Feeds

Complex tax credits harming technology firms

Defining moment

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Complex tax rules are preventing small technology companies from taking advantage of research and development (R&D) tax credits, according to accountancy firm Grant Thornton.

The Inland Revenue has launched a consultation document on the tax credits, which are available to “innovative” technology businesses.

But many firms, especially sole traders and partnerships, do not qualify for the R&D relief because of the complex rules that surround the tax credits, Grant Thornton says.

According to Grant Thornton the Inland Revenue's definition of technology businesses is much too narrow and is damaging many fast-growing start-ups.

Alan Boby, tax partner at Grant Thornton, called for the government to improve the value of the tax relief.

“Currently, because of the strict definitions and limits applied to the term ‘innovation’, some of the UK’s most technologically forward-thinking companies are missing out.

“What’s more, only companies qualify for R&D tax relief. This means that many small to medium sized enterprises, which are set up as sole traders or partnerships, cannot claim this vital financial support.

“Ironically, it is just these sorts of organisations that the government claims to want to help most,” he said.

Many small firms are also losing out because they have to pay for new software for R&D work, which isn’t covered by the tax relief, according to Grant Thornton

It has sent a letter to the Inland Revenue as part of the consultation, calling for action to make the R&D tax credits more attractive to small technology companies.

Boby said that the credits’ incentives need to be reviewed to make a “real impact” on businesses in practice.

“The government has already acknowledged that take-up of R&D tax credits has not been as high as they hoped.

“As a result, they have issued a consultation document and invited comment from the industry. This is an encouraging step forward, however we remain sceptical as to how far they will be prepared to simplify and relax the rules for claimants,” he said.

Copyright © 2003,

Secure remote control for conventional and virtual desktops

More from The Register

next story
Ellison: Sparc M7 is Oracle's most important silicon EVER
'Acceleration engines' key to performance, security, Larry says
Linux? Bah! Red Hat has its eye on the CLOUD – and it wants to own it
CEO says it will be 'undisputed leader' in enterprise cloud tech
Oracle SHELLSHOCKER - data titan lists unpatchables
Database kingpin lists 32 products that can't be patched (yet) as GNU fixes second vuln
Ello? ello? ello?: Facebook challenger in DDoS KNOCKOUT
Gets back up again after half an hour though
Hey, what's a STORAGE company doing working on Internet-of-Cars?
Boo - it's not a terabyte car, it's just predictive maintenance and that
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.