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Research and development could lead to significant tax savings

13th August 2014 Print

Leicester businesses currently investing in product development could be missing out on significant tax savings, according to Newby Castleman Chartered Accountants.

As only 15% of eligible companies have so far accessed the HMRC’s Research and Development Relief scheme, which was introduced in 2000, the city-based accountants are advising local companies to find out if they are eligible for the tax credit.

Through the scheme, companies are able to claim tax back on research and development work that has taken place over the last two years.

David Adams, Partner at Newby Castleman, comments: “Companies could make significant tax savings if they are eligible for Research and Development tax credits, which have been devised to encourage investment in developing new technologies and products.

While many of the companies currently claiming the tax credits are related to science, technology or IT industries, there are plenty in other industries that are currently overlooking the scheme.

Food production and agriculture are just two examples of industries in which businesses could potentially qualify for the scheme, as it applies to those that are investing time and money in developing new products or technology, as well as those working to make a product more efficient, more environmentally-friendly or to reduce its cost.”

The number of Research and Development Relief claimants has risen significantly over the last 14 years, from 1,900 applications in the financial year ending 2001 to 8,720 claims made in the financial year ending 2012.

Research from HMRC has found that every year around 30% of claims are made by companies making a Research and Development tax credit claim for the first time.

David adds: “We don’t want companies to be put off from making a claim because they think it is a complex process, because it is actually simpler than many believe and as only 8 – 12% of claims are rejected, there is a high chance that a claim will be upheld.

As companies are able to claim back tax on research and development projects that have taken place over the last two years, it is well worth investing time in completing and submitting an application.”

For expert advice on Research and Development Relief, please contact our Leicester office on 0116 254 9262.

Newby Castleman is one of the UK’s leading independent accountancy practices offering a range of specialist financial services, business and tax advice for individuals and businesses. Its head office can be found on Regent Road, Leicester and a branch office is located in Forest Road, Loughborough. To find out more about its full portfolio of services, visit