Taxation and Scientific Research


    IN an address recently delivered to the Association of Scientific Workers by its chairman, Mr. II. W. Western, attention was directed to the procedure in assessing income tax on commercial undertakings, whereby the position of scientific research as an aid in industry is seriously prejudiced. According to the present ruling of Inland Revenue officials, any expenditure on the scientific research incurred in connexion with a commercial or industrial undertaking is not counted as an expense which may be deducted from gross profits before assessment, but must be treated as capital expenditure and deducted from the amount available for distribution as dividend. Further, no allowance is made for depreciation of plant used in research, unless it is to be replaced an obviously inappropriate condition. While it may be perfectly logical and in accordance with the strict principles of accounting to charge expenses of scientific research to capital, it offers a too obvious inducement to business concerns, when they have to meet their shareholders in these strenuous times to economise by cutting out research. In any event, it discourages co-operation between science and industry. Mr. Western's suggested ‘Innovation Fund’, free from tax, as a remedy for the situation has one feature which would be an undoubted advantage. This is the proposal that firms should publish particulars of their expenditure for purposes of scientific research, either singly or in groups. If to this could be added, without breach of confidence or revelation of trade secrets, some indication of the aims and achievement of such research, it would increase many-fold the interest of the general public in science. Information of this nature has always proved a readily absorbed item of news.

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    Taxation and Scientific Research. Nature 134, 92 (1934).

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