With just a month to go before the end of the tax year (April 5), businesses across Sussex are being urged to avoid becoming one of the thousands missing out on tax relief designed to encourage innovation.
Stuart Noakes, Partner and Head of Tax Services at Worthing and Gatwick based MHA Carpenter Box chartered accountants and tax advisers, says that small and medium sized companies are notoriously shy of claiming Research and Development tax relief - and in doing so are overlooking a possible 230% tax benefit.
"Many SMEs simply don't appreciate the scope of R&D tax relief, which provides an enhanced deduction against tax of 230%. It can even provide an actual cash refund in a loss making situation," says Stuart.
"Research and development broadly applies to work carried out to overcome a scientific or technical challenge - but many companies assume their activities wouldn't qualify or fail to appreciate the full range of expenditure that falls within its scope, including staffing costs, consumables, power, fuel, water, software and sub-contracted work."
He also points out that R&D activity leading to a patent can in the right circumstances enable profits directly attributable to the innovation to be charged at a tax rate of just 10% under the Patent Box regime, whether this be a product or process or royalties.
Says Stuart: "Likewise, there is a growing suite of special tax breaks for the creative sector - one of our region's most important growth industries - so the message to all companies is to seek advice on possible tax incentives around process or product innovation and do it sooner rather than later."
