The importance of R&D and Innovation
HMRC’s R&D tax reliefs consultation, announced at the beginning of March, is in full swing, and we’ve been working hard behind the scenes to speak with as many clients and industry leaders as possible to help formulate our response. As part of this, we held webinars to explain the questions in more detail and what sort of information the consultation was looking to receive. We also launched a UK Innovation Survey, to which we’ve already had a fantastic response. If you’d like to take part, please get in touch here.
As a global leader in innovation, Ayming is well placed to gather insight into innovation incentives outside the UK. Each year, we release an independent review of national R&D incentive schemes, The Benchmark, so that businesses can understand the broader innovation landscape and factor it into their decision-making processes. We’ve spoken to colleagues in every R&D jurisdiction the Ayming Group covers to factor issues encountered with other nation’s incentive schemes into our response to the consultation.
Why is this important?
In the current climate, post-Brexit and soon-to-be post-pandemic, innovation will be more critical than ever. It will act as a key lever for creating jobs, stimulating the economy, and making the UK an attractive place for foreign investment & travel.
Seemingly, the government recognises the importance of innovation. It has set an incredibly ambitious target to raise total investment in research and development to 2.4% of UK GDP by 2027, where current investment sits at just 1.7%.
We were disappointed not to see changes to R&D tax credits for cloud computing following the 2020 consultation. Instead, HMRC’s latest consultation covers cloud computing again, despite already gaining broad consensus in the previous consultation last Autumn.
To hit our ambitious target, we need action. Delays such as those mentioned above show a lack of momentum or lack of will, which is slightly disconcerting.
Innovation is our future
My colleague, Njy Rios, is a member of the Innovation Expert Group, helping BEIS develop its Innovation Strategy. Last month Njy hosted a client roundtable, attended by BEIS representatives, to discuss the strategy. The attendees raised many interesting points, including the need for the UK’s innovation ecosystem to prioritise entrepreneurial thinking, be fast-paced to ensure success, and build on existing programs and initiatives rather than another total overhaul.
We have no chance of hitting our 2.7% of GDP target without concrete action. Just over 12 months after the pandemic started, over 50% of adults have received a partial vaccine. We’ve spoken before about the scientific community’s incredible work developing a vaccine in record time, but it bears repeating that we can achieve big goals if we work together.
Now is the time to light a fire under innovation and make good on promises to make the UK a shining beacon for research and development.
The Government needs to apply the lessons learnt during the vaccine development and drive the UK’s innovation landscape forward.