New research by HM Revenue & Customs (HMRC) has found that North East businesses are missing out on significant Research and Development (R&D) tax relief with very low numbers making the most of existing tax relief opportunities.
Last year, North East businesses accounted for just 930 of the 26,070 claims made, according to the new HMRC statistics. The overall sum claimed by the region amounted to £65 million, representing a worrying 2 per cent of the total claimed nationally.
While the number of claims for R&D tax credits in the region increased by 30 per cent on the previous year, vast numbers of North East businesses are still missing out.
The new report highlighted that the North East has the fourth smallest value of claims in the UK and R&D tax specialist, Haines Watts, is urging businesses across the region to grasp the valuable tax incentive in reward for their innovation.
As one of the most valuable forms of tax relief available to SMEs, R&D tax credits are intended to encourage greater spending in research and development in a bid to grow investment in innovation nationally.
Jonathan Scott, Tax Partner at Haines Watts North East, said: “Whilst uptake of R&D tax credits has increased in the North East, businesses in our region are clearly still not reaping the full rewards of the relief as the new statistics from HMRC show.
“There is a misconception that R&D tax relief is reserved for science and lab-based companies, but this couldn’t be further from the truth. In reality, any limited company that can demonstrate it is making appreciable improvements to products, processes or services can qualify for R&D tax credits.
“Unfortunately, a lack of understanding and guidance is resulting in North East businesses losing out on substantial amounts of tax relief to the tune of thousands of pounds.”
The main industries applying for R&D relief include manufacturing; professional, scientific & technical and information & communication – making a total of 73 per cent of claims and 75 per cent of the total amount claimed between 2015 and 2016.
Jonathan Scott added: “Businesses from almost all industry sectors may be eligible for R&D tax credits and we urge any company that has enhanced its products, improved efficiencies, explored new materials or solved technical problems to get in touch to discuss the opportunity to claim.”
Haines Watts North East works with a range of businesses across the UK – from architects and manufacturing companies to engineers, vets and breweries – and has helped save businesses more than £27 million in R&D tax relief.
With offices in Newcastle and Darlington, Haines Watts offers a full range of services to owner-managed businesses in the North East aiding business growth, including audit, tax and business advisory services.