www.profeng.com
The home of
Professional Engineering
on the web
Professional Engineering
Home
Current Issue
News Extra
Tech extra
PE Blog
PE Extra
Letters
Archive
Search the Archive
About PE magazine
Contact
Search our back issues
Search
Subscribe to Professional Engineering magazine
Request a media pack
Our other magazines and journals:
Automotive Engineer
Engineering Opps
PEP Journals
TopEngineeringJobs.com
Related links and resources
PE Archive pre-2008
IMechE
Return to:
Prof Eng Home
Archive
2009 Issues Archive
19 August 2009
Print Page
MPs to weigh in over research tax break row
Members of a select committee of MPs may look into alleged problems with the R&D tax credit scheme as early as the autumn.
According to sources in the Treasury select committee office, correspondence about problems with the tax credit scheme, created to encourage companies to invest in research and development, has been received. MPs on the committee have been alerted.
Accountancy experts and industry are concerned that HM Revenue & Customs (HMRC) has changed what it classifies as proper research and development (R&D) for engineering companies in the scheme to cut back on the amount it is paying out. The HMRC denies the allegation.
The CBI and the EEF last month joined the call for the government to clarify the scheme. Confusion about it has hit smaller companies hard and many are growing reluctant to invest in R&D.
Part of the remit of the Treasury select committee is to examine the administration and policy of the HMRC. Although the committee meets once during the summer recess, it is occupied with issues around the banking sector and financial stability, the source said.
The MPs are most likely to consider issues about the R&D tax credit system in October, when they return from their parliamentary holiday.
Some engineering firms which had had R&D tax credits approved face the prospect of paying back money to the HMRC during the recession because of unpublicised changes in the way tax inspectors are interpreting guidelines devised five years ago.
One such company which has contacted PE works in the nuclear sector. The company, which employs around 150 people and wishes to remain anonymous, had successfully obtained tax credits for three years while engineers developed complex remote equipment used to decommission old nuclear reactors.
The development project is near completion and interest in buying the technology has come from other countries with nuclear decommissioning programmes, said the chief executive.
However, tax inspectors raised concerns this year for a claim on the project, and requested back-up documentation.
The chief executive of the company said: “They then said they wanted to revisit the money previously awarded, which has already been reinvested in the company.
“Some of the things they were asking for and were saying were totally clueless. I don’t have the time to fiddle around with spreadsheets and accountants charge a fortune to process the paperwork,” he continued.
“A lot of the time this type of work is a loss. The credits were a good scheme which let you make a profit while you built a knowledge base.
“But this is going to switch us off from doing R&D in the future.”
Previous news story
Next news story
Back to contents
Email us your views
© PE Publishing, 19 August 2009
