A statement released by the BioIndustry Association (BIA) highlights the potential harm the proposed changes to the R&D tax credit schemes could have on small and medium-sized enterprises (SME).
The government is proposing to introduce a cap on the value of cash payments that loss-making SMEs can receive through R&D tax credits. This would be a significant threat to SMEs, especially young companies who heavily rely on these cash payments to provide an important stream of funds to finance new ventures.
The aim of the proposed changes is to prevent fraud, however, studies conducted by the BIA highlight the myriad of unintended consequences for life science companies in particular, with between 50% and 60% of genuine SMEs potentially affected. These SMEs include start-ups and those funding clinical trials. The proposed changes could see companies with no choice but to scale back on their R&D, or stop R&D projects all together due to the lack of viability.
CEO of BIA, Steve Bates, has highlighted the importance of the UK life sciences sector for economic success, due to the creation of highly skilled jobs, as well as commitment that the UK is at the forefront of innovative sciences and treatments for patients. The negative consequences resulting from the proposed changes could potentially hinder this economic success.
Bates noted, “While the Government’s consultation was done with the best of intentions, if these proposals are introduced, it could put a hard brake on the UK’s rapidly expanding biotech start-up and scale-up community and affect other tech sectors in similar ways. It will also have knock-on effects for hundreds of service and supply SMEs across the UK who will see a loss of business, as well as universities and hospitals that receive significant funding from industry and conduct clinical research.”
The BIA is recommending life science companies to respond to the Treasury to ensure their voices and opinions are heard.