UK: "Creating Wealth from Knowledge" £80M of DTI Money on Offer

Sarah Staines reports on the newest Government measures to help "UK Ltd" to achieve its optimum potential and value in intellectual property rights. Three recent announcements from the Government are all pointers to the commitment this Government has to creating wealth from intellectual property in the commercial and academic sectors.

On 29th November the Government announced that they are holding a competition for grants of up to £80M to support UK businesses to fund research and development. These grants are available from the Department of Trade and Industry (DTI) for specified technology development programmes, taking "the new ideas and technologies out of the lab and into the market."

This announcement was instigated by a request for ideas and recommendations in a paper published on EU funding for research and development by the European Research and Advisory Board (EURAB), who are in the process of preparing a Framework Programme for Research and Technical Development, taking EU R&D from 2006 to 2010. The UK Government recommendations are for concentration on basic research in science, industrial research and research in support of EU policy. It also recommends setting up a European Research Council to run EU wide competitions for funding and resources. All the recommendations clearly support privately funded R&D as the Government sees businesses as being best placed to exploit the outcomes.

The DTI has set out how the Government hopes to become the "national champion of science, innovation and technology". There are 9 high-priority areas of technology in which the grant funding will be offered:

1. Design, simulation and modelling - using computers to create new systems, products and services.

2. Micro and Nanotechnology - production of materials with commercially valuable properties.

3. Pervasive computing - the creation of access to computer technology for all.

4. Waste management and minimisation - development of new technologies to reduce or eliminate the creation of waste, including recycling and recovery.

5. Smart materials - materials which are responsive to the environment and useful for commercial purposes.

6. Bio-based industrial products - particularly those reducing costs and energy consumption.

7. Energy Technologies - for sustainable development.

8. Imaging technologies - information dissemination being a priority.

9. Opto-electronics and disruptive electronic technologies - light energy.

As a result of the second announcement made in the Pre-Budget Report 2004, which reiterated the Government's commitment to research and development, it is anticipated that the preferential tax treatment for R&D and innovation (introduced in 2000) will be reviewed, particularly the extension of tax credits from SME's to mid-sized companies. There is considerable concern in the Government that the UK is falling behind the US in commerce's commitment to research and development.

R&D tax credits are a company tax relief which can reduce the company tax payable, or even provide a cash payment from the Revenue. This credit was introduced to encourage greater investment in innovation. Claims can be made for qualifying expenditure; staff employment costs, consumables. Only certain R&D is permitted to be claimed for under the scheme - that which increases knowledge or capability in a field of science or technology; that which creates a process, material or device, product or service which incorporates increase in knowledge or capability in science or technology; that which improves anything existing in the above areas; or the invention of uses or improving uses of processes and materials, devices or services in science or technology.

The pre-budget report included a third announcement for a new tax treatment (effective from 2 December 2004) for University "spin-off companies". The Government see this as the key to encouraging collaboration between academia and commerce. We await the details of this scheme and will report to you again on this matter.

To compete for the new funding and to find out about Government support for research and development visit http://www.dti.gov.uk/technologyprogramme. To review your companies potential for R&D tax credits visit http://www.inlandrevenue.gov.uk/randd/.

Pictons Solicitors LLP is regulated by the Law Society. The information in this article is correct at the time of publication in December 2004. Every care is taken in the preparation of this Article. However, no responsibility can be accepted to any person who acts on the basis of information contained in it. You are recommended to obtain specific advice in respect of individual cases.