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Thalidomide Trust - Conservatives call on Gordon Brown to reverse decision


5th December 2002

Some 68 Members of Parliament of all parties have signed an Early Day Motion, calling on the Government to reverse its decision not to offset the taxation payable upon distributions of the Thalidomide Trust to the surviving British victims of the drug.

Some 68 Members of Parliament of all parties have signed an Early Day Motion, calling on the Government to reverse its decision not to offset the taxation payable upon distributions of the Thalidomide Trust to the surviving British victims of the drug.

Conservative Shadow Chief Secretary to the Treasury, Howard Flight MP, said: "Gordon Brown's decision not to continue the precedent established by Governments from both parties between 1974 and 1996, to off-set the taxation payable by the Thalidomide Trust when they make payments to the 500 surviving victims, is callous and uncaring. Unless reversed, it will mean a reduction in financial support for the Thalidomide victims. Many of those needs are increasing as they grow older. The decision speaks worlds as to what this Government is really like."

Notes:

Jonathan Djanogly, the Member of Parliament for the Huntingdon Constituency where the Trust is based, has announced that he has successfully applied for a debate to be held in the House of Commons at 10.00 pm on Monday 9 December 2002 in order to bring the Government to account concerning its refusal to grant tax relief to the Thalidomide victims.

Mr Djanogly said:

"A clear understanding of every Government who has been involved with the Trust since its establishment in 1974 has been that Government should not make a profit from the victims of Thalidomide. Thalidomide victims, many of whom suffer from very severe disabilities, which are worsening with age, receive on average only £11,000 a year from the Trust and deserve the maximum amount possible from Trust payments to them."

The Trust, which is based in St Neots, was set up as a charity to administer ongoing compensation offered by the company Distillers (now Diageo plc) to the victims of the drug.

The Trust was set up as a charity because it was originally believed that its objects, being charitable, would result in all distributions made to beneficiaries being tax exempt. This proved not to be the case and, in 1974, the Revenue stated that any payments made to beneficiaries by the Trust should be deemed to be "income payments" which would be taxed at the Discretionary Trust tax rate. Notwithstanding this the then Government agreed that there had been a genuine misunderstanding about the tax treatment of the payments made to beneficiaries by the Trust and, on this basis, in 1974 the Government paid the sum of £5 million to the Trust in order to offset the tax payable on distributions.

In 1975, 1979 and 1996, further payments were made by Distillers and its successor company, Guinness in the total sum of £12.8 million. On each such payment a request was made by the Trust to the Government for similar relief to that granted in 1974 and, on each occasion, this was granted by the Government using the same formula for calculating the offset of tax in each case.

In mid 2001 John Major, the then Member of Parliament for Huntingdon, wrote to the Chancellor, Gordon Brown MP, requesting that similar tax treatment be awarded by the Government to a further payment into the Trust made by Diageo. After delaying his response for over one and a half years, and despite receiving two letters and two Written Parliamentary Questions made by Mr Major's successor, Jonathan Djanogly MP, Mr Brown finally replied to say that the Government is unwilling to grant tax relief to the Trust. If the Government does not reverse its position, total Government revenues from the Thalidomide Trust are expected to exceed £10m at today's values, over the next twenty years."



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