UK businesses are still missing out on thousands of pounds of unclaimed tax credits, according to new figures from Leyton, the UK’s leading innovation funding consultancy. Leyton’s clients 85% of which are SMEs, claimed an average of £78,000 in R&D tax credits last year.
Many businesses are unaware that they are eligible for this funding, which can be claimed against spending on research and development in a wide range of areas. According to Government figures published in October 2019, only 48,635 R&D tax credit claims were made in 2017-2018.
This equates to £4.3bn of R&D tax relief in comparison to the corresponding £31.3bn of R&D expenditure (although due to the nature of the scheme, returns for the 2017/18 financial year could still be submitted past the cut-off date for publication).
Recent figures have shown the scale of the cashflow crisis facing businesses. Research from the Corporate Finance Network shows that up to a fifth of SMEs may run out of cash in a matter of weeks, while the British Chamber of Commerce has revealed that just 2% of businesses that have applied for a government loan have received funding.
While SMEs are currently struggling to access loans in time, HMRC is paying out R&D relief claims in record time. In light of these challenges, businesses – including those that have not claimed before – should be using every initiative available to support their cashflow, with many eligible for R&D relief based on initiatives they are already implementing.
In particular, companies that have repurposed their manufacturing lines to produce face masks, hand sanitiser and ventilators to support the Covid-19 relief efforts will be eligible to claim back money against the cost of staffing, consumables and the reworking of supply chains.
William Garvey, Managing Director at Leyton UK said, “Thousands of businesses are missing out on crucial funding by failing to take advantage of R&D tax credits. While government schemes have been riddled with issues that have delayed access to cash, R&D tax credits can be claimed quickly. Many business owners assume that they are not eligible for R&D tax credits. In reality, they may be able to claim thousands of pounds.
“£78,000 is enough to make the difference between survival and collapse for thousands of businesses that are struggling to stay afloat during the current crisis, and businesses must explore every avenue for funding during this period.”
Leyton recently announced that it would provide free R&D tax services to companies that are repurposing to support the Covid-19 effort.