Ayming’s first UK Innovation Barometer has uncovered widespread support for the current UK Innovation Strategy. However, when looking at the impact of reforms to innovation and R&D in the UK, a lot of which aims to reduce R&D Tax fraud, a concerning theme emerges.
Across the industry, fraudulent R&D tax claims are widely agreed to be a damaging drawback of the scheme that must be confronted and HMRC’s subsequent clampdown an inevitable repercussion. However, the unintended consequences of this additional compliance are having a significant negative impact on those carrying out legitimate R&D.
Ayming’s inaugural UK Innovation Barometer examines the current state of the UK’s innovation landscape, as well as considers the various reforms that have the potential to influence businesses operating across the technology, manufacturing, food & beverage, construction, financial services, and pharmaceutical industries.
Survey uncovers impact of efforts to reduce R&D tax fraud
In November 2022, Ayming conducted a survey of 200 senior innovation, finance, tax, and CEOs/MDs in the UK. Survey respondents are all at CXO, director or head of department level, and evenly split across SMEs (companies with 250 employees or fewer) and larger companies.
Thirty-five per cent of respondents reported that HMRC’s clampdown has delayed payments of R&D tax credits, 24 per cent share that these delays have forced them to reduce their R&D budget, and 19 per cent note that the delays have had an adverse knock-on effect on how quickly their R&D activity can be carried out.
Benjamin Craig, Associate Director of R&D Tax Incentives at Ayming UK points out that, “The tax scheme is supposed to be an incentive. Whilst everyone is agreed that those committing R&D Tax fraud must be rooted out, HMRC needs to recognise the causal sequence its actions have begun and the impact they’re having on new innovation. We know of businesses that have decided against even filing a claim, having heard the rumours of delay. Small businesses operating on tighter margins just can’t risk the wait.”
You can download a copy of Ayming’s 2023 UK Innovation Barometer here to get all of the insights.