At the time of its 2005 Budget HM Treasury announced that it would issue a discussion paper that would invite comments from the business community as to how the delivery of the credit might be improved and enhanced. This paper has now been released. It seeks views on high-level issues surrounding the R&D tax credits. It is not intended to seek policy proposals.

The paper asks for comments as to:

• whether the tax credit rules have introduced any unintended distortions, for example by favouring one type of expenditure over another, or by causing companies to alter their relationships with third parties;
• the use of scientific experts in the claims process; and whether there are other ways of ensuring the timely payment of the repayable credit to eligible companies.
• whether the emerging firms are the most effective target group for enhancements to the R&D tax credit;
• whether business can help to provide a fuller picture of the issues facing the emerging firms and the characteristics of these firms that are relevant for the R&D tax credit;
• whether it is possible to target effectively additional support to the emerging firms within the tax credit system, without compromising the basic market driven premise; and
• whether the questions raised in this paper might be better addressed with measures other than the R&D tax credit.

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