Incidentally, can I predict now that the next big tax scandal will be misuse of R&D allowances....
Like Dom I can imagine , but could you explain a bit mor Guy, i think its a real problem for the uk economy that we dont invest enough and subsequent govts from the 60's onwards have tried to remedy this - be interested to know how that might be being subverted.
My gut feel about this is that there is a scandal brewing due to the enthusiastic industry popping up around it.
In any given month I get about seven or eight unsolicited cold calls for things I reckon dodgy. They are evenly divided between a) You've had an accident in the past five years and you're due compensation b) You're entitled to repayment of your credit protection policy c) Have you thought about taking on an apprentice d) We can help you keep more of your income and e) We can help you with your R&D tax claim.
Each one of these is probably worth a thread in its own right - but scams/system abuses around a, b, c and d have had the oxygen of much publicity recently - whereas e hasn't yet. Because my company has been doing some R&D I did meet with one 'accountant' (who turned out to be a sales rep really) who assured me that I was eligible and pulled out a contract with an £800 sign-up fee, to be deducted from my first tax repayment. It smelt fishy and so I read the HMRC guidance in depth myself decided no matter what they say I wasn't entitled to the credits for the year in question, though I could imagine how some 'imaginative' descriptions of some of my commercial expenses could make it appear that I was.
You can get the gist of what is allowed here: http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm
But given you can now get 225% relief against money you spend on R&D there is HUGE sums to be had for cowboy operators to chase.
I wonder how many people were so chuffed the "accountants" say they are "legally entitled" to this that they just sign-up and the "accountants" just fill in a claim, cross their fingers that it doesn't fall into a random audit sample and just count the money that bounces back their way in commission, and live with leaving the business with bad taxman kudos for the few that get rejected. These types of operations will just treat the whole thing as a percentage game.
At some point someone will do an expose on the sharper end of these operators and the government will no doubt panic and close the scheme thereby throwing out the baby with the bath water.
Just to be clear I'm not saying this is a bad scheme, nor that all people who offer help in navigating these claims are shysters.
The idea of supporting R&D through tax support is spot on, it is vital to our future, however - there needs to be competent administration of any scheme to weed out chancers. I'm nervous that there currently isn't.