Clause 27
Finance Bill
3:15 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
Clause 27 requires claimants of vaccine research relief to make a declaration about the effects of that relief. That declaration would state that the relief resulted in more expenditure on research and development. I simplify, but that is the gist.
I would be grateful if the Economic Secretary confirmed the purpose of the clause. Again, I think that the answer is, to comply with EU state aid obligations. This point applies equally to clause 26. Will the Government provide some reassurance that the UK will not be at a competitive disadvantage, and that other member states either do not have the research and development regime that we have or are required to have in place the same restrictions and requirements that appear in clauses 26 and 27?
There is a curious requirement in the UK that a declaration must be made that research and development has increased as a result of the reliefs provided. I do not know whether there are any precedents, and whether recipients of tax reliefs in other areas are required to make a declaration. If there are, I would be grateful if the Economic Secretary informed the Committee. How such a declaration would be enforced and assessed raises one or two questions. Will recipients of tax relief for research and development have to produce evidence to support their declaration? What sort of evidence would be expected? Will Her Majesty’s Revenue and Customs police the declarations? Will HMRC seek to review whether the declarations are correct? If it does, how will it make that assessment, and what will happen if it comes to a view that is different from that of the recipient? Or will it be the case that as long as the recipient says the words that are required, that is the end of the matter and there will be no further investigation? Is the declaration intended to cause an increase in the amount claimed for vaccine research relief, or will it increase the amount of vaccine research carried out? In view of the declaration, will companies change their behaviour and do more research, so that we see greater spending?
I am not aware of other parts of the tax system in which recipients of relief make a statement of this sort. Do the Government consider this a precedent that could be used in other areas? Will future Finance Bills contain divisions whereby companies make such statements? It is not entirely clear what the purpose of such a declaration is other than, once again, satisfying the EU state aid rules, and I would be grateful if the Minister provided some clarification.