That’s the way to do it!

Don’t get me wrong: I think that there are beneficial tax reliefs. I also believe that they are much less common than has been generally thought by politicians, the Treasury and others for some time.

This is a case in point. If you want to encourage R&D it should be part of an industrial strategy. You do not want R&D generically: you want R&D specifically. The aim is to produce concentrations of excellence. And the way to achieve that is to give grants, and not splash money around in the hope that some will do some good.

Quite clearly the splashing the cash policy has failed. The UK is not creating the required excellence at much when we also very obviously need to do so. It is time for this tax relief to go, and with it all the opportunities for profit that it provides to accountants and a whole range of consultants. Instead, we need real innovation in pursuit of real goals. Picking winners and then backing them should be the policy. That’s terribly untrendy, I know, but it’s what we need to do.

And we should start with the technologies to support a Green New Deal.

Instead of research being directed by boffins who might have a clue what they’re doing the entire R&D budget of the nation should be directed by a Retired Accountant from Wandsworth.

Sounds like a hell of a plan, doesn’t it?

23 thoughts on “That’s the way to do it!”

  1. Instead of research being directed by boffins who might have a clue what they’re doing the entire R&D budget of the nation should be given to a Retired Accountant from Wandsworth.

    Corrected it for you Tim

  2. “Picking winners and then backing them should be the policy.”

    Does he never learn? This has been tried so many times before. Failed every time.

    No ‘winner’ would touch HMG schemes with a bargepole: the delays, bureaucracy and outright incompetence will ensure they fail, if so contaminated. So they stay well clear, and ‘win’.

    The only ones queuing up at the Government trough are the ‘losers’: the selection criteria ensure it. Well, losers and outright fraudsters. But yes, you can pocket a lot while claiming to make gull winged cars, transputers, and any other addled scheme that people won’t spend their own money on.

    Has he never realised that the best way to spot winners is to abolish all the red tape, and read the financial results and their tax returns?

    I’ve lived through the 70’s already, and I don’t need a replay, thank you so very much Mr P3.

  3. I don’t know, R&D of vaccines seems to be working. We’re world leaders in automotive and aeronautic research; just look at the number of F1 teams doing their development here.

    I personally am as wary of an Industrial Strategy trying to pick winers in R&D areas as for production, particularly as the former is designed to lead to the latter…

  4. If you want to encourage R&D it should be part of an industrial strategy

    Goodbye to any visionary thinking or research.

  5. Innovate UK already does the targeted funding of specific R&D projects by way of grants.

    R&D tax relief complements those grants by encouraging R&D generally.

    He’s essentially arguing that a diversified investment policy is a bad idea.

  6. Picking winners and then backing them should be the policy.

    Can he (or anyone else) point to any instance of a “winner” being picked at an early stage of development by a government R&D funding body?

  7. Bloke in Wales
    The Oxford boffins were going to go with Merck until the government stepped in and suggested Astra Zeneca, who at the time weren’t much into vaccines.
    Given medical nationalism in the US this was probably a good idea.
    But I admit it’s the exception that proves the rule.

  8. To be fair the R&D tax relief is abused something rotten. There are myriad ‘tax consultants’ who are all out there touting for business, trying to shoehorn companies existing business activities into the R&D tax relief category. I’d be prepared to bet at least half of the claims are fraudulent, in that they don’t do anything new or innovative.

  9. @ Diogenes
    At least Concorde flew – it is the Meriden motor-cycle co-operative that Labour backed in preference to the BSA factory that the owners considered more viable that springs to my mind. It managed simultaneously to drive its sole customer and former owner into bankruptcy by making the bikes too expensive to sell at a profit and lose more money than its workers take-home pay.

  10. @Jim

    Some truth in that but the reality is that the bar has been set very low for what qualifies as R&D for tax credits purposes. Winning a Nobel prize is not needed. An “advance in science or technology” is (broadly) all that is required and while the latter may be difficult the former is not. Making your widget a little bit better or just as good but smaller or just the same but using less energy or creating less waste could all qualify.

  11. Dennis, Forever Tactful

    You do not want R&D generically: you want R&D specifically.

    This is the sort of sentence you read slowly, so you can savor the depth of its stupidity.

  12. Pellinor already said what I came here to say! You could envision boosted R&D relief for key areas of public interest and boost grants for those areas known to be poorly served such as multi disciplinary teams and high value high risk areas to improve the spread of diversification.

    Am always annoyed an seeing papers per pound and citations as measure of academic efficiency but thats a different rant!

  13. @Andrew C: as far as I understand it the activities do have to be new, and not just new to the company involved, new in an entire industry sense. You can’t just take some existing new technique and apply it to your operation and claim you’ve developed something completely new and innovative. Yet I’ve seen consultants claiming (in my business area of farming) that you can claim for all manner of ‘technological innovation’ that consists of merely applying perfectly normal techniques for the first time in your own business. If that is representative of the standard of the claims that are being made across the board I suspect there will be a mass crack down on R&D claims at some future point, and many businesses will get reamed by HMRC for fraudulent claims, and lose a lot of money. The sharp suited BMW driving ‘consultants’ who drew up the claim will of course be long gone………………

  14. There are myriad ‘tax consultants’ who are all out there touting for business, trying to shoehorn companies existing business activities into the R&D tax relief category.

    I’ve had cold calls offering to figure out how my software consultancy business can claim “thousands in free money” from R&D tax relief.

    All you taxpayers will be relieved to know I (politely!) told them to fuck off.

  15. Ahem – my grandad did too…….his statuette – a rocket, obvs – given on, I assume, retirement from the programme, sits on my desk….

  16. Spud’s thinking:
    1. Claim that existing R&D spending is inefficient
    2. Demand that government R&D “grants” are centrally directed for improved efficiency
    3. Establish a new bureaucracy of vast size and cost he can suckle from
    4. Demand that all “wasteful and inefficient” non-government R&D be banned and all R&D be centrally directed
    5. Increase size of bureaucracy – a bigger teat for him to suckle from
    6. Demand that all industry be centrally directed for improved efficiency
    7. Nationalise everything
    8. Increase size of bureaucracy – a huge gushing teat to suckle from

    Result: Morris Marina and Austin Allegro

  17. Quite clearly the splashing the cash policy has failed. The UK is not creating the required excellence at much when we also very obviously need to do so. It is time for this gouging of grant funding and paid research for spurious academic projects to go, and with it all the opportunities for profit that it provides to accountants and a whole range of consultants. Instead, we need real innovation in pursuit of real goals.

  18. @Jim

    There’s an odd contradiction in HMRC’s instructions where they do say that anything claimed must be ‘new’ to the industry/sector as a whole but elsewhere accept that a process might have been developed in the industry but be ‘secret’ so having a go at replicating it could qualify.

    Then there’s using a product/technique etc already known but in a new way. That could be OK. Or combining two technologies that were not designed to be combined.

    But whatever you do, there’s supposed to be uncertainty in the development before it starts. If the answer to a problem is ‘easily deducible by an expert in the field’ then it shouldn’t qualify.

    But you’re right that there are a lot of chancers out there.

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