Ryan specialists urge tax overhaul to boost innovation

Core Viewpoint - Senior executives at Ryan propose tax policy changes to stimulate innovation and economic growth in the UK, emphasizing the need for a shift from the current growth strategy due to declining productivity and rising inflation [1][2]. Tax Policy Suggestions - The UK government should incentivize innovation and knowledge capital through tax and policy measures, similar to strategies employed in the US, Ireland, and Singapore [2]. - A targeted tax approach could raise revenue while allowing UK companies in key sectors like AI to defer corporation tax liabilities, enabling reinvestment in workforce and commercialization [3]. VAT and Cash Flow - Introducing a flexible VAT system that allows firms in priority sectors to defer VAT payments could stabilize cash flow and encourage faster investments [3]. Modern Business Models - Changes to capital allowances and R&D rules are necessary to align existing incentives with modern business models, including expanding the 100% full expensing regime to cover patents, licenses, and software [4]. - Streamlining the R&D tax relief framework is essential, with a proposal to replace the current dual system with a single 40% credit to simplify investment incentives [5]. Cost Base Expansion - Expanding the cost base for R&D tax relief to include rent, rates, capital expenditure, and patent legal fees would better reflect the full costs of developing new products and technologies [5].