Chancellor Gordon Brown is expected to use tomorrow’s budget to pledge tax benefits aimed at increasing the level of research and development (R&D) expenditure undertaken in the UK, according to predictions from a prominent business advisor.
Among the measures expected tomorrow by Deloitte is the creation of a dedicated team to handle eligibility claims for small companies wishing to claim R&D relief.
Brown has faced pressure to encourage more companies to invest in R&D amid reports of declining UK innovation rates, and the measures Deloitte expects to be revealed tomorrow will follow proposals made in the chancellor’s Pre-Budget Report last year.
Each claims team would be trained in helping smaller companies better understand the nature of eligible R&D work, particularly in the software industry, Deloitte said.
The firm also said that it anticipates a statement of practice designed to provide details of how businesses can expect their claim to be handled, a move expected to simplify the process and speed up the payment of credits.
It is thought the time limit for claiming relief will be reduced from six to two years, aligning it with the deadline applied to cash reclaims for loss-making businesses.
Although not welcomed by Deloitte, it believes the measure would avoid confusion caused by the existence of two limits under the proviso that it’s accompanied by sensible transitional rules to ensure that past years are not disadvantaged.
“The overall message is that these measures will be a positive improvement to the R&D regime, and if implemented effectively, will be of great benefit to many SMEs,” said David Cobb, head of R&D tax services at Deloitte.
“These changes should help to reduce inconsistency over the eligibility of claims, allowing inspectors to make clearer judgements and identify the hallmarks of R&D.”