Ms Deirdre Donaghy:

No problem. The question concerned the deductions taken to arrive at corporation tax that are not part of the tax expenditures total amount. Based on the figures he had, essentially, they are all items that are considered part of the benchmark as opposed to a tax expenditure. To go through them, based on what is here, they include things like capital allowances, trading losses carried forward, group relief and double tax relief for tax paid in other jurisdictions. Then one gets down to what are considered to be tax expenditures. There is the research and development, R&D, tax credit and the film credit. It is just a difference between what is and is not considered to be part of the benchmark. One example, and it is one of the larger ones, is capital allowances.

I will explain the reason they are considered part of the benchmark system as opposed to a tax expenditure. If a farmer buys a tractor, that is for his business. The purchase of a software licence by a small retailer to run his or her stock control is a business expense if it is part of the business. It is not a tax relief; it is merely an expense of doing business. Scaling that up, if one has a massive factory, the fit-out of the plant and machinery, likewise, qualifies for allowances, or if one has a licence for intellectual property, that comes under capital allowances. They are not regarded as a tax expenditure under that definition because they are considered to be a cost of business and part of the benchmark system. The fact that they are not classified as a tax expenditure does not mean we ignore them. We are very much conscious that they are there. It does not mean they get any less attention. We just do not call them a tax.