Clause 30 - Provision not at arm's length: transactions between UK taxpayers
Finance Bill
12:00 pm
Mr Mark Prisk (Shadow Minister, Economic Affairs; Hertford and Stortford, Conservative)
Thank you, Mr. McWilliam. I have no doubt that there will be a lengthy and, as always, intellectual discourse on the issue from the hon. Member for Ealing, North.
The hon. Gentleman's attention, and that of the Committee, has been grasped by the question of intellectual property. Companies face the possibility of needing to value their intellectual property and therefore of starting to charge the respective royalties to companies in the group. I tried to refer to that question in relation to the oil, gas and pharmaceutical industries.
To take an example from my constituency area, we have an outstanding research and development facility in the GlaxoSmithKline operation at Ware. In Hertfordshire, and in Harlow in neighbouring Essex, there is a number of related companies within the group.
As we can imagine, one of the problems is the complexity of trying to value the intellectual property developed at the company based in Ware, and establishing whether as an organisation it needs to charge royalties to the other companies for that development and assessment. That is one of industry's worries. Hopefully, the Minister will be able to put minds at rest.
Head office costs, intra-group loans and intellectual property are just three potential elements of a significant compliance burdens that the clause would seek to impose. Therefore, we are talking not simply about another set of files, a little more paperwork or an adjustment to a software program but, possibly, for many organisations, the need to reorganise their structure or to restructure financially how they operate.