22 May 2012
Simplify R&D relief to encourage innovation – Haines Watts
Government moves to encourage research and development (R&D) by entrepreneurial businesses could be hindered because of the amount of red tape required to make a claim, particularly at a time when businesses need to use all of their resources to drive their businesses forward instead of dealing with the complexities of the tax system says a Birmingham accountant.
Terri Halstead, tax partner at the Birmingham office of chartered accountants Haines Watts – which specialises in small and medium-sized enterprises (SMEs) - said she had no doubt that the government’s intentions were to stimulate British industry,– a move that is particularly welcome in the West Midlands. “But in doing so, the system is time consuming and complex – which is why a number of businesses do not even bother to claim,” said Ms Halstead who has advised countless businesses on the current and future tax relief system.
She said: “A business with a qualifying R&D spend of £100,000 could receive tax relief as if it had spent £200,000, which equates to a £40,000 tax saving on £100,000 of costs. This was increased to 125 per cent extra relief as opposed to 100 per cent for expenditure incurred from 1 April. But then it starts getting even more complex. A report two years ago said that UK businesses receive the equivalent of 0.12 per cent of GDP in direct and indirect support – considerably lower than many other countries. We want companies to be able to concentrate on their R&D activities – and not on their tax breaks. We think giving manufacturing companies clear and straightforward options should be the first step to encourage innovation.”
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