The Government is currently consulting on the introduction of an Above The Line Credit for R&D. Overall, I firmly welcome these proposals as I believe the regime will make it much more cost-effective for businesses to carry out R&D in the UK. There is still a lot of work to be done before we have firm proposals for the structure of such a regime but this is an important initial consultation.

My responses to the consultation document can be downloaded here.

In summary:

  • I think the general proposal is a good one;
  • I would instinctively prefer to see one regime (with different rates of credit) for SMEs and Large Companies. However, I recognise that the current SME regime is increasingly well understood and utilised by SMEs, so there are benefits to retaining it.
  • A discounted payable credit will only serve to add unnecessary complexity to the regime and is unlikely to be cost-effective in the long run.
  • There are issues around Government Procurement rules that need to be resolved to ensure companies undertaking R&D on Government contracts are not disadvantaged.

I would strongly urge everyone with an interest in UK R&D to read and respond to the consultation.