Vol. 462 No. 8
73 Mr. E. Byrne asked the Minister for Finance whether he has received representations from the Small Firms Association urging the abolition of section 115 of the Finance Act, 1986, which gives the Revenue Commissioners first call on the books debts of a small company; his views on the assertions by the SFA and ISME that this section militates against small firms securing finance from the associated banks; and if he will make a statement on the matter. [2637/96]
As the Deputy may be aware, I made a number of significant changes to section 115 last year in order to limit the claimed disincentive effect of the section on the provision by banks of finance to small companies against the security of book debts. I am advised by the Revenue Commissioners that the new provisions are being operated by the banks in so far as notifications to Revenue of fixed charges on book debts are concerned. Such notice is required under the revised section 115 if the holders of a fixed charge wish to limit their exposure under the section.
So far, 248 notifications have been received by Revenue, of which, 204 relate to fixed charges taken out prior to the enactment of last year's Finance Act. While not all notifications relate to fixed charges taken specifically in exchange for financial assistance to companies, it seems clear that the provisions of section 115 as amended are being availed of and can be worked.
I am aware of the call by the Small Firms Association to abolish section 115 in full. However, I have to weigh the potential cost of this to the Exchequer against the likely benefit from increased bank lending to small firms. I think that the amended section provides a reasonable basis for increased lending by the banks to small companies. The financial institutions would appear to see more attractions in other forms of lending, such as invoice discounting, which are unaffected by the terms of section 115.
Nonetheless, I can assure the Deputy that I am keeping the operation of section 115 under review within the framework of the considerations just mentioned.
