BIA response to HMT/HMRC consultation on Preventing abuse of the R&D tax relief for SMEs

The BIA has responded to the HM Treasury and HMRC consultation on preventing abuse of the R&D tax relief for SMEs.

In our submission, we said:

• That the 3X PAYE/NICs cap should not be introduced as proposed, as it would fundamentally undermine the UK life sciences sector
• The biotech business model includes a high level of R&D outsourcing to manage risk and access specialist facilities and expertise, as a result in-house salary costs are low despite R&D spend being high. Biotechs would therefore be disproportionately impacted by the cap
• The Government should introduce more nuanced exceptions to the cap, such as requiring the R&D to be effectively managed by UK-located staff and/or the IP to be owned by the UK company. This would identify fraudulent and abusive claims