The EU’s annual innovation‘scoreboard’ shows that public and business R&D expenditure in the UK is below the EU’s overall standard, in contrast to France and Germany, which outperformed. Ms Maire Geoghegan-Quinn, the EU Research and Innovation Commissioner, said,“I think it is disappointing...that what is being done in France and Germany is not being replicated in the UK. I’m talking about France and Germany substantially increasing their investment in this whole area,” she said,“while at the same time that same increase in investment is not happening in the UK.” The House of Commons Scottish Affairs Committee said this week that R&D tax credits“...could be adapted and enhanced, at little cost to the Exchequer, but with great benefit to video games companies.”
Dr Richard Wilson, CEO of TIGA, said:
“The EU’s annual innovation scoreboard has highlighted once again the UK’s relatively low levels of investment in R&D. If we want to strengthen both the UK economy and the economic recovery then we must foster an innovative environment. We can help to create this environment by encouraging investment in R&D. The Scottish Affairs Committee rightly notes that the R&D tax credits can help video game businesses, but they need to be improved.
TIGA members tell us that the current R&D tax credit system is too narrow in scope and the claims process is complicated.
“Under our recommendations the existing R&D Tax credit for large firms should be retained. With respect to the R&D tax credit for small firms, the categories of qualifying expenditure should be widened, the level of relief raised, the value of the relief for loss making companies increased, and the claim process simplified.”
TIGA believes that HM Treasury should consider making changes in four key areas to the R&D tax credit:
- <*>The scope of R&D tax credits credit should be expanded to include other associated costs incurred in the development of a new game: premises costs, the costs of applying for IP protection and design costs.*> <*>Increase the rate of relief under the SME R&D tax credit scheme from 175 per cent of qualifying expenditure to at least 200 per cent. This would mean that for every pound that an SME spends of qualifying expenditure it would get two pounds of tax deduction which it would use to reduce its corporation tax.*> <*>SME R&D tax relief should be reformed to help loss making companies. At present, loss making businesses receive 24p for every£1 spent of qualifying expenditure. This should be increased to 28p for every£1 spent, so that loss making, R&D intensive firms also share in our proposed rate of relief.*> <*>The claims process should be simplified. For example, HMRC could make more advance agreements of claims so that developers in the games industry and other sectors could have more certainty of what reliefs they are going to receive. Additionally, developers should have a named contact within their HMRC R&D Unit to approach with questions about the eligibility of their costs and activities.*>
“The EU’s innovation scoreboard is a wakeup call. The UK needs to invest in R&D and to promote innovation. The Scottish Affairs Committee is right to say that the current R&D tax credits could be improved to help the video game sector. TIGA looks forward to discussing with Treasury officials our proposals for improving the existing R&D tax credits and we hope that they will be adopted in the March Budget.”
Notes to editors:
TIGA is the trade association representing the UK’s games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership. TIGA was awarded‘Trade Association of the Year’ and the‘Member Recruitment Award’ at the Trade Association Forum Best Practice Awards 2010. TIGA has also been named as a finalist in the 2010 Chartered Management Institute (CMI) National Management and Leadership Awards in the category of‘The Outstanding Organisation of the Year Award (SME)’.
TIGA is an‘Investors in People’ accredited organisation.
TIGA's vision is to make the UK the best place in the world to do games business. We focus on three sets of activities: political representation, generating media coverage and developing services that enhance the competitiveness of our members. This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.
For further information, please contact Eva Field, TIGA PR Manager on: 07814 039 983, or email email@example.com.