R&D credits supporting the innovators
Rising numbers of SMEs are now taking advantage of support that exists to help them innovate. But many are still unaware of R&D tax credits and their impact.
According to the latest figures HMRC figures there has been a 20 per cent increase in the total number of claims for R&D tax credits.
And that rise has been driven in the main by a growing number of claims from SMEs, with the department even forced to bring in extra resources to meet the demand.
Since the scheme was launched back in 2000 more than 300,000 applications have been made, with £26.9bn claimed in tax relief. The figures are going the right way, but there is no doubt that there are small businesses that are missing out.
R&D tax credits are a form of corporation tax relief. They provide qualifying companies with very generous cash repayments.
And those companies operate in a whole range of sectors – businesses investing time and cash on improving products or services.
There is no doubt that there are small businesses that are missing out.
There are clear rules and guidelines, but the requirements of the scheme are broad. It can include creating new products, processes or services or changing or modifying existing ones.
The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.
It is not enough to say that a product is commercially innovative. You can’t claim in respect of projects to develop innovative business products or services if they don’t incorporate any advance in science or technology.
If your company is carrying out work on a subcontract basis, you could still be eligible for R&D tax relief, If you can demonstrate that you are taking the technical and financial risk.
You may be surprised to hear that your project doesn’t have to be a success in order to qualify for the relief. The fact that it failed can be used to show that its work was genuinely pioneering.
- To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.