Companies in Northern Ireland are continuing to miss out on tens of thousands of pounds of Research and Development (R&D) Tax Credits, according to the latest figures released recently by HMRC.
The research shows that despite R&D Tax Credits aiming to drive innovation, Northern Ireland continues to fall behind nearly every other region in the UK, with local companies claiming a total amount of £45m in 2016, comparing unfavourably to the South-East of England which secured £570m or West Midlands claiming £230m.
Although there has been an increase of 29 per cent in the total value of Tax Credits claimed since 2015, compared to the UK average of 19 per cent, Northern Ireland still lags significantly behind other UK regions. Overall, Northern Ireland accounted for just 3 per cent of total claims and 1.6 per cent of the total tax benefits claimed.
This demonstrates that many companies in Northern Ireland continue to miss out on this valuable tax relief initiative, and according to local R&D Tax Credit specialist the Momentum Group, this is due to a number of reasons.
These include a lack of awareness and not understanding which activities and costs qualify for this purpose.
The 2016 HMRC statistics show a high percentage of claims in sectors traditionally associated with R&D Tax Credits with the manufacturing sector accounting for 28 per cent, information and communication sector 26 per cent and the professional, scientific and technical sector with 20 per cent of claims across the UK.
However, FSB Member and Momentum Group Managing Director, Tom Verner, commented: “One of the biggest issues with companies in Northern Ireland claiming their full R&D tax relief, is that many believe R&D Tax Credits are only available for traditional research sectors and ‘white coat’ industries.
"Interestingly, the statistics show that local SMEs are driving the growth in claims, accounting for 82% of Northern Ireland’s total R&D Tax Credit claims. This is positive for SMEs in Northern Ireland which need all the help they can get.
“As the only local company specialising solely in R&D Tax Credits, Momentum partners with every sector in manufacturing, from engineering, food and drink, digital and technology, and everything in between, to ensure they claim what they are legitimately entitled to.
"These claims are so important in encouraging companies to innovate and by not taking advantage of this available tax relief, Northern Ireland firms risk stagnating their growth and restricting their competitiveness which effectively holds back our overall economy. Relief can be in the form of cash, or a reduction in corporation tax liability.”
If you think your business could benefit from R&D Tax Credits, you can find out more about the scheme here.