Member Article

Yorkshire businesses may be missing out on generous tax breaks

Leeds accountancy firm, Baker Tilly, has analysed the latest figures from HMRC on tax breaks for research and development and warned that businesses in Yorkshire may be missing out on generous allowances as the report has showed that the region recorded a lower than average number of claims.

The figures for the financial year ending 2012 show that businesses registered in Yorkshire only made 840 claims for R&D tax credits totalling £38m - just a fraction of the 12,535 claims submitted by UK businesses for relief totalling £1.2 billion.

The averages across all regions are 964 claims and over £90 million secured.

R&D tax credits are a tax relief designed to encourage greater R&D spending and innovation. They were first introduced in 2000. Since then, the available tax breaks have become more generous and HMRC has expanded the way it interprets and applies the rules in order to provide greater stimulus for innovation in the economy.

While the perception might be that R&D tax relief is for the manufacturing or science and tech sectors, any eligible company can deduct up to 225% of qualifying expenditure when calculating their profit for tax purposes. This may include, for example, investments in process improvements or new software.

Stuart McKinnon, Baker Tilly tax partner, said: “There are likely to be many firms who are simply unaware that they qualify for this type of tax relief. Claims can even be backdated for up to two years, so for businesses in the region facing cash flow problems, a tax refund for R&D expenditure can be a lifeline.”

This was posted in Bdaily's Members' News section by David Gatehouse .