Schedule 12 - Tax relief for expenditure on research and development
Finance Bill
6:00 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
The thinking behind the amendments was, first and self-evidently, that if an SME was nearly up to the limit, rather than getting caught with the problems caused by having one set of rules one year and another set the next, it might be more simple for them to go straight to the large company rules. The Minister has allayed that fear to some extent by saying that there will be a year's grace.
Another thought behind the amendments was that, as we were advised, some of the conditions attaching to the more generous SME reliefs are pretty onerous and demanding, and that that might act as a disincentive to SMEs to take them up. The Minister has not said anything specific about consultation with SMEs, but one of the attractions of the large company reliefs is that they are drafted in a simple and straightforward fashion, whereas existing reliefs for SMEs are quite complex. If an SME was not sure whether it would meet the requirements of the more generous provisions, but was sure that it would certainly meet the wider requirements, it might want to take them up.
The amendments are in essence probing amendments. As the Minister accepts, there is more work to be done in this area. However, I would like to hear a little more from her on whether the conditions attaching to existing SME reliefs are demanding and have therefore resulted in their underuse.