British software houses are set to miss out on new tax incentives intended to stimulate R&D in the UK, according to a leading IT industry body.
Software research and development does not qualify for the tax incentives due to be rolled out by the Inland Revenue next year, depriving startups and established players of badly needed tax breaks, according to the Computer Software and Services Association (CSSA).
?On the face of it, it looks like the definition of R&D doesn?t capture application development - which many of our members or industry start ups would be involved with,? said John Higgins, director general of the CSSA, speaking at the association?s general conference in Brighton this week.
?One thing everyone recognises is that in the early stages of a start up, you need to conserve cash. So this was a welcome scheme,? said Higgins. ?But at the moment, most of the R&D by our members is outside the current treasury definition.?
Two proposals to assist R&D by small businesses were proposed by the government in March. They were introducing new tax incentives for smaller businesses? spending on R&D and new rules for the tax treatment of intellectual property.
Industry has until 31 July, 1999, to comment on the proposals. Higgins said lobbying the government to get application development covered by the rule will be one of its major goals this year.
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