Each year around 50,000 R&D tax credit claims are made in the UK, which helps businesses to fund innovation and advancements, but accountants Davis Grant believe that many more companies could benefit.
At a time when many businesses are struggling to access finance or funding due to the economic downturn caused by the Coronavirus pandemic, the firm based in East London says that this tax relief remains underused and could assist businesses with their cash flow.
The experienced team at Davis Grant said that while there is a perception that only the most innovative businesses or projects can make use of this tax relief, the reality is that many other companies could gain from this scheme as well.
It points out that the small and medium-sized enterprises (SME) R&D tax relief scheme allows businesses to deduct an extra 130 per cent of their qualifying R&D costs from their yearly profit, as well as the normal 100 per cent deduction, to make a total 230 per cent deduction – which can equate to up to 33p for every £1 spent on R&D for some projects.
This SME scheme is open to business with fewer than 500 members of staff or turnover below €100 million turnover or €86 million gross assets.
Ben Chernoff, a Director at Davis Grant, said: “For a project to be eligible for R&D relief it must have looked for an advance in science and technology, had to or tried to overcome uncertainty and be an advance that couldn’t be easily worked out by a professional in the field, which covers a wide range of innovations and procedures conducted during the R&D process.
“While this set of criteria may seem quite strict it is amazing how many businesses out there could benefit from this relief, but many do not take advantage of it.
“At a time when some companies are struggling to access finance, this is one scheme that is worth investigating.”
Last year more than £4.3 billion was claimed via the R&D tax relief scheme and Davis Grant itself has helped their clients to claim more than £1 million recently.
Steven Sandford, another of Davis Grant’s Directors believes there are numerous businesses in London, Essex and beyond who are either unaware of R&D tax credits, or who, for whatever reason, do not believe they are eligible.
“With such a generous tax relief on offer businesses can’t afford to miss out on this opportunity and should seek advice as soon as they can,” added Steven.