The results of a new survey have illustrated to the Verastar team that thousands of technology-based UK small to medium sized enterprises (SMEs) are failing to claim tax relief.
Research and Development
In the year 2000 the government launched a new programme to provide tax relief to UK SMEs which focus their operations around technology. This is the R&D (Research and Development) Tax Credits Scheme, which is designed to reward firms that conduct self-funded R&D operations.
The programme has provided relief to companies across the UK, with 33,800 making successful claims since its introduction. R&D tax credit statistics showed that 16,610 small business owners received pay outs under the programme in 2013-2014. 81% of claims (by value) were made collectively by the scientific and technical, manufacturing, professional, and IT and communications industries.
Breakthrough Funding survey
If they’re eligible, a small company can make a claim retroactively for the previous two years, and then for each year developments continue to take place. Yet despite this provision, Talk Business Magazine reported that a new survey from Breakthrough Funding indicates that 90% of companies eligible to lodge a claim have failed to do so.
Breakthrough Funding’s CEO, Sue Nelson, spoke out on the survey’s findings at the IP EXPO at ExCel in London. The CEO said that “despite the fact this generous cash-for-innovation scheme has been around for 15 years, surprisingly few companies even know about it.”
A company can quality for the scheme if their work represents “an advance in overall knowledge or capability” and to have found a “resolution of a scientific or technological uncertainty.” Say for example, your firm had been paying staff or subcontractors to develop new software or write code. Under the scheme you could claim back 25%, on average, of the costs. You can also claim back costs incurred for materials used to construct prototypes.
Nelson explained what this means for SME owners. She said: “This might all sound very technical, but in essence it means that if your company is developing something new or different, and is overcoming teething problems or design glitches along the way, then it’s highly likely to meet the government criteria. You will have a pot of money which is due to you.”
Verastar is a leading provider of essential business services to micro SMEs, operating under the following brands: Kinex, Clear Business Water, Titan Telecom, Marble Telecom, Economy Gas and 118777 Limited. Our business model is focused on providing a spectrum of consolidated services that disrupt traditional markets and create great savings, efficiencies and value for our customers.