2 minute read
R&D IN THE NORTH EAST
The North East has a proud history of ingenuity, creativity and innovation – from the birth of steam to the lightbulb. But the region still has the lowest research and development (R&D) rate in England. What can we do to change it?
“A lot of firms in this region are involved in R&D relating to the food and drink industry, technology, engineering, chemicals, virtual and augmented reality, oil and gas, etc, but they are not maximising their potential claims”, says Joanne Warren, Managing Director at Lumo Tax.
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“We work alongside firms and analyse precisely what is going on, who is contributing to the project, and how we can help the company claim exactly what they are due. In some of the cases we work on, this can amount to tens of thousands of pounds in tax credits that the company was unaware they were entitled to. “This includes salaries too - if you or any of your staff are involved in research and development (R&D), then a chunk of their salary becomes tax deductible.”
With an aim to ‘shed some light’ on your business, Lumo’s focus is on helping businesses understand and capitalise on R&D credits to find and fund their futures.
On average, businesses can claim 33p of every £1 spent on ‘innovation’, i.e. any investment into new processes or products you make, or any effort you make in enhancing your existing processes or products.
“The Government see any form of research and development as being critical for any firm – small or large – and will eventually benefit the country as a whole. They understand that for every £1 that the HMRC pays out in R&D tax credits they see a return of approximately £2.50 from future R&D projects.
“In other words, the Government sees a clear return on their investment with a scheme that helps create innovation and ultimately jobs in the UK market.” While it’s advised that an R&D expert such as Lumo is engaged at the very early stage of innovation, helping companies predict precisely what they can claim and helping them budget, they understand that their expertise may be required further down the pipeline.
“The good news is that if we arrive when a project is well and truly underway, we can actually work retrospectively and go back as far as two financial years,” added Joanne.
“We can then figure out whether the company has been missing out on any claims. The Government is very supportive of any R&D work at companies and are trying to help. Taxation is very complex and it easy for benefits to be overlooked which is where we come in.”
While Lumo has worked at a variety of companies and seen precisely what goes on, they’re also fully aware of the expense that R&D requires and how it can be a gamble.
“Companies need help; they need to be able to have the confidence to take a gamble and put time and effort – and money – into R&D.
“It’s why it is so important that they make full use of any benefits which are available to them. We make sure that they get value for money.”
