Accountancy firm Albert Goodman today called on Chancellor Jeremy Hunt to provide some much-needed certainty surrounding research and development (R&D) tax relief for tech companies across the region.
The tech sector continues to play an important role in the South West economy, with many start-ups emerging from leading universities in Bristol, Bath and Exeter but Albert Goodman insists they also require ongoing support to achieve the innovations they are pioneering and to grow successfully.
Albert Goodman’s Bristol-based tax specialist Sam Wood wants to see the Chancellor take further steps to encourage innovation when he announces the Autumn Statement on Wednesday, November 22.
“We can all be proud of the companies in the South West that are leading the way in the tech, aerospace, life sciences and software sectors,” he said.
“But I know from listening to these innovators that the changes to R&D tax incentives are starting to hamper plans for investment and growth.
“Start-ups or the smaller businesses that often spin out from universities are now seeing the tax relief available to them on their qualifying R&D is being reduced or being challenged more intensely, which is disappointing.
“The relief available for small and medium sized businesses (SMEs) isn’t as generous as it used to be and the process for accessing relief is becoming far more complicated.
“Furthermore, the proposed changes to merge the small and large business R&D tax relief systems together under a universal system do not provide enough clarity about who in the R&D supply chain should be making the claim for tax relief.
“At Albert Goodman, we would like to see the Chancellor take steps to either defer these proposed changes to R&D tax relief or provide some much-needed clarity to ensure businesses are better positioned to make informed decisions about their R&D strategy.”
The Taunton-headquartered chartered accountants, tax consultants and financial planners are also urging the Chancellor to provide a boost to emerging businesses following warnings that they need better access to finance.
Wood added: “While it is encouraging news for business leaders across the South West that inflation fell in October following a difficult period, the economic environment in which SMEs operate remains challenging.
“Looking ahead, we know from conversations with our clients that SMEs require better access to finance and key research and development funds so they can continue to play a key role in the regional economy.”
The Office for National Statistics this week revealed UK inflation had dropped to its lowest rate in two years, largely due to lower energy prices, falling to 4.6% in the year to October, down from 6.7% in September. However, the stagnation of GDP growth has been highlighted with only 0.1% and 0.2% increases in August and September respectively.
Wood, who took up his role as Senior Tax Manager with Albert Goodman this summer, said up-and-coming enterprises should have more certainty over their access to finance so that they can compete on a more equal footing with larger companies.
“Access to finance is crucial to the survival of start-ups and scale ups in the South West,” Wood added.
“While more established larger businesses enjoy easier access to raising finance and are better placed to shoulder the burdens of macro-economic pressures, SMEs have to absorb higher costs as they can’t pass them on to their customers.
“So, we hope the Chancellor will be bold. Small businesses are very much reliant on bank loans, funding, or grants; all of which have obviously become more difficult to obtain so the stage is set for the Chancellor to put that right and inject some encouragement to support business growth.”
While rumours are rife around Wednesday’s announcement, The Chancellor promised an “Autumn Statement for growth” when he addressed the House of Commons.