| HM Revenue & Customs
(HMRC) has issued a new report on research
and development (R&D) decision-making
processes in British businesses. The
report, released in November, explores the
role of government support in the
decision-making process and identifies the
effects of R&D tax reliefs and grants on
business behaviour.
It concludes that because most
businesses involved in R&D see it as a
“vital, often intrinsic part of their
work” they already carry out as much as
they can afford and are keen to do more.
Although it says that government
support is viewed as “enabling rather than
motivational” it adds that: “Grants allow
companies to conduct R&D project which
they would otherwise have been very
unlikely to pursue (and)…tax credits do
appear to increase the overall budget
available for R&D within the company”.
However, it also found that many
companies consider the procedure around
grant applications to be time-consuming
and onerous while most of the respondents
involved in its research “know little
about the process and progress of tax
credit claims”, with, typically, little
communication between finance and R&D
functions when the claim is submitted or
afterwards.
But it adds: “However, once the routine
of claiming is established, the company
tends to gain confidence in the likely
availability of this funding stream and
begins to rely on it as part of the budget
for reinvestment in future R&D work.”
The report suggests that support for
R&D is likely to continue, concluding:
“Alongside the monetary value of the
government support, the message sent by
the system of R&D tax credits and grants
is important to companies engaged in R&D.
Any attempt to reduce their availability
would be interpreted as a statement that
government no longer values the
contribution of R&D in this country.”
LINK:
The HMRC report |
