Clause 53 - Treatment of expenditure on research and development
Finance Bill (except clauses 4, 5, 20, 28, 57 to 77, 86, 111 and 282 to 289, and schedules 1, 3, 11, 12, 21 and 37 to 39)
3:00 pm
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
Essentially, the answer is yes—either but not both. We could have considered changing the tax rules only for those companies using IAS, but we have taken a broad, simplifying approach instead to allow all companies the deduction when the expenditure is incurred.
In answer to the point made by the hon. Member for Arundel and South Downs also, that approach allows companies using UK GAAP to choose whether to add expenditure to an asset or take it to profit and loss on the basis of what is best for their accounting purposes. They will not be driven to account in one way because of the tax treatment. In no case will there be a delay in granting R and D tax relief, including the payable credits, to companies carrying out R and D. That is one of several improvements to the R and D rules in the Bill. It supports our aim of increasing productivity through the growth of the knowledge economy, and I hope that it commends itself to the Committee.