HMRC recently released its latest annual Research and Development Tax Relief Statistics and they make encouraging reading, not just for the companies that have benefited directly, but for UK PLC as a whole.
By the end of 2013, more than 28,500 companies had made claims under the SME scheme since its introduction in 2000, and over 7,000 under the Large Company scheme, which launched in 2002, making a grand total of more than £9.5bn in tax relief claimed to date.
What’s even better news is that uptake is on the increase, with over a quarter more R&D tax relief claims in 2012-13 than the previous year. London has been the main beneficiary of this remarkable surge, businesses in the UK capital easily outstripping other British regions. The South East also had a disproportionate number of claims and the East of England - with just 9% of the population - claimed more than Scotland, Wales, Northern Ireland and the North East of England put together, which collectively have 20% of the population.
There was a general welcome in business circles for the reported 30% increase in SME claims, however there was undisputed joy in SME circles at the fact that the overall money given back to SMEs by HMRC rose by a staggering 39.5%, compared with the 2.5% decline in large company claim values.
Felicity Burch, Senior Economist at EEF, the manufacturers' organisation, said: "The continued strong uptake of the R&D tax credit is good news, as it supports companies seeking to bring new products and services to market. The credit is a strong feature of the UK innovation system and its position within the innovation landscape must be maintained."
Brian Williamson, MD at Jumpstart agrees that this increase in claims “demonstrates that awareness of the government's existing relief programme is significantly increasing throughout the UK. The 30% rise in the number of SME claims has to be because of a better understanding of the scheme by companies and their advisors.”
The Jumpstart team works tirelessly to promote awareness of the benefits of the UK R&D tax relief scheme. Why? Because they can make a real difference to the finances of dynamic and expanding companies. "Those companies who reap the benefits of successful R&D claims tend to go on to spend more on R&D, thus creating a virtuous circle and bringing substantial benefits to the wider UK economy," adds Brian Williamson.
Of those companies capitalising on the scheme, those in the ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors accounted for the greatest volume of claims for 2012‐13, according to HMRC’s latest stats. As Jumpstart knows though, R&D tax relief isn’t just confined to technology and manufacturing companies. Far from it! Lots of companies – in a variety of different sectors – are constantly striving to take their products and production methods above and beyond existing technology. This means that they’re doing R&D – sometimes without even realising it – and could be eligible for R&D tax relief, providing the funding for continuing advances.
Take ACS Clothing: “When Jumpstart came to visit and advised us that even the processes used by bakeries had been eligible for R&D, then we thought about all the process projects we have in ACS. We realised then that R&D is not the preserve of high-end, high-tech, pharmaceutical businesses!” says Andrew Rough, Finance Director, ACS Clothing Ltd.
"The rewards for innovation and efficiency are there for all to see” continues Williamson, "SMEs just need to make the most of them. The number of new clients we are attracting every day would suggest that UK SMEs are becoming much more aware of the game-changing advantages which can be reaped from government schemes.”
However, he is keen to stress that “companies must not become complacent when claiming R&D tax relief. It is of the utmost importance that claims are compliant, and good advice and guidance is necessary to ensure vigilance when claiming and avoid the possibility of a challenge from HMRC.”
If anyone can help businesses to benefit from the Government’s increasingly popular and lucrative R&D tax relief scheme, Jumpstart can. Since its inception, Jumpstart has helped its clients recover £44m in R&D tax relief and has identified over £225m in R&D expenditure. It has achieved a claim success rate of 98.9%.
Jim McColl OBE, Chief Executive and Chairman of Clyde Blowers Capital looks back on his experience claiming R&D tax relief with Jumpstart “My company has benefited enormously. Whether you’re £1.4m or £1.4bn, the principle is the same. If everyone made use of the services of Jumpstart, then the UK economy... would be so much healthier. I urge all to follow us, and get what is, after all, rightfully theirs.”
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