National audit, tax, advisory and risk firm Crowe is calling on Chancellor Rishi Sunak to support the manufacturing sector in his Budget on Wednesday 3 March.
Johnathan Dudley, Partner and Head of Manufacturing at Crowe, said: “The government has secured billions in COVID-19 corporate debt, most of which is at least a medium term risk to the Exchequer.
“To reduce and manage this risk, it is important for manufacturers to be productive and competitive and for the original equipment manufacturer (OEM) supply chains to be secure for the former to survive and the latter to have the incentive to stay around. This requires investment and simple tax relief alone will not justify it.”
He said that investment is needed in digital equipment and production processes, skills, reshoring, exporting and more in innovation.
“Using the R&D mechanism will enhance this as a credit against COVID-19 debt to reduce gearing and increase industry viability and security of the government’s debt along the way.”
He added that if corporate tax rates were to be increased, then so must the incentive for UK business to modernise and create long term sustainability. This, in turn, will mitigate the government’s risks in terms of lending guarantees.
And he called on the government to reinstate some kind of job retention cash bonus, or even credit against debt repayment, VAT or PAYE deferral.
“Incentives and support for UK banks to open new accounts for new customers or for customers expanding overseas (exporting rather than importing or offshoring) would also be a welcome move.
“Innovation grant funds that are genuine should be put forward. ‘Competitions’ are over-subscribed and are routinely taken up by big businesses before SMEs get a chance to apply. The process, freed from the restrictions of EU red tape, needs to be simple and provide a clear route to qualification and remove uncertainty of eligibility, quickly,” he said.
Crowe is holding a post-Budget webinar on Friday 5 March at 12 noon. Attendance and participation in the event is free and registration is available by emailing nathan.sanghera@crowe.co.uk or calling 0121 543 1900 for details
