UK technology companies could soon lose tax deductions for
research and development, according to business advisory firm Grant
Thornton.
HM Revenue & Customs (HMRC) may change its interpretation of
the rules which provide for "tax super-deductions" on costs
incurred for R&D, Grant Thornton has warned.
The new interpretation of the rules may prohibit claims for any
R&D costs which relate to products and services that are sold
for use rather than scrapped.
Samantha Vanags, technology and R&D tax partner at Grant
Thornton, said HMRC is increasing the number and toughness of
challenges to these claims.
"This has led us to believe the [narrower] new interpretations
will soon be made official," she said.
According to Vanags, the new interpretations will be
particularly hard-hitting for many leading-edge technology and
engineering companies already adversely affected by current
economic conditions.
"Clamping down in this area goes directly against the original
purpose of the relief, which was to stimulate R&D activity in
the UK," she said.
Vanags said the move is "short-sighted" at a time when the UK's
income from other sectors such as financial services has
declined.