Manufacturers missing out on tax credits millions
A survey of UK manufacturers, including those in the food and drink industry, found that 41% of businesses were not claiming R&D tax credits – potentially missing out on £2bn of government support each year.
Only 39% of companies surveyed felt confident they could access R&D credits or business grants, with a further 11% uncertain of their company’s eligibility.
Commenting on these findings, RSM head of manufacturing Mike Thornton said: ‘Accessing development funding is crucial to the prosperity of the sector, particularly at a time when Brexit negotiations could undermine the current EU funding streams available.
‘Perceptions surrounding funding eligibility’
“The £2bn R&D commitment from the government offers reassurance. But, as our findings highlight, there is a lot to do to change business perceptions surrounding funding eligibility.”
Thornton added that even if a manufacturer were rejected in the past, updated claim criteria or business operations meant an application could now be successful.
“It’s worth considering, or manufacturers could miss out on a potential cash injection,” said Thornton.
Innovative development of new or improved products, processes or systems developed via new methods or techniques could be eligible to claim, according to RSM.
In addition, as advanced manufacturing processes filter through the industry, the opportunities to claim could increase – highlighting the potential to unlock more cash.
Potential to unlock more cash
In May last year, tax advisory firm RD Tax Solutions urged food manufacturers to claim back R&D tax credits, after Her Majesty’s Revenue and Customs figures revealed only 1% of potentially eligible UK businesses were doing so.
“The complexity of R&D tax credits, coupled with constantly changing legislation, means that the majority of companies undertaking R&D activity in the food manufacturing industry are not making claims,” said RD Tax Solutions md Mark Tighe.
Company’s could be missing out on a tax windfall of thousands, or even tens of thousands of pounds, he explained.
“Clearly we’re not talking pocket change here. In fact, our average claim is in excess of £42,000. In some cases, the tax relief available to the claimant can extend to approximately 30% of the initial investment undertaken by a business in research and development,” added Tighe.
