A new study suggests that British small and medium-sized enterprises (SMEs) do not fully understand Research and Development (R&D) tax relief – and that many could be missing out as a result of their own misconceptions.
New research carried out by survey company Censuswide and published in The Engineer suggests that more than a third (36 per cent) of SMEs in the engineering sector wrongly believe that R&D tax credits are restricted to specialist hi-tech companies in the science or pharmaceutical sectors.
Similarly, 35 per cent mistakenly believe that any innovative activity eligible for R&D must be successful in order for the businesses involved to make a tax relief claim.
In reality, R&D tax relief is available to most businesses that have spent time and money ‘developing a new product or process over the past three years’ – regardless of whether the innovative activity itself is successful.
When survey respondents were asked if they had spent time or money on such processes within the three-year timeframe, more than half (55 per cent) answered ‘yes’ – suggesting that many of the businesses quizzed may have missed out on significant tax reliefs.
More information about R&D tax relief and eligibility for SMEs has been published here by HM Revenue & Customs (HMRC), but businesses interested in exploring tax reliefs of any kind should always contact a specialist accountant for the best advice tailored to suit their specific circumstances.