Accountant urges SMEs to take advantage of Research & Development tax relief

By Anita Jaynes on January 01, 2019

Haines Watts Swindon is a firm of chartered accountants and business advisors based in Old Town. They offer audit, accountancy and tax and R&D planning services to owner-managed businesses, SMEs and UK subsidiaries across the South West.

Martin Gurney, tax expert at Haines Watts Swindon, is urging SMEs in Wiltshire to take advantage of the government’s research and development tax relief.

The Haines Watts team in Swindon have already helped several local businesses access the relief – yet very few companies are taking advantage of it. 

Martin Gurney, tax expert at Haines Watts Swindon

Recently HMRC unveiled new statistics showing there were 39,960 R&D tax credit claims for the tax year 2016 to 2017 and the majority – 34,060 – are in the SME R&D scheme. 

Martin said: “It’s good to see the majority of claims are coming from the SME sector as this is the backbone of our economy in the UK. However only a fraction of those companies which could make a relevant claim are doing so. 

“Either business owners don’t know about this scheme or they don’t consider what they are doing could qualify for this relief. However many companies are doing innovative things to grow their businesses which could qualify for this tax relief.”

Examples of activities which could attract R&D relief might be:

  • Productising a service eg. online courses to create a new income stream. 
  • Creating a new system or process to automate a part of a business allowing for growth.
  • Integrating different systems to create a competitive advantage.

“It’s important to take the proper advice,” Martin said. “Working with an accountancy practice which has the expertise and knowledge is critical before starting a new project to see if it qualifies and, if it does, to plan finances accordingly.”

“We recently helped one new client, providing supply chain software, to claim relief for the continuing development and improvement of its software.  Their previous adviser had suggested they were not able to make a claim.”

R&D tax relief is a valuable way of rewarding companies which are investing in innovation, either to create something new in their field or to improve on existing technology.

The HMRC figures also show during the tax year 2016 to 2017, £3.5bn of R&D tax relief support has been claimed, corresponding to £24.9bn of expenditure on R&D projects nationwide. 

A breakdown of the statistics show claims are concentrated in companies with a registered office in London, the East of England, or the South East. 

“These figures show clearly that the South West region is not taking full advantage of this type of tax relief. We are home to some of the most innovative companies in the country and yet the overall figures show most companies area not even exploring the possibility that they may qualify for this valuable government tax relief,” Martin said. 

Between the launch of the R&D tax credit scheme in 2000/01, and 2016/17, over 240,000 claims have been made and £21.4bn in tax relief claimed.

To contact Martin directly to discuss R&D tax relief email: mgurney@hwca.com