Member Article

Businesses Urged To Claim Research And Development Relief

SMEs are failing to claim tax relief when they invest in research and development (R&D) projects, according to leading accountancy firm BHP Chartered Accountants, which says huge numbers of Yorkshire businesses are entitled to claim cash back from HMRC.

R&D tax credits are available to businesses across all industries investing in a vast range of projects including patents, new manufacturing processes, environmental improvements, software development, new product design and the development of existing products.

The tax credits were first introduced in 2000, exclusively for SMEs and in recent years the rates have increased significantly. In April 2013, the Research & Development Enhanced Credit (RDEC) scheme was also introduced for large companies.

However, figures from HMRC reveal that although R&D tax relief claims are increasing, with 15,820 companies claiming £1.36bn in 2012/13, businesses in Yorkshire and Humberside accounted for just 6.7% of the claims made.

Chris Humphreys, Tax Partner at BHP Chartered Accountants, explains: “The average R&D claim for an SME is approximately £46,000, so it’s worth taking seriously, but the reality is there are millions of pounds going unclaimed every year. This is largely because businesses are unaware of the huge remit and vast range of business activities that R&D covers.

“These tax credits mean SMEs are entitled to claim up to 33.35% of their R&D spend from HMRC, either as a cash payment or by reducing their tax liability as part of the Government’s commitment to promoting innovation in the UK’s economy. Plus, the RDEC scheme, which is now in its third year, means large companies can also claim R&D relief, albeit at a lower rate than SMEs.”

Chris continues: “In recent months we’ve successfully handled claims across all industries for the costs of staff working on R&D projects, expenses relating to materials and equipment as well as costs for subcontractors that have assisted with such projects. Even R&D projects that have been unsuccessful are still eligible for the relief.

“We would therefore urge any businesses to consider the types of investments they have made in recent years, or are currently making, because in many cases they will be entitled to R&D relief without even realising it. It also opens doors for any companies that have been delaying possible R&D projects due to cost constraints.

“However, HMRC carefully reviews all the claims it receives so it’s important to ensure the claim is accurate and meets all the necessary criteria. Many businesses will require expert advice on this from an R&D tax specialist, who will usually be able to confirm during a telephone consultation that a claim can be made.”

This was posted in Bdaily's Members' News section by Steven Wright .