Don't miss out on R&D tax breaks, Midland companies warned

Nov 20 2008 by Jon Griffin, Birmingham Mail

MIDLAND companies have been warned they could be missing out on valuable research and development tax breaks – because they think they don’t qualify.

The tax team at accountants and business advisers Horwath Clark Whitehill in the Midlands say that since August 1 more companies now qualify for the enhanced relief available to Small and Medium Enterprises (SMEs).

Tax director Paul Edwards said: “There is common misconception that R&D tax relief is only for high-flying, blue-sky research companies.”

Companies that are engaged in R&D activities may qualify for enhanced or accelerated tax relief and, in somecases, a tax repayment for the costs they incur on qualifying R&D, and many are missing out, said Mr Edwards.

“For expenditure incurred sinceAugust 1 this year, an SME is a company that alone or together with linked or partner organisations has less than 500 employees and either turnover below €100 million or gross assets below €86 million – quite a sizeable entity and one that takes in the vast majority of Midlands companies that could qualify.”

From August 1, 2008, the enhanced R&D relief for SMEs increased to175 per cent of qualifying expenditure (previously 150 per cent; with the SME limits being less than 250 employees, turnover less than €50 million and gross assets less than €43 million).

“But whether you qualify under the SME or the ‘large company’ rules, there must be a minimum of €10,000 per annum R&D expenditure – so most projects should be covered,” said Mr Edwards.

“With pressure on cashflow and costs across the board, it is vital the companies do not miss out on this potential source of tax relief.”