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Times are tough and the Government are continually looking for ways to cut costs and rebalance public finances.
Troublingly, UK Research and Innovation (UKRI) and Innovate UK are both now staring down the barrel of potential funding cuts.
Will R&D tax relief claims be next on the chopping block, or will they provide a vital means of funding for businesses left out in the cold?
What is happening with UKRI funding?
Where once UKRI were at liberty to spend £8 billion of taxpayer money each year, the body is now being asked to pause new grants.
It is apparent that the Government is hoping to focus the funding and expertise of UKRI in an effort to “focus and do fewer things better.”
However, many in the research community are left concerned that many projects will now go without the funding they need and could result in a decline in the UK’s R&D power.
Despite not being previously made apparent, there is now a limit to the number of projects that UKRI will support and any new projects may come at the expense of those that are currently funded.
The funding cutbacks are also set to limit the scope of Innovate UK, which is likely to be a heavy blow for the SMEs that rely upon it.
It has been reported that business advisors have been laid off and the remaining staff are under instructions not take on additional clients.
What does this mean for the future of R&D in the UK?
At a time when the UK needs to position itself as a valid place for R&D to flourish, these cuts are a troubling sign that the Government may be shifting its focus elsewhere.
However, there currently seems to be no indication that these cutbacks will reach R&D tax relief claims.
This is likely due to R&D tax relief claims being based on the amount of Corporation Tax paid by businesses, so act more as a refund of money rather than the Government having to source the funds.
As R&D tax relief claims have demonstrated their value across the many years since being implemented, it would be unwise to cut back the service.
If the Government do want to restrict funding, it is more likely that this will come in the form of heightened compliance or administrative burden.
By making R&D tax relief claims more challenging to file, HMRC have succeeded in cutting the number submitted while still preserving the value of funds awarded.
We want to help support accountants and innovative businesses as the view of R&D changes in the UK.
If compliance does become more restrictive, then we will help preserve valid R&D tax relief claims as we have been doing.
Speak to our team today for support with R&D tax relief claims.
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