Now that the new Government has settled in, innovative businesses across the UK wait with nervous anticipation as to what the forthcoming Budget might bring.
In the party's manifesto pre-election, there was some optimism as to the direction of travel that Labour would take concerning R&D tax incentives. Assurances that the legislation, which had been through many changes by the Conservatives, would be left alone and capping MRCT at the current level of 25% were just some of the welcome budget speculations.
Those pledges, however, were given in the (occasionally) bright sunny days of summer when the prospect of assuming control of the nation's finances were still unrealised. Fast-forward a few months and as days noticeably begin to shorten, the discovery of a '£22bn black hole' may well throw a spanner into these best laid plans.
It is customary that the first Budget of a Parliament is a chastening one. There is a high probability that that tradition will be followed this Autumn.
The timing of revelations concerning the extent of abuse of the R&D Tax scheme by companies such as Green Jellyfish have certainly not helped the cause of innovative businesses. Multi-million pound fraud will hardly please the Treasury. But Chancellor of the Exchequer, Rachel Reeves would be wise to thoughtfully consider the implications.
That nefarious groups have exploited and misused the scheme is not news. It has been common knowledge for many years and, here at MMP, we have commented on it repeatedly.
A welcome injection of investment for HMRC to eliminate it occurred in the previous Parliament. That HMRC is now identifying and putting an end to these fraudulent practices is an indication that order is perhaps on its way to being restored.
It is hoped that Ms Reeves will acknowledge this. A sensible response would be to commit to the pre-election pledge of undertaking a sector-by-sector assessment of the scheme that roots out the ineligible, while ensuring genuine innovation continues to be supported.
- Any concerns you may have over the implication of these moves can be discussed with one of MMP's technical experts
For a free of obligation no-charge initial consultation please contact us or to speak to one of our team
James is a Content Writer at MMP Tax.
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