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There is a deep interconnection between the work conducted by universities and investors when it comes to R&D.
Oftentimes, the two can work in tandem, forging ahead with advances.
Yet a misalignment of priorities often leaves these relationships open to turbulence that could lessen the effectiveness of the R&D work being conducted.
As funding is an ever-present challenge for innovative work, it is worth examining this schism and determining whether R&D tax reliefs could help the situation.
Why do universities and investors disagree?
The main source of conflict between universities and investors is the way in which they have different values when it comes to funding research.
Universities are often conducting research for the love of the game and will be more inclined towards providing proof-of-concept grants with little consideration of the ultimate commercial viability of the project.
Investors, on the other hand, operate with a Return on Investment (ROI) firmly in mind.
This means that investors are more drawn towards developed ideas and tend to favour high-potential ventures with larger funds.
The dynamic between the two was explored in a report published by UK Research and Innovation (UKRI), which offered recommendations concerning ways to deepen university-investor links.
While it may be possible to get universities and investors to see things from the other’s perspective, there may be little that can be done to change the values that are at the core of the funding decisions being made.
What is the best way forward for innovation?
Rather than pitting investors and universities against each other, it might be wise for accountants to advise innovative businesses about the best places to secure funding.
Knowing the kind of R&D projects that universities or investors prefer to support can allow an innovative business to get greater access to funding without as much fear of rejection.
Regardless of which path they choose, innovative companies will still stand to benefit from R&D tax relief claims.
If a university is involved in the project to the extent that some of the research takes place there, then this counts as a qualifying indirect activity and associated costs can be included in an R&D tax relief claim.
It should also be noted that if investors and universities do find a way to work more closely together, then additional funding opportunities may arise.
Understanding the full scope of funding available to an innovative business is a core part of facilitating advances.
However, where external funding is obtained, it may not be possible to claim R&D tax relief on the portion of R&D costs covered by that funding.
Even if it slightly lowers the eventual value of the R&D tax relief claim, external funding is often useful for innovative businesses seeking to make a difference in the world.
As R&D tax consultants, we help accountants and innovative businesses understand the intersection of funding and R&D tax relief claims to ensure that valid claims are processed effectively.
Whatever the future of R&D funding, gain confidence by speaking to our team today.
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