Call for Government to increase take-up of R&D Tax Credits in Creative Industries
An independent review led by the current Chair of ITV Sir Peter Bazalgette, calls for industry and government to develop a joint plan to increase take-up of existing R&D Tax Credits in creative industries businesses. The Independent Review of the Creative Industries from the Department for Digital, Culture, Media & Sport, outlines the key recommendations for how the Creative Industries can underpin the UK’s future economic growth.
The reports states that the impressive growth of the Creative Industries is built upon a commitment to continual innovation and that research conducted by the Enterprise Research Centre for Nesta suggests that the Creative Industries are as likely as manufacturing firms to conduct in-house and external R&D and be far more likely than services firms to do so.
It recognises that whilst the Creative Industries are highly innovative, they are characterised by an abundance of SMEs, micro-businesses and individuals spread across the arts, design, cultural, digital, entertainment and media sectors. As a consequence, it states they lack the capacity for strategic, cross-sectoral R&D which, if properly recognised and supported, could propel growth.
The report identifies that the challenge for the Creative Industries is twofold: whether the creative sector is accessing and able to access an equitable level of tax relief on the R&D it undertakes under the current definitions of R&D; and whether there are barriers to Creative Industries accessing direct public investment in R&D in the same way as other sectors such as Science and Engineering.
It highlights that it is unclear based on statistics published by HMRC, which activities in the Creative Industries qualify for R&D Tax Credits, and whether the Creative Industries are missing out on support for their efforts. Government guidance to SMEs wishing to claim relief states that “science doesn’t include work in the arts, humanities and social sciences”, and the report states that with such messaging it can be difficult to ascertain what creative R&D, if any, is eligible for support.
Stakeholders in the Creative Industries, including the CIC, Nesta, AHRC and arts organisations, have argued that a redefinition of R&D is required to draw out legitimate practice in these excluded areas and encourage R&D across the Creative Industries.
In relation to R&D Tax Credits in Creative Industries, Peter Bazalgette puts forward the following recommendations:
– Industry and government should develop a joint plan to increase take-up of existing R&D Tax Credits by eligible Creative Industries businesses.
– Government should lead a new review looking at whether the definition of the R&D Tax Credit captures legitimate R&D activity within the Creative Industries.
The full report can be accessed here.