Michael Noonan (Limerick City, Fine Gael)
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The IDA regards the research and development tax credit as a very important part of its portfolio of attractions for foreign direct investment. The reason we are coming back to it again is that last year the Deputy will recall I announced a review of the research and development tax credit. It was published on budget day and it identified that the potential for a claw-back from the employee was acting as a barrier to take-up of the scheme. Furthermore, the independent survey identified that despite more than 70% of companies being positively disposed to this provision, only a small number - seven - who responded to the survey have availed of this provision. Based on a review of corporate tax returns filed to date in respect of 2012, I am informed by the Revenue Commissioners that the returns indicate that credit has been surrendered by seven key employees.

This amendment recognises that, generally, an employee will not be aware of or involved with the claim of the research and development tax credit and therefore should not be held responsible for an incorrect claim of this nature or subject to any penalties. Instead, the changes being made in section 21 of the Bill will ensure that the tax foregone will be reclaimed from the company, which will be subject to penalties in the event of a deliberately false claim.

To address situations where an employee may have had a degree of control over his or her entitlement to qualify for a credit, the existing Revenue powers under self-assessment rules can still be used to reclaim credit given to an employee in such circumstances.

The bottom line is that this is a modest measure with no cost to the Exchequer. It removes a barrier that was preventing people from accessing the key employee relief. Given that there is no additional cost to the Exchequer, it does not make sense to wait a further year when we can help companies now. We are talking about people who are inventive. They are the kind of people whose research leads to the patenting of new products or new ways of doing things. By its nature, therefore, it applies only to a very small select group of people.