'Tax reliefs need to be underpinned by clear policy objectives, and it’s important that those objectives are kept under review and the benefits quantified. HMRC has made some progress in doing this but, as the latest NAO report suggests, it is disappointing that they are unable to articulate or quantify the positive benefits of the R&D incentive scheme, particularly naming SMEs for whom the relief has the greatest positive impact.
'The report highlights that R&D incentives for small and medium sized businesses are costing more than published forecasts and that the relief is subject to increased abuse. While there are undoubtedly examples of abuse, albeit in a small minority of cases only, this is being targeted through proposed anti-avoidance legislation. It is important not to lose sight of the fact that for the vast majority of beneficiaries of the scheme, it is a valued incentive that continues to be a significant stimulus for innovation by UK businesses.
'The R&D regime for both SME and large businesses remains a key lever available to the Government to stimulate and support innovation, and the scheme should be championed, particularly as we emerge from a period of time when business confidence has taken a knock.'