HUNDREDS of businesses in Cumbria may be due an unexpected tax relief boost, a top accountant advises today.
Paul Hornby, the managing director of JF Hornby and Co, says companies in the county have benefitted by a collective £1m this year through HMRC reliefs.
They have all used the accountancy firm to make a claim for Research and Development tax credits - and many more may be missing the opportunity.
Paul said: “The words used by HMRC put many companies off because they think they do not apply to them. However, by understanding their business and processes we can sometimes facilitate a fit within the rules.
“At Hornby’s we have seen this as a huge growth area and one which is not being tapped into. In the last 12 months alone we have claimed more than £1m in additional tax relief for clients and we anticipate that will increase significantly next year.”
Research and Development (R&D) for tax purposes takes place when a project seeks to achieve an advance in science or technology.
The tax relief applies to both profit-making companies paying corporation tax and also loss-making companies who are not.
R&D tax relief can be received as lowered corporation tax or in some cases as a payable cash credit.
Mark Telford, is the managing director of Forth Engineering in Maryport and commisioned Hornby’s to deal with his R&D. He said: “Paul took over our R&D claim as our previous accountant barely understood how it worked.
“He’s designed a system to help record our data going forward and the results have been phenomenal. His input has definitely had a significant influence on the growth of our business.”
The calculations and the exact figure a business can claim in R&D tax credits will depend on a variety of factors, such as the size of the company, its tax rate and how many of its activities are eligible. Businesses can claim R&D tax credits on expenditure that's up to three years old.
Despite the up-tempo message from Paul about the potential for companies to win big, he does have a word of warning: “Firms which target businesses in this area are catching onto the fact that companies don’t appreciate the goldmine they are potentially sitting.
“They therefore offer their advice but for a huge slice of the claim – typically 25 per cent. This is grossly overcharging the client and borders on the immoral.
“So the message is make sure you understand what you are signing up to - and if you think you may be engaged in R&D activities and up until now have not made a claim for enhanced tax relief, we would be happy to carry out a full review.”