05/10/10

By Claire West

BTG Tax believes the publication of this year’s third Finance Bill brings good news for SME’s whose license agreements may have denied them tax breaks on the intellectual property they have created and that this in turn will provide a welcome stimulus for SME’s across many sectors, prompting many to reconsider investing in R&D initiatives.

The appearance in the third Finance Bill, published last week, of draft legislation abolishing the requirement for small or medium-sized companies seeking tax repayments on Research and Development (R&D) to own the intellectual property on which the R&D was focused was originally proposed in Alistair Darling’s Pre-Budget Report of 9 December 2009 and this date has been maintained as the effective date from which it should apply.

Companies whose license agreements may have denied them ownership of the intellectual property they have created may now be able, along with IP-owning developers, to obtain the valuable 24.5% cash back on their R&D spend.

Laurence Bard, Partner, BTG Tax said: “This is great news for SME’s many of which have been unable to obtain the significant tax rebate of 24.5% on their R&D initiatives. It sends out a signal that the UK presents a tax friendly environment for R&D activity among SME’s and is an encouraging sign for further investment including inward investment in the important SME sector.”