By Malcolm Durham, Chairman of FD Solutions
In my last blog I pointed out that the National Loan Guarantee Scheme (NLGS) is not providing any new money for small to medium sized enterprises (SMEs). So I carried on looking and have found two pots to look in:
• Technology Strategy Board and
• R&D tax credits.
Technology Strategy Board
The government has ear-marked £75m for SMEs as part of its Innovation and Research Strategy (their capitals not mine!) to support technology innovation. So is there anything new in this? Only if you look really closely:
• There is some new money for the SBRI programme, which effectively directs government procurement at UK-based SMEs. But mostly it is a bit more of what's gone before. For example, the Technology Strategy Board will extend its Launchpad initiative, following a pilot supporting the development of the Tech City cluster in London (again their initials not mine, except London!).
• The Technology Strategy Board will also plan a new innovation voucher programme (no capitals for this one but guaranteed bureaucracy anyway) to support collaboration between SMEs and external knowledge providers, such as universities and the Catapult centres - the new technology and innovation centres.
R&D tax credits
In case you didn’t know, you don’t need to employ a scientist to claim for R&D. R&D is essentially something new and can be summarised as follows (I have taken the salient parts from the HMRC website):
• An advance in overall knowledge or capability in a field, not in a company’s own state of knowledge or capability alone.
• If a particular advance in science or technology has already been made or attempted but details are not readily available (for example, if it is a trade secret), work to achieve such an advance can still be an advance in science or technology. However, the routine analysis, copying or adaptation of an existing product, process, service or material, will not be an advance in science or technology.
Claims have been successful in a variety of cases e.g. database architecture, reducing the risk of food contamination and the development of financial and manufacturing processes. Usually you claim 200% (225% from April 2012) in your corporation tax return, effectively getting 56.25% relief on the money (assuming your marginal tax rate is 25%). But if you have not made profits then you can get 25% of the amount incurred, back in CASH. Remember to include all the relevant costs such as staff costs, some sub-contractor costs, premises, utilities and computer software used directly in the R&D.
In order to get it approved we also suggest attaching a written justification to the return, a short, succinct, description of the research and development you’ve undertaken.
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