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Government coronavirus support impact on state aid

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Emma Rawson looks at how state aid can affect claims for R&D tax credits or the employment allowance, and the implications for the government’s coronavirus business support packages.

14th Apr 2020
Technical Officer Association of Tax Technicians
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Many businesses and their advisers may never have had to worry about state aid before. However, the coronavirus-related government support package and changes to how the employment allowance claimed are likely to change that. 

What is state aid?

The EU state aid rules are rather complex but, in essence, they are designed to prevent member states introducing measures which may otherwise distort competition within the single market. 

Broadly, a measure will constitute state aid if it is an advantage granted by a member state on a selective basis that could distort competition and trade in the EU. That includes grants, loans or tax breaks only available to businesses of a certain size, or to certain sectors or industries.

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Replies (6)

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By Sanjeev Nanda
15th Apr 2020 11:38

PM Boris Johnson graciously thanked the NHS for their prompt treatment of his affliction. A man of the stature as the Prime Minister, could've received the best treatment in any private hospital, but he chose to stick to public service, demonstrating its brilliance. Looking at countries like the USA where people are suffering a great deal as public services are nothing to brag about. Makes one feel proud about the structural integrity of the country like the United Kingdom.
~Sanjeev Nanda

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Replying to Sanjeev Nanda:
By SteveHa
15th Apr 2020 13:59

And then he buggered off to Chequers, his holiday home, contrary to his own Governments instructions. His right hand man, Dominic Cummings, having only just recovered from Covid-19 also chose to completely ignore Government advice, and has returned to work at No.10.

Do not try to sell me on a "benevolent government" when those making the rules are so happy to flout them.

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Replying to SteveHa:
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By meadowsaw227
20th Apr 2020 10:36

There there lie down and take your tablets !

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Jessica Pillow
By Jessica Pillow
16th Apr 2020 12:31

"The receipt of state aid can also restrict the ability to claim R&D tax relief under the SME regime. Very broadly, an R&D project will be completely excluded if notified state aid is received in respect of it, and any expenditure covered by de minimis state aid is not eligible for relief."

Does this mean that if you claim employment allowance against a director's salary, you then can't use that director's salary in an R&D claim under SME regime? Does the SME R&D tax relief received by a client also count towards rolling €200k limit over 3 years?

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By Louise G
30th Apr 2020 23:00

Will government payments for furloughed staff be counted as State Aid?

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Replying to Louise G:
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By rmillaree
09th Jun 2020 16:41

That's the elephant that has been completely ignored in this article (as far as i can see) - onto somehere where the elephant is known to exist or not.

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