NORTHERN Ireland continues to be the UK region with the lowest numbers of small businesses making claims for R&D tax credits, according to HMRC data.
Despite a recent period of impressive innovation, only 1,400 claims were made from companies in the north in the 2018/19 tax year, with a total of £70 million being paid, lagging behind all other UK regions.
The figures come as Belfast business advisory firm Grant Thornton says it has helped SMEs recoup more than £10m of R&D tax relief in the past 18 months.
And it says that figure is expected to increase significantly throughout 2021 as companies explore new ways to improve cash flow as the economy emerges from restrictions.
The money is reclaimed through a government scheme that allows companies to reduce their tax bill or claim payable cash credits on the proportion of their expenditure incurred on qualifying R&D activities.
Peter Legge, tax partner at Grant Thornton in Belfast, said: “Working with clients in industries as diverse as construction, manufacturing, technology, engineering and pharmaceuticals, we are helping them to release money that can then be invested in other areas.”
Tax credits for R&D were first introduced for SMEs in 2000, with a scheme for larger companies following two years later.
With many businesses sustaining major declines in turnover due to Covid, many have adapted their services or introduced innovations enabling them to keep trading, diversified into new production lines or brought forward automation plans.
Peter said companies embarking on such programmes could avail of tax reliefs which will significantly improve cash flow.
He said: “In this time of uncertainty, R&D tax credits and otherreliefs could be an invaluable source of funding for many businesses to reduce tax liabilities and generate funds.
“We've worked with clients throughout the pandemic who have typically sought to diversify and de-risk their business through development of innovative new products or sought to drive increased efficiency.
“Typically, projects that qualify for R&D tax relief are those that seek to advance knowledge in any given industry, with a focus towards overcoming issues that enable the improvement of products and processes.”
Successful claimants include Magherafelt-based blinds manufacturer Bloc Blinds, whose finance director Ciara McGonnell-Cushnahan said: “Operating in a highly competitive industry, innovation is key to staying ahead in the market and continuing to grow.
“We constantly seek to invest in new ways of working, and R&D is an important driver for us to create market-leading products such as the Bloc Wand, which is providing a child safe alternative to blind cords.”
