Thousands of small to medium-sized technology businesses could be missing out on payments of around £50,000 from a little-known government scheme, according to a survey by Breakthrough Funding.
Nine out of ten companies who could claim under the R&D (Research and Development) Tax Credits scheme have failed to do so.
Speaking from IP EXPO at ExCeL London, Sue Nelson, CEO of Breakthrough Funding, said, “Despite the fact this generous cash-for-innovation scheme has been around for 15 years, surprisingly few companies even know about it.”
“We’ve had a 100% success rate and managed to claim back an average of almost £50,000 in cash or tax relief for every company we have worked with. It’s a fantastic incentive and payback for the UK’s innovators from a government keen to promote the country’s technology sector – it’s just a shame more companies aren’t making the most of it.”
The programme, launched for SMEs in 2000 and extended to large companies from 2002, paid out to 16,610 small business owners during 2013-2014, according to the latest R&D tax credit statistics published last month.
Since its introduction, 33,800 companies have claimed the SME relief.
The sectors that dominated claims were scientific and technical, manufacturing, professional, and IT and communications, which together made up 81% of claims by value.
The scheme rewards companies involved in self-funded Research & Development work and can be claimed by businesses in loss as well as those in the black.
To qualify, innovative projects need to be scientific and technical rather than aesthetic, to represent ‘an advance in overall knowledge or capability’ and to have found a ‘resolution of a scientific or technological uncertainty’.
Breakthrough’s Sue Nelson 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.”
If a company has been paying staff or subcontractors to develop new software or write code, then around 25% of those costs can be claimed back on average. Costs to buy materials for prototypes also qualify. Claims can be made retrospectively for the previous two years and then every year that developments continue to take place.
By far the largest number of claims are from London and the South East, but there are still thousands and thousands of eligible SMEs that are not claiming at all.
Find more details of the R&D tax credit scheme on the government website or try the simple eligibility calculator on www.breakthroughfunding.com