Clause 25
Finance Bill
3:00 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I wish to ask some brief questions about the clause and follow the precedent set under the previous clause and address them equally to schedule 9. SMEs in difficulty will no longer be able to apply for R and D relief and vaccine research relief. The clause requires them to be going concerns. If a company is in difficulty, but has a legitimate expectation of succeeding, why should it not be able to claim R and D relief and vaccine research relief? Directors are personally liable for trading while insolvent, so why is that not sufficient to prevent companies from claiming if they are in difficulty? Within VAT regulations, there is already a regime that restricts what companies may do so that they are not insolvent or in liquidation. Why should the test be that they are a going concern, as opposed to not being insolvent or in liquidation?
Does the Minister consider that the clause will affect many companies? Perhaps she can give an historical analysis of any companies that have claimed R and D or VRR, when they were not a going concern. Having asked for an analysis, however, we must appreciate that the economic conditions might be somewhat bumpy, to use the words that the Governor of the Bank of England used yesterday. In a downturn in the economy, the provision might become increasingly important. The main point is that the last accounts show that the company is a going concern. Does the Minister anticipate that some companies may be seeking to make applications for R and D relief or vaccine research relief slightly earlier in the process than they would otherwise do in order to ensure that they put the applications in before accounts are published?
A point made, perhaps not surprisingly, by the Institute of Chartered Accountants in England and Wales is that the measure may create certain pressures on auditors, who may be placed in a slightly more responsible position than they were previously. Does the Minister think that that an issue of any concern?
My main concern is: why is the clause particular? Was there not an alternative formulation on the basis of companies not being insolvent or in liquidation that would have perhaps been clearer for companies and perhaps not distort behaviour, as there may be a danger that this clause and schedule will do?