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Mr. Roger Berry accordingly presented a Bill to make discrimination against older people unlawful; to provide for the creation of an Age Discrimination Council; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 11 May, and to be printed [Bill 95].
The substantive measures will apply from 6 April 2001, the date on which businesses could first incorporate as limited liability partnerships under the Limited Liability Partnership Act 2000. A measure to prevent capital gains tax loss will apply from 3 May, the day on which these clauses were published.
Mr. Oliver Letwin (West Dorset): This is a somewhat surreal event, not least because our discussion is due to be repeated in Committee in not many minutes' time. We shall reserve our substantive points--which, I am glad to say, are not deep or wide--for that debate. We understand that the measure is essentially intended to create fiscal neutrality as between partnerships that have limited liability and partnerships that do not, which strikes us as a perfectly reasonable principle.
I hope the Financial Secretary will not think it ungenerous of me to say that it is slightly regrettable that we are debating the proposal at such a breakneck pace. I do not suggest for a moment that anyone else might not have got into the same difficulty; nevertheless, I harbour a doubt, or worry. I fear that, in a few months, we shall all wake up one morning and realise that an aspect of the Finance Bill--perhaps more than one, quite apart from the aggregates tax, which we already know is loathsome--was ineptly or improperly enacted, conceivably against the wishes of Ministers, simply because we had such a short time in which to grapple with the details.
There must be some way in which a parliamentary democracy as old and experienced as ours can devise mechanisms to avoid having to deal with a Finance Bill so rapidly just before a general election. I suspect that whichever party finds itself on whichever side of the House after the election may have cause to rue the speed of our proceedings.
Mr. John Bercow (Buckingham): This is a truly fascinating matter, and I share the concern cautiously expressed by my hon. Friend about the circumscription of debate on it. Does my hon. Friend agree, however, that it is important for us to know what representations, and how many, the Government have received about what might
Mr. Letwin: My hon. Friend has had such a reputation for eloquence and coherence in the current Parliament that it is hardly necessary for me to say how much I admired both the length of his sentence and his perfect articulation of it. As far as we are able to determine, the industry in this case--or rather, the range of industries in which partnerships prevail in this case--has been consulted, and is broadly content with the proposals.
Conservative Members have had serious difficulties with many aspects of many Finance Bills produced by this Government--and, as I said earlier, with the aggregates tax in the Bill that we are discussing. Our objections, however, have never been directed towards those whom my hon. Friend calls the Treasury anoraks. Treasury and Inland Revenue officials have done a magnificent job in dealing with the inordinately difficult business of trying to translate the Government's wildly over-ambitious taxing plans into practice, in a series of dizzying Finance Bills. They deserve our sympathy and admiration. We just hope that, in future, after the general election, we shall have the opportunity to spare them from such activities--by reducing rather than increasing the tax burden, and by reducing rather than increasing the ingenuity and complexity of tax legislation. As I said, however, the specific provision that we are debating does not fall into any of these latter lamentable categories.
When everyone has had time to examine the details of this Finance Bill at more leisure, and if we find that there are serious lacunae, I hope that, together, whichever of us find ourselves on the Treasury Bench after the general election, we shall be able to cure those deficiencies. We certainly have not had the time that was due before the general election to do that.
Mr. John Burnett (Torridge and West Devon): I had conduct of the Limited Liability Partnership Act 2000 during its progress in the House. The Government were represented in those debates by a Department of Trade and Industry Minister, the Minister for Competition and Consumer Affairs, and it is good to have a Treasury Minister to discuss the provision today on the Floor of the House.
I have always been assured that the principle is that limited liability partnerships are taxed in pretty much the same manner as existing partnerships. Nevertheless, I should like to make a few detailed points on the taxation of limited liability partnerships. I am doing so now, as I may not have an opportunity to do so later today, in Committee.
First and foremost, the Financial Secretary will recall that, in the Finance Act 1998, changes were made to prevent firms that were on the cash basis from staying on the cash basis. There was a transitional period of about eight years, I believe, in which cash-basis firms would go on to a full-earnings basis. Many of those firms, or at least
Secondly, I should like to have the Minister's confirmation on the attribution of capital gains and losses. Will he confirm that, even in cases of liquidation, the members of a limited liability partnership will be subject to capital gains tax in accordance with their beneficial interests in the assets disposed of, rather than their shares in the limited liability partnership?
The third point concerns statements of practice and extra-statutory concessions, some of which currently apply to existing partnerships. I hope that the Minister will be able to confirm that those extra-statutory concessions and those statements of practice will apply to limited liability partnerships just as they apply to existing partnerships.
In relation to a statement of practice, for example, although it may be an extra-statutory concession, assets may be owned by members of a limited liability partnership--perhaps by one member of the limited liability partnership, or by two members if the partnership consists of more than two members, and so forth--and leased to the limited liability partnership. Will the Minister confirm that those assets will count as business or agricultural property for purposes of 100 per cent. inheritance tax relief? Will he also confirm that the assets will count as business property for purposes of capital gains tax roll-over relief, for example?
I realise that those points are relatively esoteric. I join my colleague the hon. Member for West Dorset (Mr. Letwin) in saying that we should very much have liked to have an opportunity today, either in Committee or on the Floor of the House, for a detailed debate on the tax aspects of limited liability partnerships. Nevertheless, I have flagged up three or four important points which will affect the commercial judgment of individuals who are considering entering into limited liability partnerships. I look forward to hearing the comments of the Financial Secretary on the points that I have made, either when he responds today or perhaps at a later date.
Mr. Timms: The House will be aware that we need to agree the resolution in order to allow for a debate in Committee later. I hope that it will be possible to have a discussion of some of the points that have been raised in
The hon. Member for Torridge and West Devon (Mr. Burnett) asked me to confirm the principles that we are applying here, comparing the tax position of ordinary partnerships with limited liability partnerships. As we said in the pre-Budget report sent out on 8 November last year, in general, limited liability partnerships will be treated as partnerships for tax purposes and there has been no change in that policy. These measures expand and clarify the rules put in place by the Limited Liability Partnership Act--as he said, the hon. Gentleman served on the Standing Committee considering that Bill. Limited liability partnerships also prevent tax loss through investment and property investment, as announced in the pre-Budget report and confirmed in the Budget in March; so I do not think that there are any surprises here.
On the other point that the hon. Gentleman raised, I hope that he will catch the eye of the Chairman in the relevant Standing Committee and that there will be the opportunity for a discussion that will be expertly dealt with by my hon. Friend the Paymaster General.