Mohamed Dafea, co-founder of R&D tax funding firm Grantica, considers the likely impact of tax reforms on innovation in the engineering sector.
UK engineering has long been a hotbed of innovation, with many businesses in the sector securing R&D tax relief for their ground-breaking research.
But major reform of the UK’s R&D tax regime is likely to have a significant impact on engineering firms that outsource R&D tasks, with intellectual property (IP) becoming an increasingly important factor in claims.
The SME and large company R&D schemes are being merged to create a single R&D regime. Under the new scheme, companies of all sizes can claim qualifying payments for contracted-out R&D, subject to certain conditions.
Who can claim?
The question of exactly who can make a claim has become an increasingly contentious issue – is it the company paying for a product or service, or the one doing the research?
Under the merged regime, the requirements for contracted-out...