From G. D. W. SMITH
The absence of tax incentives for research and development represents
only one of the problems facing high-technology companies in Britain (‘Give
industry a break’, 6 February). Another difficulty is that the Inland Revenue
makes no provision for the setting up of company ‘R&D funds’, which
would permit the profits made on one product to be carried forward for investment
in new products in future years. Tax must be paid on profits in the latest
financial year, and can only be reclaimed if there are losses in subsequent
years. If R&D funds were given the same tax-protected status as pension
funds, there would be a terrific incentive to keep money in a company,
and to use it productively. This happens in other countries, why not in
Britain?
G. D. W. Smith Eynsham, Oxfordshire
