Taxman to get software R&D tax break help

Tax inspectors are to get special training in order to make it easier for companies to claim government tax breaks for software research and development.

Chancellor of the Exchequer Gordon Brown introduced the R&D tax credits in 2002, which allow businesses to deduct their tech R&D costs from the amount they pay in tax on their profits.

But the tax breaks have suffered from poor take-up with a recent survey by Deloitte finding that only 45 per cent of eligible small and medium-sized businesses are taking advantage of the credits, and almost a quarter are unaware the incentives even exist.

HM Revenue & Customs (HMRC) is now to include a module on software R&D for its training course for tax inspectors who specialise in R&D tax credit claims.

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The first half of the three day course will be devoted to general R&D tax credits, while the second half - which will be delivered by IT trade body Intellect - will focus purely on the software industry.

Tom Wills-Sandford, deputy director general at Intellect, said the course will give tax inspectors a better understanding of software R&D procedures.

He said in a statement: "In the past, the industry's view has been that tax inspectors have not always understood the software development process and how it is related to R&D tax credits."