Schedule 12 - Tax relief for expenditure on research and development

Part of Finance Bill – in a Public Bill Committee at 6:45 pm on 21st May 2002.

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Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 6:45 pm, 21st May 2002

The amendment broadens the cost base of the credit and reduces the rate of the relief, which can be ill afforded in such a targeted measure. It would be distortive, because although we give R and D tax credits on current expenditure, the credit for benefits in kind and class 1A national insurance would not all be for current expenditure. The design of the scheme tries to avoid the complexity and distortion that are created by focusing on simple staff costs and consumable stores, which are the main extra costs of R and D. The scheme tries to stay clear of complex apportionments.

I believe that the right hon. Gentleman's amendment would give us much more complexity for no increase in R and D expenditure, so I ask my hon. Friends to reject it if it is put to the vote.