The number of companies claiming tax relief for research and development has increased according to data released by HMRC but critics say not enough is being done to encourage innovation.
R&D tax credits are nothing new having first been introduced 18 years ago to help companies invest more in research and development. During the period since the tax relief was first introduced 21.4 billion has been claimed, something that the government would point to as a success particularly as the majority of companies applying belong to the SME sector.
Despite this many companies are still not aware they can claim tax relief on research and development or they will have difficulty applying due to difficulties involved in the application process.
A business must have proof that money will be spent on improving a product or service so that it is genuinely innovative. Also businesses must be classified as limited companies to be eligible to receive the tax relief. There may also be a lack of awareness that R&D expenditure can be retrospectively claimed.
With Brexit looking large on the horizon innovation in business will be the key to global competitiveness for the country if it has to operate alone outside the EU.