EOTs: A success to build on and protect

One of the problems that advocates of the use of tax incentives to encourage economic growth face is that it can be quite hard to objectively demonstrate that a particular tax incentive is having a meaningful economic effect or one that might not have occurred anyway.

Recently the UK’s regime of supporting innovation mainly through generous research and development (R&D) tax credits has come under renewed scrutiny given its cost and concerns over fraud and the UK’s somewhat disappointing record in developing large scale UK-based successful commercial innovation businesses despite having a number of the world’s leading universities and a tax regime that has favoured start-ups.

In the absence of evidence the belief in the effectiveness of tax incentives can sometimes seem more like a religious act of faith than a hard-nosed commercial judgment.

The John Lewis model

But one area where...