Monthly digest with Mark Smith – December 2020

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Expert Opinion
December 18, 2020

Let’s look forward to 2021

As the saying goes, diamonds can’t be made without pressure, and the entire world has been placed under significant pressure for most of the year. But under this immense pressure, the global scientific community has come together and achieved what once we would have considered impossible.

Back in January, the average person hadn’t even heard of coronavirus, but in less than a year we have developed, tested and approved a vaccine – with a couple more just around the corner. This is an incredible achievement for science, and for global co-operation. It also begs the question – what would happen if we channelled that sort of energy into addressing a different global crisis, like climate change?

The promise of a sustainable future

2020 hasn’t all been doom and gloom. The UK government is legislating for a greener future with its Net-Zero carbon emissions target by 2050 and departmental announcements have come in thick and fast. Sustainable fuels powering our RAF jets, a path to sustainable farming, a quadrupled offshore wind capacity by 2030, and a promise to end the sale of new fossil fuel-powered cars in ten years.

These targets are all ambitious but if we can be sure of one thing it’s that the UK plans to innovate its way through the first few post-Brexit years.

R&D incentives are a shining light

The government incentivises industry and businesses through various tax relief schemes, helping to ease some of the financial risk implicit in research and development. In fact, the UK scheme is one of the most generous we analyse as part of our annual global R&D tax incentives benchmark report.

However, there have been several high profile examples this year of HMRC cracking down on fraudulent claims. These include arrests in the West Midlands and the jailing of three business owners who attempted to claim £29.5 million on a bogus IT project.

HMRC published an update to its consultation into the prevention of abuse of the R&D tax credit scheme in November, and you can read Ayming’s response here. HMRC is acting much stronger on compliance, and we commend it for doing so. I have no desire to see the R&D tax credit scheme tarnished by fraudulent claims because I believe in the UK’s fantastic science, engineering and technology development and the R&D regime is a key mechanism for us to hit the government’s ambitious green targets.