The Pharmaceutical Journal
Vol 270 No 7248 p648
10 May 2003

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  Agenda for change
  Drug misuse services
  CPD
  R&D tax credits
  Allergies
  The Industry
  The Profession
  Extended roles

Letters to the Editor

R & D tax credits

Poor records will jeopardise R & D tax credits

From Mr L. Palmer

Improvements to research and development tax credits announced in the Finance Bill this month should provide a welcome boost for the pharmaceutical sector, which was one of the major investors in research and development last year, according to the Department of Trade and Industry. However, companies in this sector will still struggle to qualify for tax relief because they are unable to present a valid business case to the Inland Revenue.

In theory the DTI is making it easier for companies to gain access to the R&D credit by clarifying or removing grey areas of qualification. The review of the R&D definition, the reduction of the minimum expenditures threshold to £10,000 and the extension of the large company scheme, are all designed to promote investment and encourage innovation.

However, the onus is on company directors to prove to tax inspectors that their employees and subcontractors are doing work that qualifies as R&D and to assess accurately the time that is being spent in this area. If this process is undertaken manually then companies are in danger of drowning themselves in paperwork or worse still failing to account accurately for time and staffing costs.

Instead companies should be looking to use technology to automate time and expense management. This will enable directors to demonstrate clearly all R&D expenditure and take advantage of tax credits without placing an administrative burden on staff, which will help to support a more competitive United Kingdom business environment.

Len Palmer
Managing Director
SharpOWL (provider of professional services automation solutions)
www.sharpowl.com

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