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George Bull
Senior Tax Partner

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Other possible changes

Our predictions

R&D Tax Credits

This relief is a flagship initiative and one that has had some measure of success in incentivising innovation. A major anomaly is the requirement for SMEs to continue to own the intellectual property (IP) that has been generated from the research activity in order to qualify for any relief at all. Failure to meet this condition debars the company from relief – whether for SMEs or large companies.

In practice it was not considered to be a problem as HMRC had been relaxed as to how long any IP continued to be owned.

The practice appeared to be changing and, following protestations, an announcement was made that this rule will be removed.

Venture Capital Schemes

HMRC has published draft legislation making changes to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), which are necessary to secure State Aid approval for the schemes as well as draft legislation announced in the Pre-Budget Report on 9 December 2009 which would apply a new condition based on the European definition of a small enterprise to the venture capital schemes (the Enterprise Investment Scheme (EIS) and Venture Capital trusts (VCTs).

The government‟s current intention is that any legislation to apply a new condition based on the EC Small Enterprise definition would only apply to money raised by VCTs or EIS Funds after a final announcement of the detail of any legislation. Money raised before then by a VCT or EIS Fund, but which is not invested until a later date, would not therefore be affected.

Points to note

There are various other developments that may be referred to:

  • Online filing becomes mandatory for a range of taxes and there may be comment as to the “value” of the continued extension of ebusiness
  • A number of Extra Statutory Concessions (ESCs) are being legislated and some of these may not be legislated in full. There will thus be some changes of detail that will concern businesses (e.g the ability to have distributions in the course of having a company struck off (ESC C16) treated as capital)
  • The Independent Business Review for time to pay arrangements (£1m or more) will come into effect from 1st April 2010
  • Detailed legislation on the Bank Payroll Tax will be made available.