Comments of the CIOT on Tax Law Rewrite Paper CC/SC(03)05, sent to the Inland Revenue on 14 August 2003. The Chartered Institute of Taxation has only the following observations on this paper.
This paper has been circulated amongst the volunteer members of our committees. We have not received any comments. We think that this is probably because a certain amount of Rewrite fatigue has arisen, perhaps not helped by the recent experience with Finance Bill 2003 and Schedule 22 (despite your colleague Janice Cross’s helpful letter of 4 August 2003), but perhaps also caused by reaching the five year mark and individuals considering where the Project is going and what has actually been achieved.
We have looked back at the comments we made on these provisions in response to Exposure Draft 2. We had only two major points then.
One, concerning the complexity of the provisions on securities issued in separate tranches, appears to have been dealt with by the more straightforward wording in the new clause 385 and we welcome this.
The second we reproduce, for ease of reference, below:
“7.1 FA 1996, Sch 13 did away with the distinctions between deep discount security/deep gain security/qualifying indexed security/qualifying convertible security. Instead, it subsumed all these securities under the term ‘relevant discounted security’. This concept has now established itself in practice.
“7.2 Accordingly, with regard to clause 6.6.3, we can see no merit in replacing the term ‘relevant discounted security ‘by the term ‘deep gain security’, especially when the term ‘deep gain security’ has until 1996 had a distinct and different meaning. The change seems pointless and a recipe for confusion.”
As the most recent Finance Act, 2003, continues with the term ‘relevant discounted security’, even to the point of using the abbreviation ‘RDS’ in the Explanatory Notes to the Bill, we are surprised that the term ‘deep gain securities’ persists. As noted above, perhaps this persistence has already resulted in some confusion as to the subject matter of this paper. We would prefer the term ‘relevant discounted security’ to be used.
CIOT
14 August 2003
Technical Department
020 7235 9381
