I beg to move amendment No. 54, in page 189, line 24, at end insert—
'3A. A company's ''qualifying R and D expenditure'' shall not include any amount in respect of which, under the law of any territory outside the United Kingdom, the company is entitled to a deduction for the purposes of any foreign tax which exceeds the amount of such expenditure.'.
I had understood, when the main reliefs were announced, that they would relate only to R and D undertaken in the UK and there was an issue about the relative attractions of Canada and other such places. I was interested to hear the Paymaster General say that that was how the measures had been cast. As far as our adviser and I can see, clause 52 contains no restriction that any expenditure benefiting from enhanced tax relief should be incurred in the UK. Conceptually at least, the relief could be used to allow foreign groups to obtain additional tax relief for R and D expenditure routed through UK companies. The UK Exchequer could suffer without any additional R and D being carried out here.
The Paymaster General referred to the scope of the relief to R and D carried out in the UK being limited by European Union law. The amendment seeks both to limit the scope of any potential abuse by ensuring that no relief is given where another territory is giving a super-deduction for the same expenditure under its tax laws and to make it clear that double dipping is prohibited.