§ Mr. Diamond
I beg to move Amendment No. 165, Clause 75, in page 149, line 21, after "year" to insert:and the company possesses the source at the end of that year".
I suggest that the House could conveniently discuss at the same time Amendment No. 259, Clause 75, in page 149, line 25, at the end to insert:Provided always that a company shall not come within the charge to corporation tax in respect of a trade, if the company is no longer carrying on the trade at the end of the year 1965–66.
§ Mr. Diamond
This Amendment deals with a point raised in Committee by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin), who moved an Amendment on the matter but later withdrew it on my promise to examine the question further. Under the Clause as drafted, there could in rather special circumstances be a charge both to Corporation Tax and Income Tax on the same measure of profits. If a company is carrying on a trade in 1965–66 but transfers that trade to an individual during 1965–66 and the individual owns three-quarters of the ordinary share capital in the company, then, assuming that the accounts are made up, say, to the end of December, the individual will be charged to Income Tax for 1966–67 by reference to the profits of the calendar year 1965, and the company will be charged to Corporation Tax on the profits from 1st January, 1965, to the date of the transfer to the individual.
This was not intended. We are grateful to the hon. Gentleman for bringing 150 the matter to our notice. This Amendment is moved in order to prevent such a double charge by providing that there will be no charge to Corporation Tax on the company in these very limited and exceptional circumstances.
§ Mr. Patrick Jenkin
I acknowledge with gratitude the kind remarks of the right hon. Gentleman, but one is prompted to ask how many more mistakes of this sort—the right hon. Gentleman will concede that, as this was not intended, a mistake must have been made—are lurking as yet undiscovered in the pages of the Bill. How many people will find themselves paying tax twice over on the same profits because something has remained undiscovered?
This is exactly the sort of point we were dealing with in our earlier argument. The Bill requires very much more attention before we can be satisfied that it really represents what the Government intend to happen as regards the Corporation Tax. However, having said that, and not wishing to be accused of ingratitude, I thank the Treasury Bench for having accepted the substance of our earlier Amendment.
§ Amendment agreed to.