Tax fears alarm scientists

August 8, 1997

SCIENTISTS are being caused "considerable anxiety" by proposals that could force non-profit making research and technology organisations to pay corporation tax, writes Julia Hinde.

Liberal Democrat MP Vincent Cable said in a question to the House of Commons that "in widening his net for soft targets", there was concern among scientists that the Chancellor had his eye on "admirable" research institutions.

Science minister John Battle confirmed that the Government was looking at proposals to change tax exemptions under section 508 of the Income and Corporation Taxes Act 1988. He expected to approve new arrangements by the autumn.

Proposals published by the last government in April recommended that 75, rather than the current 50 per cent, of an organisation's work had to be scientific research for it to warrant a corporate tax exemption. The guidelines also stipulate that this research should be done in-house and that work on a one-to-one basis for a client would no longer be exempt.

Mr Battle told the Commons that the Association of Independent Research and Technology Organisations was working with Government to "ensure that genuine research is properly supported through the tax system, not priced out". John Bennett, its secretary general, said negotiations were on-going. "Our members make no profits. All surplus is ploughed back into research. It seems contradictory for a government trying to boost technology transfer to charge research associations taxes."

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