Government tax plans for promoting R&D fail to impress

Government tax plans for promoting R&D fail to impress
Richard Wilson
Tax changes in the Budget failed to address the problem UK firms have in turning R&D into commercial products, according to tax consultants Coopers & Lybrand.
The Chancellor’s new consultation document – Innovating for the Future: investing in R&D – dealing with the funding of R&D by industry and government has been criticised for a lack of information on proposed tax incentives for firms moving R&D into commercial products.
“The Chancellor admitted that the UK seems to have a higher proportion of scientific research than most countries but a lower proportion of development into patentable products, but he did not make the connection with the tax regime,” said Derek Jenkins, a specialist in high-technology tax at Coopers & Lybrand. According to Jenkins, the UK is unique in its lack of tax incentives to encourage firms to commercialise their research.
“The consultation paper gives no hint that the government is moving in that direction,” said Jenkins. This is despite strong representations on the issue, particularly from the electronics sector.

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