As companies across Britain are gripped ever harder by the credit squeeze, cash is becoming more and more important.

And thanks to a recent legislative change, the number of companies that can claim a cash rebate in the form of a research and development tax credit has been boosted substantially.

In order to claim a cash rebate, businesses must be loss-making and must qualify as Small or Medium Sized Enterprises (SMEs). In August this year, the size limits for what constitutes an SME were doubled. SMEs with taxable profits can still claim R&D tax relief but this will be in the form of reduced tax payments rather than an actual cash rebate.

Unfortunately, those businesses most in need of a helping hand, may find that they are unable to claim R&D tax credits as a result of a legal Catch 22. Under the rules, if a business is reliant on R&D tax relief in order to remain a going concern, it is precluded from claiming the benefit.

David O’Keeffe, head of the R&D tax credits team at KPMG in the UK said: “There is a cruel irony in denying a business a lifeline that could save it precisely because without such support, it will go bust. The reasoning behind these rules is that Europe does not want tax rebates propping up struggling enterprises. Companies should most definitely make sure that they claim these valuable tax benefits but if they’re really in the last chance saloon, they may be out of luck.”

Under the new rules, to qualify as an SME, a company should have fewer than 500 employees and either turnover of no more than ??100m or gross assets on the balance sheet of less than ??86m.

David O’Keeffe said: “When hunting for cash down the back of the corporate sofa, businesses really would do well to remember R&D tax credits. Many are not aware of the changes to the SME definition so don’t realise that they qualify.”

At the same time as the size limits for SMEs were doubled, the value of the R&D tax relief was raised from 150 percent of qualifying spend to 175 percent. And for large companies the value of the relief was also increased from 125 percent to 130 percent.

David O’Keeffe continued: “The new limits mean that loss-making SMEs can claim a cash credit worth around ??24 for each ??100 of qualifying R&D spend a valuable benefit, especially in the current climate.”

According to KPMG, some businesses are confused about what sort of activities can count as qualifying R&D spend. David O’Keeffe explained: “Often it’s assumed that only people in white coats working in laboratories will qualify. But this is a misconception, sectors such as banking, insurance companies, retailers and airlines also undertake qualifying R&D and we have made successful claims for many companies in these sectors.”

An R&D tax relief claim can be sizeable, depending on the amount of qualifying spend. For example, KPMG successfully claimed relief of ??900k for just one year for a ??95 million turnover SME.

Multinationals with globally mobile employees are adopting a wait and see approach to their policy for dealing with issues arising from the UK’s new tax rules for non-domiciled individuals (’non-doms’), according to a survey by KPMG in the UK.

Most of the respondents, who were HR professionals with responsibility for international assignments, said that the changes to the non-dom tax rules were unlikely to affect their assignment selection processes.

However when questioned on their likely reaction to specific issues arising from the new non-dom rules (such as whether they would be prepared to pay any additional UK tax the employee or their spouse incurs as a result of the rules) a significant proportion of the respondents appeared to have no firm policies in place.

Sarah Robert, Director, International Executive Services at KPMG in the UK; said: “It is not good policy to have no policy. No clear guidance tends to result in subjective decisions being made on issues arising with different employees. Such decisions are usually inconsistent and this often leads to employee discontent.”

Sarah Robert continued: “Despite the non-dom rules’ complexity, it is surprising that large global employers have not made greater progress in adapting to this new legislation which has been in force since 6 April this year. It may well be the case that UK-based HR professionals are struggling to get these issues discussed outside the UK or amend global policies to reflect these peculiarly British rules.”

John Griffith-Jones has been appointed as Chairman of KPMG’s EMA (Europe, Middle East, Africa and India) region.

EMA is the largest of KPMG’s three regions, comprising more than 3,000 partners and 55,000 staff in 105 countries.

John, who will also continue in his role as joint Chairman of KPMG Europe LLP, said:

“I am looking forward to the challenge of ensuring that KPMG continues to expand in a region that includes some of the world’s fastest growing economies.

“At a time when the global business environment is changing so rapidly, part of my role will be to help member firms’ clients benefit from KPMG’s increased international capability and increase their awareness of our services and insights.

“I will also continue to maintain my focus on the UK marketplace - meeting our senior clients, regulators and opinion formers.”

John joined KPMG in 1975, and held senior positions in the Audit and Corporate Finance practices. He was CEO of KPMG in the UK for four years, and was appointed Chairman and Senior Partner of KPMG’s U.K. member firm in 2006.

John takes over from Ben van der Veer, who is also retiring as the Senior Partner of KPMG’s member firm in the Netherlands. He was EMA region Chairman for three years and successfully led EMA through a period of unprecedented growth and change.

KPMG has also appointed Alan Buckle as head of its Global Advisory practice, which accounts for more than 30,000 professional partners and staff in KPMG member firms globally. Advisory works with clients to help them grow their businesses, improve their performance while enhancing governance and risk management.

Alan was previously Chief Executive of KPMG’s Advisory practice in Europe, and led KPMG Consulting in Europe, prior to its separation and sale. His clients have included global corporates and government agencies.

Alan said:

“This is a tremendously exciting time to be asked to lead KPMG’s Advisory business, with fundamental changes occurring to economies and businesses globally. The shift of industrial activity and capital flows further east and south are changing the nature of the market for advisory services - both the demand from our firms’ clients and our own internal delivery models.

“Key themes for the next few years will include unparalleled focus on the fastest growing Eastern markets; the completion of the integration of our mature Western practices; and harnessing the ever increasing power of technology.”

Tim Flynn, Chairman of KPMG International, said:

“In this time of unprecedented change for businesses globally, it is critically important that KPMG continues to advance leaders who have extensive international experience. John Griffith-Jones and Alan Buckle are outstanding professionals who are well suited to lead in this rapidly changing world, and I am proud to welcome them as they join our global executive team.”

The European Private Equity & Venture Capital Association has launched its fourth Benchmarking study of European tax and legal environments at EVCA??™s Policy Meeting in Brussels today.

The study, carried out in collaboration with KPMG??™s M&A Tax Services, assesses the tax and legal situation across 27 European countries for limited partners and fund management companies, investee companies, as well as the environment for retaining talent at both investment firms and investee companies.

The aim of the study is to enable comparisons between different regimes, to highlight industry (RC) best practice and to engender more efficient tax and legal frameworks across a more integrated internal European market.

The study found that the gap between Europe??™s most and least favourable tax and legal environments has widened considerably. This year the highest ranking country(1) achieved 1.23, compared with 1.27 in 2006, and the lowest achieved 2.40, compared with 2.35 in 2006.

France achieved the highest score in the study, followed by Ireland and Belgium, pushing the UK out of the top three countries for the first time.

The study also found:

• The total European average for 2008 is relatively unchanged at 1.85, compared with 1.84 in the previous study in 2006
• An improved environment for pension funds and insurance companies to invest in private equity and venture capital funds, with the European average rising to 1.54 and 1.33 respectively
• Fund structures remain an obstacle to international fundraising, with the overall European environment for funds slightly worsening from 1.47 to 1.51. While most EU Member States provide a suitable domestic fund structure for private equity and venture capital, some features may be sub-optimal when it comes to cross-border fundraising and investment
• The European average for company incentivisation has slightly improved from 2.36 to 2.25, although it continues to significantly lag the overall average of 1.85
• The European average for fiscal R&D incentives still lags the study??™s overall European average of 1.85 but has improved from 2.13 to 2.03 resulting from a rising awareness of the importance of R&D investment for a country??™s future growth and competitiveness
• The European average to retain talent has worsened further, with a fall from 1.89 to 2.19. This is partly due to the inclusion of several Central & Eastern Europe states with very low capital and income tax rates, which have reduced the overall European tax rate.

In terms of member states:

• France has replaced Ireland as the most attractive fiscal and legal environment for private equity in 2008, with Ireland dropping to second place
• For the first time the UK fell out of the top three countries, displaced by a rising Belgium, which has made beneficial changes to its pension fund environment and new fiscal R&D incentives
• Southern Europe countries Greece, Spain and Portugal consolidated their position in the top half of the table with continuous improvements to their tax and legal regimes. Meanwhile the environments in the Netherlands and Luxembourg deteriorated, particularly because of difficulties in retaining talent and incentivising companies
• Germany, Austria, and Italy all dropped further behind, as reform-friendly countries such as Latvia, Poland and Estonia continued to constructively reform their markets. Meanwhile Lithuania newly included in the study entered straight into the top half.

Commenting on the research, Javier Echarri, EVCA Secretary General said:

???Amid the current financial turmoil, the need for a strong private equity and venture capital market is more crucial than ever. Fiscal and legal frameworks that encourage long term business investment will help Europe??™s economies adapt to their changing economic circumstances.

???Several European countries have shown good progress in the past two years, in improving the environment for private equity capital. But those countries slipping down the rankings should take this as a wake up call that their long term economic health is in jeopardy.

???Private equity??™s proactive style of business ownership ensures that companies remain globally competitive, by embracing change and fostering innovation. Policymakers must give serious consideration to these important contributions as they review their legal and taxation initiatives.???

Methodology

The data for this research has been compiled by KPMG??™s M&A Tax Services. The research assesses each of the 27 European markets on seven criteria:

Those relating to the environment for limited partners and fund management companies ??“ pension funds, insurance companies, fund structures and tax incentives; those relating to investee companies ??“ company incentivisation and fiscal R&D incentives; and the retention of talent at fund management and investee companies.

Information on these criteria was collected across 30 different variables, with a cut-off date of 1 July 2008.

To enable comparison between different national environments, each country was allocated a score per variable, with ???1??™ representing the best possible score and ???3??™ the worst. An average was then calculated per criterion, based on the scores for the underlying variables. Finally, a composite score per country was calculated by taking the average score across all seven criteria.

Equal weight was accorded to each of the seven criteria when calculating the countries??™ composite score.

The results from previous assessments in 2006, 2004 and 2003 are also shown in the table. While broad comparisons across the years provide a meaningful picture of a country??™s evolution over time and relative to its peers, strict comparison across the years is inhibited by the development of variables and the inclusion of new countries.

Following the ratification of its new network structure PricewaterhouseCoopers today announced the following appointments to its Network Executive Team (NET). The NET, which reports to PwC’s Network Leadership Team will be responsible for key service line and functional areas across the PwC network. The appointments were announced by PricewaterhouseCoopers’ Global CEO Samuel A. DiPiazza, Jr. “Since its formation ten years ago, PricewaterhouseCoopers has experienced strong, sustained global growth. We are very fortunate to have intelligent, strong leaders who will assume the critical responsibilities of guiding our global network through the next phase of our development and help us to build on our growth over the last ten years,” Mr. DiPiazza said.

Donald A. McGovern Jr. of the U.S. has been appointed Global Leader for Assurance. Mr. McGovern succeeds Rob Ward of Australia who had served in the post since 2005 and has returned to PwC Australia. Mr. McGovern has served as Global Engagement Partner for such significant PwC clients as Cisco Systems Inc and Schlumberger Ltd. He led the PwC office in San Jose California and was prior to his new role Vice-Chair Markets, for the New York Metro region of PwC U.S.

Richard Collier-Keywood of the U.K. has been appointed Global Leader for Tax. Mr. Collier-Keywood has led the UK tax practice for the past five years. and succeeds Gene Donnelly, who had been Leader of both the Global Tax and Advisory practices and has returned to PwC U.S. Mr. Collier-Keywood will also serve as Managing Partner of PwC U.K.

Juan Pujadas of the U.S. has been appointed Leader of Global Advisory and also will continue in his role as Leader of Advisory for PwC U.S. Mr. Pujadas has spent much of his career in the financial services industry and is experienced in many markets around the world.

Moira Elms of the U.K. has been appointed Global Leader of People & Culture, Brand & Communications. Prior to this appointment Ms. Elms was the leader of Marketing and Business Development and Knowledge as well as Brand and Communications for PwC U.K. She previously was the Human Capital Leader for the U.K. firm and has served as Chairwoman of the PricewaterhouseCoopers Global Gender Advisory Council for the last two years. Ms. Elms, a tax partner, succeeds Richard Baird of the U.S., who was Leader of Global Human Capital and has returned to PwC U.S.

Edgardo Pappacena of the U.S. has assumed the newly-created role of Leader of Global Strategic Sourcing. Mr. Pappacena has been Global Leader of Strategy as well as Brand and Communications. In his new role, he will focus on the development of new business and delivery models.

Peter Wyman of the U.K. has been appointed Global Leader of Public Policy & Regulatory Matters. He succeeds Richard Kilgust, who has retired from PwC after 36 years of service. Mr. Wyman, a tax partner, has been leader of the Public Policy and Regulatory Matters for PwC U.K. and serves on the profession’s Global Public Policy Committee.

Donald Almeida of the U.S has been appointed Leader of Global Clients and Markets He succeeds Alec Jones who has returned to PwC U.K. Mr. Almeida currently serves as PwC’s Global relationship Partner for IBM. He has served as U.S leader of the Technology, InfoComm and Entertainment practice, combining industry management skills with large account-management experience.

Pierre Coll of France has been appointed Global Leader of Risk & Quality: He succeeds Michael Gagnon of the U.S. who has retired after 35 years with PwC. Mr. Coll was previously our Leader of Assurance for PwC’s continental European firms. He has worked in the US and Germany, and has served large multinational clients throughout his career.

Tony Harrington of Australia has been appointed Global Leader of Global Strategy and Network Transformation. Mr. Harrington has served for the last eight years as the Territory Senior Partner for PwC of Australia. He has been a member of the Global Extended Leadership and served on a number of high level global PwC programmes.

In addition to the new appointments, Javier Rubinstein of the U.S. will remain in his role as PwC’s Global General Counsel, and Paul Boorman of the U.K. will remain in his role as our Global Leader of Operations.

PricewaterhouseCoopers today disclosed that total gross revenues for its worldwide network of firms rose to a record US$28.2 billion for the fiscal year ended 30 June 2008, an increase of 8 per cent at constant exchange rates. At variable rates of exchange, growth was even higher at 14 per cent.

Revenues from tax operations were up 13 per cent to US$7.5 billion, reflecting strong growth across the full range of service offerings. For the first time tax and advisory accounted for more than half of PwC’s global revenues, 51 per cent, compared with 48 per cent in FY2007 and 44 per cent four years ago.