There’s a pot of HMRC gold and businesses need to be dipping into says R&D specialist
The Chancellor of the Exchequer is putting £2billion in the pot for innovative businesses across the UK. Tom Verner of The Momentum Group says Northern Irish businesses need to be jumping in with both feet to take advantage of this lucrative HMRC scheme
THE Chancellor of the Exchequer Philip Hammond has announced a massive £2billion per year increase in research and development funding for UK businesses during his Autumn Statement.
Great news, right? Totally!
What this actually means is the Government is making £2billion available for companies to innovate, grow, create new jobs and add wealth – the opportunities of this tax relief are endless.
This increase, coupled government’s long-term planned commitment to their R&D tax relief initiative, should embolden Northern Ireland businesses to continue to engage and invest in innovative activity.
This news, delivered in the shadows of the aftermath of Brexit and the US election, was like a shining light of hope and encouragement for businesses who quite frankly need a confidence boost right now.
In her speech, delivered a few weeks ago, Prime Minister Theresa May said she wants to make the UK the “global go-to place for scientists, innovators and tech investors” and is hoping that the £2billion pledge will put the UK at the forefront of research and development.
As it currently stands the initiative is really working as evidenced by government research which highlights that, for each £1 spent on R&D tax credits, between £1.53 and £2.35 of additional investment in the UK was stimulated.
May described her aim “not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation”.
A further Treasury review of R&D Tax Credits is now pending to see whether the expense can be pushed further above the current £2.5billion. This, combined with aims to drop the UK corporation tax rate to 17 per cent by 2020, and Northern Ireland’s corporation tax being reduced to 12.5 per cent in 2018, is helping the economy in what many expected to be uncertain times.
The thing is though – there has always been a pot of money for the HMRC’s R&D Tax Credit scheme and businesses have been taking advantage of it. This further £2billion is a phenomenal commitment to innovation.
The latest HMRC statistics which were published a few months ago showed an increase in Northern Ireland businesses engaging with the R&D Tax Credit Scheme. A total of 610 businesses here took advantage which equated to £25million of money being poured back into companies for growth and further innovation. There were 190 more businesses successfully submitting R&D claims in 2015 than in 2014.
Although it is encouraging that 610 companies are involved in R&D for this purpose, many businesses are missing out on this generous Government mechanism to incentivise innovation.
With the pending implementation of Article 50, this post-Brexit period is a fantastic time for innovative and developing companies to apply for R&D Tax Credits.
SME’s in Northern Ireland accounted for 79 per cent of the successful claims processed, but, overall Northern Ireland still lags behind the rest of its UK counterparts.
Regional trends show that, although the majority of R&D Tax Credit applications are concentrated in the south-east of England and London, Northern Ireland still lags behind our UK counterparts.
The good news is that more companies are engaging with the R&D Tax Credit Scheme; the bad news is that we still far off where we need to be.
Northern Ireland is punching well above its weight in terms of innovation but not in claiming R&D Tax Credits. The methodology behind the R&D Tax Credit initiative is that the economic and growth across the UK is likely to come from its ability to deliver technological innovation. The pot of gold is to encourage firms to invest in developing their own innovative products and services which ultimately will make us more competitive in the global marketplace.
Northern Ireland companies need to be clambering all over this initiative so we can get our fair share of money to reinvest in our region, create new jobs, develop innovative practices and, quite frankly, take credit where credit is due.
We are very good here in Northern Ireland of keeping our heads down and cracking on with the job in hand that sometimes we forget to raise our heads above the water and look at our own businesses. It’s time now to raise our heads and take notice of this lucrative initiative. If you don’t it could cost your company hundreds of thousands of pounds.
There’s one thing I hear from companies all too often. They don’t think they are doing any research and development. This is one reason why we are falling behind the other UK regions. R&D Tax Relief is not just for the ‘white coats’. We need to get that notion out of our heads. You can be creating a new process, product or indeed service. You can be making improvements to an existing service or using science and technology to duplicate existing processes, products or services.
Northern Ireland has the potential here to be the “global go-to place for scientists, innovators and tech investors”. What we are achieving in Northern Ireland is phenomenal. There are so many businesses doing great things. But, credit where credit is due. Get your share of Mr Hammond’s pot of gold. After all, it’s there for the taking.
Tom Verner is the Managing Director of The Momentum Group in Bangor – a firm which specialises in R&D Tax Credit Relief
