be made in relation to charges on income for the purposes of corporation tax.

    14. Rent factoring

    Resolved, That provision (including provision having retrospective effect) may be made—

      (a) amending any enactment contained in sections 43A to 43G of the Income and Corporation Taxes Act 1988, or

      (b) in relation to finance agreements (whenever entered into) to which section 43D of that Act would apply but for section 43E(1)(a) or (b) of it.

    15. Loan relationships etc

    Resolved, That provision (including provision having retrospective effect) may be made for the purposes of corporation tax in relation to—

      (a) loan relationships, and

      (b) other relationships where a company stands, or is to be treated as standing, in the position of a creditor or debtor in relation to a debt.

    16. Annuities and other annual payments

    Resolved, That provision (including provision having retrospective effect) may be made in relation to assets which—

      (a) represent the right to, or

      (b) secure,

    the payment of, or payments corresponding to, the whole or a part of one or more payments remaining to be made under an annuity or other obligation to make annual payments.

    17. Manufactured interest

    Resolved, That provision (including provision having retrospective effect) may be made amending paragraph 3 of Schedule 23A to the Income and Corporation Taxes Act 1988.

    18. Strips of interest-bearing corporate securities

    Resolved, That provision (including provision having retrospective effect) may be made in relation to assets which—

      (a) represent the right to, or

      (b) secure,

    the payment of, or payments corresponding to, the whole or a part of one or more payments remaining to be made under a security.

    19. Derivative contracts etc

    Resolved, That provision (including provision having retrospective effect) may be made for the purposes of corporation tax in relation to—

      (a) derivative contracts, and

      (b) contracts and other transactions which are to be treated as if they were derivative contracts.

    20. Capital redemption policies

    Resolved, That provision (including provision having retrospective effect) may be made in relation to capital redemption policies, within the meaning of Chapter 2 of Part 13 of the Income and Corporation Taxes Act 1988.

    21. Provision not at arm's length

    Resolved, That provision (including provision having retrospective effect) may be made amending Schedule 28AA to the Income and Corporation Taxes Act 1988.

    22. Intangible fixed assets

    Resolved, That provision (including provision having retrospective effect) may be made amending Schedule 29 to the Finance Act 2002 and section 86(2) of the Finance Act 1993.

    23. Insurance companies etc

    Resolved, That provision (including provision having retrospective effect) may be made about insurance companies and friendly societies.

    24. Controlled foreign companies

    Resolved, That provision (including provision having retrospective effect) may be made amending Chapter 4 of Part 17 of the Income and Corporation Taxes Act 1988.

    25. The United Kingdom Atomic Energy Authority

    Resolved, That provision (including provision having retrospective effect) may be made in relation to the United Kingdom Atomic Energy Authority.

    26. Stamp duty land tax

    Resolved, That provision may be made amending Part 4 of the Finance Act 2003.

    27. Stamp duty land tax (miscellaneous amendments)

    Resolved, That—

    (1) Part 4 of the Finance Act 2003 shall be amended in accordance with the following provisions of this Resolution.

    (2) In section 45, at the end of subsection (3) there shall be inserted "except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual)".

    (3) In paragraph 1 of Schedule 7, in sub-paragraph (7) for "paragraph 3" there shall be substituted "paragraphs 3 and 4A".

    (4) In paragraph 3 of Schedule 7—

      (a) for sub-paragraph (2) there shall be substituted—

          "(2) The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for group relief if the chargeable consideration for that transaction had been an amount equal to—

      (a) the market value of the subject-matter of the transaction, and

      (b) if the acquisition was the grant of a lease at a rent, that rent,

          or, as the case may be, an appropriate proportion of the tax that would have been so chargeable.", and

      (b) at the end of sub-paragraph (5) there shall be inserted "and paragraph 4A (withdrawal of group relief in certain cases involving successive transactions)".

    (5) In paragraph 4 of Schedule 7—

      (a) in sub-paragraph (3), for paragraph (b) there shall be substituted—

          "(b) another company that—

      (i) is above the vendor in the group structure, and

      (ii) as a result of the transaction ceases to be a member of the same group as the purchaser.", and

      (b) in sub-paragraph (5), for "this purpose" there shall be substituted "the purposes of sub-paragraphs (3) and (4)".

    (6) After paragraph 4 of Schedule 7 there shall be inserted—

      "Withdrawal of group relief in certain cases involving successive transactions

      4A(1) Where, in the case of a transaction ("the relevant transaction") that is exempt from charge by virtue of paragraph 1 (group relief)—

      (a) there is a change in the control of the purchaser,

      (b) that change occurs—

      (i) before the end of the period of three years beginning with the effective date of the relevant transaction, or

      (ii) in pursuance of, or in connection with, arrangements made before the end of that period,

          (c) apart from this paragraph, group relief in relation to the relevant transaction would not be withdrawn under paragraph 3, and

          (d) any previous transaction falls within sub-paragraph (2),

          paragraphs 3 and 4 have effect in relation to the relevant transaction as if the vendor in relation to the earliest previous transaction falling within sub-paragraph (2) were the vendor in relation to the relevant transaction.

      (2) A previous transaction falls within this sub-paragraph if—

          (a) the previous transaction is exempt from charge by virtue of paragraph 1, 7 or 8,

          (b) the effective date of the previous transaction is less than three years before the date of the event falling within sub-paragraph (1)(a),

          (c) the chargeable interest acquired under the relevant transaction by the purchaser in relation to that transaction is the same as, comprises, forms part of, or is derived from, the chargeable interest acquired under the previous transaction by the purchaser in relation to the previous transaction, and

          (d) since the previous transaction, the chargeable interest acquired under that transaction has not been acquired by any person under a transaction that is not exempt from charge by virtue of paragraph 1, 7 or 8.

      (3) For the purposes of sub-paragraph (1)(a) there is a change in the control of a company if—

          (a) any person who controls the company (alone or with others) ceases to do so,

          (b) a person obtains control of the company (alone or with others), or

          (c) the company is wound up.

      References to "control" in this sub-paragraph shall be construed in accordance with section 416 of the Taxes Act 1988.

      (4) If two or more transactions effected at the same time are the earliest previous transactions falling within sub-paragraph (2), the reference in sub-paragraph (1) to the vendor in relation to the earliest previous transaction is a reference to the persons who are the vendors in relation to the earliest previous transactions.

      (5) In this paragraph "arrangements" includes any scheme, agreement or understanding, whether or not legally enforceable."

    (7) In paragraph 11(5)(a) of Schedule 17A, for the words from "the purchaser" to the end there shall be substituted "the event falling within paragraph 3(1)(a) of Schedule 7 (purchaser ceasing to be a member of the same group as the vendor), as read with paragraph 4A of that Schedule".

    (8) In paragraph 8 of Schedule 7—

      (a) in sub-paragraph (1)(b) for "the first and second conditions" there shall be substituted "all the conditions", and

      (b) after sub-paragraph (5) there shall be inserted—

          "(5A) The third condition is that the undertaking or part acquired by the acquiring company has as its main activity the carrying on of a trade that does not consist wholly or mainly of dealing in chargeable interests.

          In this sub-paragraph "trade" has the same meaning as in the Taxes Act 1988."

    (9) In paragraph 9 of Schedule 7, for sub-paragraph (2) there shall be substituted—

      "(2) The amount chargeable is the tax that would have been chargeable in respect of the relevant transaction but for reconstruction or acquisition relief if the chargeable consideration for that transaction had been an amount equal to—

          (a) the market value of the subject-matter of the transaction, and

          (b) if the acquisition was the grant of a lease at a rent, that rent,

          or, as the case may be, an appropriate proportion of the tax that would have been so chargeable."

    (10) After paragraph 17 of Schedule 15 there shall be inserted—

      "Withdrawal of money etc from partnership after transfer of chargeable interest

      17A(1) This paragraph applies where—

          (a) there is a transfer of a chargeable interest to a partnership ("the land transfer");

          (b) the land transfer falls within paragraph (a), (b) or (c) of paragraph 10(1);

          (c) during the period of three years beginning with the date of the land transfer, a qualifying event occurs.

      (2) A qualifying event is—

          (a) a withdrawal from the partnership of money or money's worth which does not represent income profit by the relevant person—

      (i) withdrawing capital from his capital account,

      (ii) reducing his interest, or

      (iii) ceasing to be a partner, or

          (b) in a case where the relevant person has made a loan to the partnership—

      (i) the repayment (to any extent) by the partnership of the loan, or

      (ii) a withdrawal by the relevant person from the partnership of money or money's worth which does not represent income profit.

      (3) For this purpose the relevant person is—

          (a) where the land transfer falls within paragraph 10(1)(a) or (b), the person who makes the land transfer, and

          (b) where the land transfer falls within paragraph 10(1)(c), the partner concerned or a person connected with him.

      (4) The qualifying event—

          (a) shall be taken to be a land transaction, and

          (b) is a chargeable transaction.

      (5) The partners shall be taken to be the purchasers under the transaction.

      (6) Paragraphs 6 to 8 (responsibility of partners) have effect in relation to the transaction.

      (7) The chargeable consideration for the transaction shall be taken to be—

          (a) in a case falling within sub-paragraph (2)(a), equal to the value of the money or money's worth withdrawn from the partnership, or

          (b) in a case falling within sub-paragraph (2)(b)(i), equal to the amount repaid, and

          (c) in a case falling within sub-paragraph (2)(b)(ii), equal to so much of the value of the money or money's worth withdrawn from the partnership as does not exceed the amount of the loan,

          but (in any case) shall not exceed the market value, as at the effective date of the land transfer, of the chargeable interest transferred by the land transfer, reduced by any amount previously chargeable to tax."

    (11) For paragraph 3 of Schedule 16 there shall be substituted—

      "Bare trustee

      3(1) Subject to sub-paragraph (2), where a person acquires a chargeable interest as bare trustee, this Part applies as if the interest were vested in, and the acts of the trustee in relation to it were the acts of, the person or persons for whom he is trustee.

      (2) Sub-paragraph (1) does not apply in relation to the grant of a lease.

      (3) Where a lease is granted to a person as bare trustee, he is treated for the purposes of this Part, as it applies in relation to the grant of the lease, as purchaser of the whole of the interest acquired.

      (4) Where a lease is granted by a person as bare trustee, he is to be treated for the purposes of this Part, as it applies in relation to the grant of the lease, as vendor of the whole of the interest disposed of."

    (12) In paragraph 11 of Schedule 17A, for sub-paragraph (1) there shall be substituted—

      "(1) This paragraph applies where the grant of a lease is exempt from charge by virtue of any of the provisions specified in sub-paragraph (3)."

    (13) In paragraph 15A of Schedule 17A—

      (a) after sub-paragraph (1) there shall be inserted—

          "(1A) Where any consideration in money or money's worth (other than an increase in rent) is given by the lessee for any variation of a lease, other than a variation of the amount of the rent or of the term of the lease, the variation is treated for the purposes of this Part as an acquisition of a chargeable interest by the lessee.", and

      (b) for the heading preceding that paragraph there shall be substituted "Reduction of rent or term or other variation of lease".

    (14) After paragraph 18 of Schedule 17A there shall be inserted—

      "Loan or deposit in connection with grant or assignment of lease

      18A(1) Where, under arrangements made in connection with the grant of a lease—

          (a) the lessee, or any person connected with him or acting on his behalf, pays a deposit, or makes a loan, to any person, and

          (b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the lessee or on the death of the lessee,

          the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Part to be consideration other than rent given for the grant of the lease.

      (2) Where, under arrangements made in connection with the assignment of a lease—

          (a) the assignee, or any person connected with him or acting on his behalf, pays a deposit, or makes a loan, to any person, and

          (b) the repayment of all or part of the deposit or loan is contingent on anything done or omitted to be done by the assignee or on the death of the assignee,

          the amount of the deposit or loan (disregarding any repayment) is to be taken for the purposes of this Part to be consideration other than rent given for the assignment of the lease.

      (3) Sub-paragraph (1) or (2) does not apply in relation to a deposit if the amount that would otherwise fall within the sub-paragraph in question in relation to the grant or (as the case requires) assignment of the lease is not more than twice the relevant maximum rent.

      (4) The relevant maximum rent is—

          (a) in relation to the grant of a lease, the highest amount of rent payable in respect of any consecutive twelve month period in the first five years of the term;

          (b) in relation to the assignment of a lease, the highest amount of rent payable in respect of any consecutive twelve month period in the first five years of the term remaining outstanding as at the date of the assignment,

          the highest amount of rent being determined (in either case) in the same way as the highest amount of rent mentioned in paragraph 7(3).

      (5) Tax is not chargeable by virtue of this paragraph—

          (a) merely because of paragraph 9(2) of Schedule 5 (which excludes the 0% band in the Tables in section 55(2) in cases where the relevant rental figure exceeds 600 a year), or

          (b) merely because of paragraph 5(4)(b), 6(6)(b), 9(4)(b) or 10(6)(b) of Schedule 6 (which make similar provision in relation to land which is wholly or partly residential property and is wholly or partly situated in a disadvantaged area).

      (6) Section 839 of the Taxes Act 1988 (connected persons) has effect for the purposes of this paragraph."

    (15) In section 80 (adjustment where contingency ceases or consideration is ascertained) after subsection (4) there shall be inserted—

      "(4A) Where the transaction ("the relevant transaction") is the grant or assignment of a lease, no claim may be made under subsection (4)—

          (a) in respect of the repayment (in whole or part) of any loan or deposit that is treated by paragraph 18A of Schedule 17A as being consideration given for the relevant transaction, or

          (b) in respect of the refund of any of the consideration given for the relevant transaction, in a case where the refund—

      (i) is made under arrangements that were made in connection with the relevant transaction, and

      (ii) is contingent on the determination or assignment of the lease or on the grant of a chargeable interest out of the lease."

    (16) Subject to paragraph (22) of this Resolution, paragraphs (3) to (7) of this Resolution shall have effect where the effective date of the relevant transaction (within the meaning of paragraph 3 or 4A of Schedule 7 to the Finance Act 2003) is after 19th May 2005.

    (17) Subject to paragraph (22) of this Resolution, paragraph (9) of this Resolution shall have effect where the effective date of the relevant transaction (within the meaning of paragraph 9 of Schedule 7 to the Finance Act 2003) is after 19th May 2005.

    (18) Subject to paragraph (22) of this Resolution, paragraph (10) of this Resolution shall have effect where the effective date of the transaction transferring the chargeable interest to the partnership is after 19th May 2005.

    (19) Subject to paragraph (22) of this Resolution, paragraphs (11) and (12) of this Resolution shall have effect where the effective date of the land transaction consisting of the grant of the lease is after 19th May 2005.

    (20) Subject to paragraph (22) of this Resolution, the amendments made by the other provisions of this Resolution shall have effect in relation to any transaction of which the effective date is after 19th May 2005.

    (21) In paragraphs (22) and (23) of this Resolution "the specified date" means—

      (a) in relation to the amendments made by paragraphs (4)(a) and (9) of this Resolution, 19th May 2005, and

      (b) in relation to the amendments made by the other provisions of this Resolution, 16th March 2005.

    (22) The amendments made by this Resolution shall not have effect—

      (a) in relation to any transaction which is effected in pursuance of a contract entered into and substantially performed on or before the specified date, or

      (b) subject to paragraph (23) of this Resolution, in relation to any other transaction which is effected in pursuance of a contract entered into on or before the specified date.

    (23) The exclusion by paragraph (22)(b) of this Resolution of transactions effected in pursuance of contracts entered into on or before the specified date shall not apply—

      (a) if there is any variation of the contract or assignment of rights under the contract after that date,

      (b) if the transaction is effected in consequence of the exercise after that date of any option, right of pre-emption or similar right, or

      (c) if after that date there is an assignment, subsale or other transaction (relating to the whole or part of the subject-matter of the contract) as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance to him.

    (24) In this Resolution "assignment", "effective date" and "substantially performed" have the same meaning as in Part 4 of the Finance Act 2003.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    28. Stamp Duty and Stamp Duty Reserve Tax (Intermediaries)

    Resolved, That provision may be made repealing section 117 of the Finance Act 2002.

    29. SEs (stamp duty and stamp duty reserve tax)

    Resolved, That provision (including provision having retrospective effect) may be made about stamp duty and stamp duty reserve tax in relation to securities issued or raised by an SE which has its registered office in the United Kingdom.

    30. SEs (residence)

    Resolved, That provision (including provision having retrospective effect) may be made about residence for tax purposes, and changes of residence, of SEs.

    31. Reorganisation of water and sewerage services in Northern Ireland

    Resolved, That provision may be made in relation to—

      (a) any transfer from a Northern Ireland department to one or more transferees of property, rights and liabilities connected with the provision of water or sewerage services; and

      (b) property, rights and liabilities of any transferee.

    32. Relief from tax (incidental and consequential charges)

    Resolved, That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) that may arise from provisions designed in general to afford relief from taxation.

    Procedure (EU Mutual Assistance),—Resolved, That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision for implementing provisions of Council Directive 77/799/EEC as amended (in particular by Council Directive 2004/56/EC).

    Procedure (Future Taxation),—Resolved, That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

      (a) provision in relation to the taxation of social security pension lump sums;

      (b) provision amending section 25 of the Finance Act 1990;

      (c) provision in relation to authorised unit trust schemes and open-ended investment companies;

      (d) provision in relation to insurance companies and friendly societies.

    Finance [Money],—Her Majesty's Recommendation having been signified to the proposed Motion relating to Finance [Money];

    Resolved, That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise any increase in sums payable under any other enactment attributable to the reimbursement of expenditure in connection with the administration of stamp duty land tax.

    Ordered, That a Bill be brought in upon the foregoing Resolutions; and that the Chairman of Ways and Means, Mr Chancellor of the Exchequer, Mr Secretary Prescott, Mr Secretary Blunkett, Mr Secretary Darling, Ms Secretary Hewitt, Secretary Alan Johnson, Secretary Ruth Kelly, Mr Des Browne, Dawn Primarolo, John Healey and Mr Ivan Lewis do prepare and bring it in.

7    Finance Bill,—Dawn Primarolo accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance: And the same was read the first time; and ordered to be read a second time to-morrow and to be printed [Bill 8].

8    Adjournment,—A Motion was made, and the Question being proposed, That this House do now adjourn—(Gillian Merron);

    And the Motion having been made after Seven o'clock, and the Debate having continued for half an hour, the Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order, it being then fourteen minutes past Eight o'clock, till to-morrow.
[Adjourned at 8.14 p.m.

Michael J. Martin

Speaker


Mr Speaker will take the Chair at half-past Ten o'clock.


APPENDIX

Papers presented or laid upon the Table:

Papers subject to Affirmative Resolution:

1    Companies,—Draft Companies Act 1989 (Delegation) Order 2005 [by Act], with an Explanatory Memorandum [by Command] [Secretary Alan Johnson].

2    Northern Ireland,—Draft Northern Ireland Act 2000 (Modification) (No. 2) Order 2005 [by Act], with an Explanatory Memorandum [by Command] [Mr Secretary Hain].

Papers subject to Negative Resolution:

3    Trade Descriptions,—Textile Products (Indications of Fibre Content) (Amendment) Regulations 2005 (S.I., 2005, No. 1401), dated 23rd May 2005 [by Act], with an Explanatory Memorandum [by Command] [Secretary Alan Johnson].

Other Papers:

4    Armed Forces' Pay,—Supplement to the Thirty-Fourth Report of the Armed Forces' Pay Review Body [by Command] [Cm. 6563] [The Prime Minister].

5    Criminal Procedure and Investigations,—Code of Practice for Northern Ireland under Part II of the Criminal Procedure and Investigations Act 1996 [by Act] [Mr Secretary Hain].

6    Defence,—Ministry of Defence Minute, dated 25th May 2005, concerning the gifting of non-lethal military equipment to the Government of Nepal [by Command] [Secretary John Reid].

7    Environmental Audit,—Government Response to the First Report from the Environmental Audit Committee, Session 2004-05, on Housing: Building a Sustainable Future [by Command] [Cm. 6575] [Mr Secretary Prescott].

8    Government Resources and Accounts,—(1) Resource Accounts of the Office of Gas and Electricity Markets for 2004-05, with the Report of the Comptroller and Auditor General thereon [by Act]; to be printed [No. 64]; and

    (2) Treasury Minute, dated 25th May 2005, directing the application of certain amounts as appropriations in aid of the Estimates for the year ending 31st March 2006 [by Act]

    [John Healey].

9    Justice (Northern Ireland),—Account of the Office of the Chief Inspector of Criminal Justice in Northern Ireland for 2003-04, with the Report of the Comptroller and Auditor General thereon [by Act]; to be printed [No. 66] [Clerk of the House].

10    Supply Estimates,—(1) Main Supply Estimates for 2005-06 for—

      (i) Central Government [by Command]; to be printed [No. 2] [John Healey];

      (ii) the Electoral Commission [by Act]; to be printed [No. 5] [The Speaker];

      (iii) the House of Commons: Administration [by Act]; to be printed [No. 3] [The Speaker];

      (iv) the National Audit Office [by Act]; to be printed [No. 4] [Mr Alan Williams]; and

    (2) Central Government Supply Estimates 2005-06: Supplementary Budgetary Information [by Command] [Cm. 6489] [John Healey].

11    Treaty Series (No. 51, 2004),—Fourth Supplementary List of Ratifications, Accessions, Withdrawals, etc., for 2004 [by Command] [Cm. 6564] [Mr Secretary Straw].

12    Video Recordings,—Report and Accounts of the British Board of Film Classification for 2004 [by Act] [Secretary Tessa Jowell].



 
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