New research based on claims for tax relief to HM Revenue and Customs has revealed that spending on research and development (R&D) by British businesses hit a record high last year of £11.9bn, a rise of eight per cent from 2011, with businesses claiming back £1.2bn in tax relief on this investment.
West Yorkshire accountancy firm Clough & Company’s figures show that there has been a similar increase in the amount of R&D tax relief claims processed in the region for its clients during 2012 and is attributing the rise to new incentives introduced by George Osborne but the firm believes many businesses are failing to take advantage of the tax relief available to them.
Clough & Company’s practice chairman Steven Gash said:
“R&D tax relief is intended to drive productivity by encouraging innovation. Extending the tax credit for R&D spending by large businesses has encouraged businesses to increase their investment in innovation on a more long-term basis.
“Companies can receive up to 225 per cent tax relief on qualifying R&D costs which don’t just cover scientific development, as R&D applies to staff costs and consumables too so its important businesses get the right advice to achieve the tax savings on offer.”
Clough & Company has recently completed R&D relief claims for two of Yorkshire’s best known manufacturing businesses, NSF Controls in Keighley and Millers Oils in Brighouse.
“NSF Controls is a leading UK manufacturer of solenoids, switches and sub assemblies.
“The company provides solutions for diverse applications and markets, from tonal control on an electric guitar to missile release control on the Tornado aircraft.
“NSF Controls also specialise in the manufacture of a range of solenoid gas valve units for pre-payment and smart meter applications.
“The company’s development team spends a huge amount of time designing and testing new products to overcome technical flaws and create some of the most innovative products on the market.
“We were able to help NSF Controls achieve a £40,000 tax saving on projects already completed and have identified further tax savings for the future.”
Millers Oils is an international blender of quality lubricants for the industrial, commercial vehicle and automotive markets and pioneered the use of nanotechnology in lubricants by initially developing low friction oils for use in motor sport.
“Millers Oils’ continued development of nanotechnology has seen its products rolled out into other markets with trials taking place for the bus and truck industry.
“The company hopes to reduce maintenance periods and improve fuel efficiency and Millers’ R&D work plays a vital role in achieving these goals.
“We have been able to help Millers Oils receive significant tax relief on its ground breaking innovations and are keen to make other businesses in the region aware of how they can qualify for the tax relief.
“In addition, businesses don’t need to be designing parts for next generation fighter jets to qualify for R&D, as relief is available for most activities that bring about improvement or changes to products or processes.
“It’s also worth checking if the products or processes a business has developed can be patented or carry existing patents as the new “Patent Box” relief could further reduce tax payable on profits generated from any product or process in which the patented product or process is used.
“As an example, Patent Box relief would be available on the profits made from an entire motor vehicle if just a switch carrying a patent was used in the manufacturing process.”