Companies missing R&D tax savings boat
NORTH West companies are losing out on millions of pounds of research and development tax savings every year compared to their counterparts across the rest of the UK, according to R&D tax relief specialist Jumpstart.
Despite an increase of 37% year on year in the total R&D tax credits claimed in 2014-2015, analysis of the latest HMRC figures for FYE 2015 shows that North West companies accounted for just 9.9% of total claims and a mere 5.9% of the total tax benefits claimed.
Russell McGrath, client engagement manager for Jumpstart in the North West, said: “Of the 22,445 claims across the UK totalling £2.45b in tax benefits, only 2,200 claims came from companies in the North West and resulted in just £130m back.”
Of the 2,200 North West claims, 1,865 were from the SME R&D Scheme and the remainder were claimed under schemes for large companies.
London and the South East of England made the highest number of claims in the year. While London companies accounted for 19.1% of all claims and 32.7% of the total tax relief claimed, the South East of England accounted for 17.9% of claims and 18.5% of the total claimed.
The figures show a concentration of claims in the ‘Manufacturing’ [30.5% of claims and 35.5% of total claimed]; ‘Professional, Scientific & Technical’ [19.5% of claims and 24.2% of total claimed]; and ‘Information & Communication’ [24.8% of claims and 17.7% of total claimed] sectors across the UK.
McGrath continued: “Whilst uptake of the UK government’s R&D tax relief scheme is increasing across the UK as a whole and is very healthy in certain regions, companies in the North West are clearly not reaping the full benefits of the scheme.
“Furthermore, local companies could be under claiming or over claiming because their technical project activities and expenditures are not being accurately interpreted against legislation. As well as the introduction of increased scrutiny over such claims by HMRC, the process of claiming is very much a technical assessment, so it is important that companies instruct a specialist advisor to handle this for them.
“There is huge scope for a much more focused uptake by companies in the North West. I would urge firms here to get in touch with Jumpstart or their advisors to find out more about how they can make significant tax savings through R&D tax credits if they are making a profit or get a Cash Credit if they are loss making.”
Since its inception, Jumpstart has helped its clients recover almost £80m in R&D tax relief and has identified over £404m in eligible R&D expenditure.