Is R&D tax relief working?? – Part 1
Date: 18th May 2016
As an RandDTax consultant, I am also in my final year of an MBA programme and I am undertaking a research project entitled Research and Development Tax Relief for Small Companies – A good thing?
From our client base of over 600 I have taken a random sample and sent out a short questionnaire to explore whether R&D tax relief has influenced investment decisions in SMEs.
I am also analysing the financial data to see if there is any correlation between R&D spend, turnover, profit, number of R&D staff over the years.
My analysis of the responses to the questionnaire shows that whilst most people appreciate that the positive financial benefit that R&D tax relief brings reduces the risk of innovative investment and facilitates the decision making process in order to increase investment, they have only been partially influenced by the relief and that the commercial realities of keeping one step ahead of their competition would ordinarily lead to such expenditure.
That said, there are a great number of respondents who expressed that the timing of new spend has been brought forward significantly, that the level of their investment has increased, resulting in taking on more R&D staff, and that they would continue to invest more in the future. My initial review of the financial data tends to back up the qualitative data from the questionnaire and in due course, I will be posting a more detailed analysis, attempting to find any trends and drawing some conclusions.
Tim Walsh CTA, Consultant & Shareholder.