R&D Tax Credits for Manufacturing firms
Here at R&D Tax Solutions in Manchester, we noticed an issue that is common among many businesses in the manufacturing sector: awareness of the opportunity to claim for such tax benefits is alarmingly low. In fact, according to research, 41% of manufacturing companies – including those within the food and drink industries – are missing out on the tax benefits to which they’re entitled.
With such a significant number of UK businesses missing out on the tax credit scheme set up by the UK government and HMRC, it begs the question why so many eligible companies are not making the claims to which they’re entitled. We take a look at a number of reasons why manufacturing businesses may have been missing out on their R&D Tax Credits.
Lack of awareness
Arguably the biggest reason that research and development in the manufacturing industry is going unrewarded is down to a lack of awareness. Since being introduced in 2000, the initiative has encouraged UK businesses to engage in R&D activity, and thus keep British companies at the forefront of global industry. However, since this time, businesses across a broad array of sectors have been missing out on the opportunity to make a claim for their innovative work.
Not knowing if the work qualifies
In order to be eligible for R&D tax credits, it is simply the case that you are engaging in work that is looking for an advance in science and technology; has identified and tried to overcome an uncertainty; and has been looking for a solution that could not be easily worked out by a professional in the field. It certainly isn’t the case that your research activity involves men in a laboratory with white coats!
Of course, manufacturing research and development also has to fulfil other criteria – such as that which determines what scheme you are eligible for –in order to claim.
Failed projects don’t count
This is simply untrue, but it’s understandable that many companies still consider failed projects as something with no value. In the manufacturing industry, like so many others, not every R&D project will go to plan, but that shouldn’t mean that the time and resources invested in the work should go to waste. The R&D tax scheme instead rewards the fact that an improvement or advancement was sought; regardless of the level of success, such exploits are still deemed applicable for reward.
Loss-making companies can’t claim
Much like the assumption that failed projects can’t form part of an R&D claim, it’s easy for loss-making business to assume that they won’t be in a position to be successful in an application either. The reality of the situation is far different; in fact, the amount of the benefit available is often higher than those making a profit. For SME manufacturing businesses, there is the chance to recover up to 33% of the costs spent on R&D – a significantly higher amount than the usual 26%.
If you’re a manufacturing company that is unsure about your R&D tax credit rights, or even if you’re in an alternative industry sector engaging in research and development activities, contact the experienced team at R&D Tax Solutions today for more details.
