A change in policy on the rules dictating research and development (R &
D) tax credits has led to accusations HM Revenue and Customs is unfairly
discriminating against the SME sector.
The change relates to where SMEs must hold their intellectual property in
claiming cash back from the department, according to
If a claim for R & D tax relief is to succeed, the company must both own
all IP created as a result of the R & D expenditure and retain the right to
apply for and own the patent. This means that, even if all the IP is retained
within the UK group, because it is not specifically registered in the name of
the R & D company, no R & D tax relief will be available under either
the SME scheme or the large company scheme.
Colin Smyth, tax partner at Baker Tilly, said: ‘I can see the mischief if the
company was creating its own IP and moving it to a company offshore but we are
seeing UK groups of small and medium-sized enterprises being penalised for
following legal advice.’
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