Member Article

North East companies missing out on R&D Tax Credits

According to the latest figures released by the Government, companies in the North East only claimed £25 million for spending on research and development in 2012-13.

This made the North East one of the lowest-claiming regions throughout the whole of England and Wales.

To put this into context, during the same period, companies in London claimed a whopping £420 million in R&D tax credits, and those in the South East (not including London) claimed £315 million.

The R&D Tax Credit scheme, introduced in the year 2000, allows businesses to claim back up to 32.6% of their R&D expenditure in cash.

To make a claim, a company must meet the EU definition of an SME, meaning they have less than 500 employees, annual turnover of €100 million or less, and a balance sheet of €86 million or less.

The two key criteria in determining whether a business is eligible for R&D tax credits are ‘advance’ and ‘uncertainty’.

Undoubtedly many business owners and finance departments will wonder if their company is eligible, and the answer is often yes.

If a company is taking a risk by innovating, improving or developing a process, product or service, then it can qualify for R&D tax credits.

In 2012-13, over £1.36 billion was successfully claimed across more than 19 different industries, including manufacturing, mining and quarrying, and agriculture, forestry and fishing, as well as many other more predictable industries such as Information & Communication and the Professional, Scientific & Technical sectors.

Managing Director of R&D claim specialists Innovation Plus, Micah Levy, said: “I continue to be surprised by the amount of businesses who are unaware that they are eligible to claim R&D tax credits from HMRC, and as a consequence are missing out on tens or even hundreds of thousands of pounds.

“I strongly advise these companies to act quickly, as claims dating back to 2012 must be submitted by the end of this year. With the total amount claimed rising every year, it is essential that companies in areas such as the North East do not miss out.”