Part of Orders of the Day — Finance Bill – in the House of Commons am 12:00 am ar 17 Gorffennaf 1974.
I am happy to respond to the hon. and learned Gentleman. I appreciate the point that he is making. There is a possibility that there may be a type of company caught in the way that he suggested. But I want to explain the effect that his amendments would have.
The amendments are designed to put the company which ceases to be within the charge to corporation tax on a par with a company which is wound up, both as regards the liability to pay the ACT supplement and the set-off or repayment of the supplement. We have not been able to see clearly the type of case which these amendments seek to protect. But in any event—I hesitate to say this to the hon. and learned Gentleman, although I see him smiling—the amendments are, in the jargon, technically defective, I hasten to add that I do not accuse the hon. and learned Gentleman of being defective in any way.
I am assured that the amendments as drafted would embrace a company that at any time in the past had ceased to be within the charge to corporation tax—for example, through migration—irrespective of whether it had subsequently come back within the charge. The purpose of subsection (8) is to exempt from the surcharge the exceptional case of the company already in liquidation on 1st January 1974 which makes a distribution after that date giving rise to an ACT liability. Under paragraph (b), where a company goes into liquidation after 1st January 1974 but before 1st April 1975, any additional payments made under the clause may be rebated against the tax due on profits, if any, arising up to the date that winding-up commenced. This ensures that the completion of a winding-up will not be unduly delayed because of the effect of the clause.
We find it hard to envisage a case in which it is thought that the subsection operates unfairly. There is no problem with the example that the hon. and learned Gentleman has given, because it would be treated in another way and I am assured that it would be all right.
However, I want to promise this to the hon. and learned Gentleman: if we come across cases—examples which he has not given us—which might be affected in the way suggested. we shall seek either to deal with them by administrative action, or, if necessary, come back with other amendments. At present, as far as I can see, there is none that would be affected—I hope that the hon. and learned Gentleman will accept that from me—otherwise I should have been happy to look at this matter.