By Stephen Watts
Partner
Haines Watts
STAGGERINGLY, just three per cent of eligible companies are submitting Research and Development (R&D) claims to HMRC. Based on the latest statistics from the Revenue, that could mean over 50,000 companies in Northamptonshire are missing out.
This reflects the common misconception that R&D reliefs are confined to just manufacturing plants, tech giants and research laboratories. In reality, the ideas and inspirations that move industries forward have their roots in everyday innovation, from the professionals on the ground are eligible to claim.
R&D tax credits are a tax relief designed to encourage further R&D spending, leading in turn to greater innovation and wealth creation. Essentially, they work by either reducing a company’s liability to corporation tax or, by making a payment to cover potential losses the company endured.
This innovation can be in the form of developing new systems, processes, products, materials, devices, customising software to automate a process or any changes to the way in which your business works.
In our opinion, companies are missing out for a number of reasons:
* Some companies may not be aware the scheme exists, as their tax advisers are not R&D experts
* Many companies don’t realise the work they carry out falls under the umbrella of qualifying R&D
* Others leave their claims until the last minute, which could harm their chances of success if paperwork is rushed and mistakes are made
* Numerous companies are put off by the HMRC guidelines and the preparation involved. This discourages companies who think they’ll make costly mistakes or just don’t have the time to put a case together
R&D activity is undertaken, in some form, as part of the day-to-day running of many companies in different sectors.
It’s quite possible that your business is carrying out R&D without even realising – the ‘people in white coats’ myth urgently needs to be debunked, as currently many owner managed businesses are losing out.
That said, we have seen a significant increase in local companies submitting a claim, which suggests the misconception is changing. This is great news for the local economy, as often this money is then reinvested.
For a free scoping meeting with one of our R&D specialists contact Stephen directly on 07789 961839.