North East firms have received just a fraction of the tax breaks due to them, accountants have warned.
Businesses across the region have been told to make sure they are not missing out on much-needed tax benefits available for those carrying out research.
Accountancy firm Baker Tilly has warned that businesses in the North East may be missing out on generous tax breaks for research and development after the latest HMRC figures showed the region recorded the lowest number of claims in England.
Regional firms only made 390 claims for R&D tax credits totalling ï¿½18m, a tiny fraction of the 12,535 claims submitted by UK businesses for relief of ï¿½1.2bn.
But with many manufacturing firms based in the North East, alongside other firms carrying out research, the figure should be much higher. Accountants say expenditure may include, for example, investments in process improvements or new software.
Stuart McKinnon, Baker Tilly tax partner in Newcastle, said: “There are likely to be many firms in the North East who are simply unaware that they qualify for this type of tax relief. Claims can even be backdated for up to two years, so for businesses in the region facing cashflow problems, a tax refund for R&D expenditure can be a lifeline.”
Last night Ross Smith, policy director at the North East Chamber of Commerce, said it was clear more had to be done to encourage firms to take advantage of the rules. He said: “There doesn’t seem a clear reason for why this is so different to other regions? The R&D tax credits are a good scheme, they can be applied to a much wider range of activities than you might think. We encourage as many of our members as possible to take a serious look at this.
“But like a lot of other schemes at the moment, it is not being promoted widely enough. It is one of those policies which is actually quite good but then is just left alone rather than being communicated well.
“It’s money available to businesses, and the more money that gets back into the hands of businesses the more that can be invested in growing the economy and growing employment opportunities.”
The figures come as it emerges half of manufacturing firms expect to invest in their business in the coming months, according to findings to a survey of almost 700 companies by the Manufacturing Advisory Service.