Abstract

REFERENCE has been made in various recent reports on scientific research and industry to the financial aspect in its relation to taxation. Thus the London Chamber of Commerce report (see NATURE, March 11, p. 294) advocates that expenditure on research should be chargeable on revenue. The matter has also been taken up by the Parliamentary and Scientific Committee, which has prepared a memorandum on the subject. This memorandum urges that the Government, in considering its taxation policy, should look to the prospect of benefiting from higher income tax returns when industry, as a result of the development, through research, of new processes and products, is made more profitable. The recommendations, however, are intended to afford a basis for discussion rather than to represent rigid and final views, and in particular the Committee wishes to learn the opinion of the revenue authorities on the practical reactions of its proposals. In general, it is recommended that the law relating to the taxation of profits should be amended so as to recognize the principle that all expenses incurred on research and development are allowable as deductions from taxable profits, with the corollary that receipts from a lease or sale of discoveries should be brought into taxable profits. It is also suggested that an allowance should be made for taxation purposes of a fixed percentage of any capital assets which have been provided solely for research purposes. The Committee also supports suggestions made by representative trade bodies to the Inland Revenue Committee regarding the amortization of business premises and machinery generally. Depreciation rates should be increased so as to include obsolescence, which has become a more important factor than wear and tear.

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