§ Mr. McWilliamTo ask the Chancellor of the Exchequer what assessment he has carried out on the impact of the DTI guidelines on the definition of development for tax purposes on the research and development tax credit in respect of large companies; and if he will make a statement. [70864]
:The current definition of Research and Development (R&D) in the Secretary of State for Trade and Industry's guidelines is based on UK accounting principles—in SSAP (Statement of Standard Accounting Practice) 13—and on international standards established by the OECD. It was introduced in 2000 and underpins both the R&D tax credit for SMEs, also introduced in 2000, and the new R&D tax credit for large companies, in the current Finance Bill.
This definition was introduced after extensive consultation. It has only been in force for a short time, and it will not be possible to assess either its impact or that of the credits themselves (which are measures for the long-term) until companies have had a period of stability in which to make use of them. In the meantime, the Inland 1171W Revenue, the Treasury and the DTI are working with industry on case studies to clarify the application of the definition.