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Tax regime fails to help UK technology sector, says PwC

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Despite the wide range of tax relief available, over two thirds of UK technology companies do not believe the current tax regime fuels enterprise in the UK, according to a survey conducted by PricewaterhouseCoopers.

Its survey found that measures introduced in the 2009 Budget are not reaching the majority of the domestic technology industry. Over 50% of technology companies have failed to make use of tax R&D credits, while nearly 80% have not taken advantage of environmental relief.

Barry Murphy, PwC's UK technology leader, said the low takeup may indicate that tech companies do not view what they do as innovative, or are put off by a complex claims process.

"Many UK tech companies assume they are not at the cutting edge of technology, therefore don’t apply, but are actually entitled to that all-important relief," said Murphy. "In this digital age, UK competitiveness is reliant on innovation and technology."

"It’s now time for people to review their claims and tap into as much tax relief as possible," he said. "This is particularly important in a tough investment environment,” he said.

Over 90% of those surveyed called for a reduction in tax rates.

"This is a common call but it is allied to the need for simpler systems that are less subject to unexpected change in every [Pre Budget Report] and Budget," said Murphy. "Getting the policies right to encourage early and second stage capital investment is key to future growth in UK technology, however constant tinkering with the tax regime causes companies to disengage."

Murphy said that technology leaders are committed to the long-term success of the economy, and need stability to enable them to make sensible commercial decisions.

"They are calling on Government to provide more certainty in the tax regime and regulation more broadly," he said.

The Government's Pre Budget Report is scheduled for 12.30pm on 9th December.

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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