Clause 165 - Expenditure on software for sub-licensing
Finance Bill
6:15 pm
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
Hindsight is a fine thing, and the right hon. Gentleman will know better than I that there are advisers and others who will work at finding ways around any legislation. We are now trying to tackle an avoidance scheme that has been developed since the legislation has been put in place and confounds the original purpose of the legislation.
The hon. Member for Arundel and South Downs expressed a concern about school PFI contracts. I can reassure him to a degree but, I suspect, not entirely. The vast majority of expenditure incurred on the right to use software under PFI contracts is likely to be revenue, and will not be affected by the clause. If capital expenditure is incurred on the right to use software, it will continue to qualify for capital allowances. It is only the right to 100 per cent. first-year allowances that might be lost. The original legislation prevents such schemes where the
technology is leased, and the clause will put a stop to the attempted avoidance by putting licensing on the same footing as leasing. The clause will not affect bona fide investment in information and communications technologies by small enterprises, and I commend it to the Committee.
Question put and agreed to.
Clause 165 ordered to stand part of the Bill.