|Practice area:||Competition, Regulation and Business | Finance|
|Client:||HM Revenue & Customs|
|Published:||17 November, 2020|
|Keywords:||finance quantitative analysis SMEs|
The independent evaluation of the SME R&D tax relief scheme addressed the requirements of the evaluation plan set out in the European Commission (EC)’s decision letter and the common methodology designed by the EC for State Aid evaluations. More specifically, the evaluation had three main objectives:
- Assessing the direct impacts of the scheme, measured by the additionality effect on R&D expenditure; (that is, R&D expenditure that would not have been undertaken in the absence of the scheme).
- Understanding the indirect impacts of the scheme in terms of firm productivity, and the extent to which the scheme may distort market competition.
- Determining the ‘proportionality’ of the scheme (whether the same level of R&D expenditure can be achieved with lower relief rates), and the ‘appropriateness’ of the scheme (whether alternative forms of support would be better suited to incentivise R&D expenditure).