Companies ‘miss out’ on tax credit bonanza

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A paltry five per cent of the estimated 146,000 eligible UK companies have applied for R&D Tax Credit.

Specialist accountants from MPA at Olney say companies don’t need to sport boffins’ white coats to be able to put in the average £36,000 claim.

Speaking at the first business breakfast seminar at Cranfield University Technology Park, MPA director Andy Miles said companies operating in services and manufacturing could apply. The public sector would also be eligible for the European scheme.

“It is a really important fund of money,” said Mr Miles. “But in this country only five per cent of eligible companies are claiming. In Europe the figure is 80+ per cent. The vast majority of companies we meet are eligible. In Europe you have to justify why you haven’t claimed. It’s a significant source of money that is protected until the year 2032.”

To qualify for tax credits, payable as a lump sum or against future tax liabilities, companies must pass four hurdles. There are nuances but in general the firm must have been a UK company for more than 12 months and being eligible to pay Corporation Tax, PAYE and National Insurance. The business must be developing new or existing products and spending time re-engineering business processes or manufacturing processes.

Activities currently eligible include overcoming challenges and system uncertainties, replacing materials or improving, re-engineering manufacturing and business process. This can include integrating IT systems.

HM Revenue and Customs is able to pay out claims within 42 days, Mr Miles said. And claims can be made retrospectively for two years.

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