Research bodies face paying £50m tax bill

Up to £50m could be wiped off the value of Britain’s research and development base under tax proposals being considered by the Government. Independent research organisations could be forced to make cuts in jobs, research or equipment under plans to change tax guidelines, said the Association of Independent Research and Technology Organisations (Airto). Its 50 […]

Up to £50m could be wiped off the value of Britain’s research and development base under tax proposals being considered by the Government.

Independent research organisations could be forced to make cuts in jobs, research or equipment under plans to change tax guidelines, said the Association of Independent Research and Technology Organisations (Airto). Its 50 members, with a turnover of £500m, could be forced to pay corporation tax for the first time in 50 years.

Bevan Braithwaite, chief executive of Airto member TWI, said that removal of the exemption would ‘severely impact on the research organisations’ ability to develop technology and may also have an affect on research organisations’ ability to maintain jobs and facilities. The situation is further exacerbated by the fact that the Department of Trade and Industry is seeking to make this change retrospectively to 1996.’

The move would also disqualify them from receiving grants such as those from the research councils.

Brian Blunden, Airto president and managing director of Pira International, said that although trade minister John Battle had made reassuring noises at a recent meeting, DTI officials appeared to pressing ahead with the planned changes.

‘We feel there is a good case for the minister actually extending the exemption rather than removing it,’ said Blunden.

The UK’s research organisations are in the main membership based companies limited by guarantee whose constitution prohibits distribution of surpluses, but requires them to reinvest available funds back into research and research facilities with the objective of providing new and improved technology for industry.

Members include TWI, BMT, ERA Technology, Mira, Pera and Pira International.

A decision on the review of the exemption is due this autumn.

* Britain’s universities and colleges need £400m to update their teaching equipment and facilities, according to a survey published this week which was commissioned by the Higher Education Funding Councils for England and Wales, the Committee of Vice-Chancellors and Principals, and the Standing Conference of Principals.