In times of recession and economic stagnation SMEs need as much help as they can get.
Accountants will always advise that SMEs should be looking at, and making the most of every conceivable tax break that will give their businesses a competitive advantage. Yet you may be surprised to learn that a large number of SMEs are failing to do this. A recent carried out by chartered accountants Baker Tilly found that the vast majority of the UK’s small and medium-sized enterprises (SMEs) are failing to take advantage of such tax breaks. In fact Baker Tilly found that as many as 75% of UK SMEs are currently unaware of a potentially valuable tax break – Research and Development tax credits.
So what did this latest survey say?
Well, according to Baker Tilly’s accountants just 15% of the small firms surveyed were aware of the government’s Research and Development (R&D) tax credits. The scheme, which was originally introduced in 2000-01, is arguably the centrepiece of the coalition’s plans to encourage businesses to boost investment in growth. Although the coalition government has expanded the scheme significantly few small businesses seem to be aware of it.
Baker Tilly’s official figures show that whilst smaller companies failed to take advantage of these tax breaks, large businesses are listening to their accountants’ advice and making significant savings. Baker Tilly’s figures show that large companies benefited from almost two-thirds, (65%) of the £1.2 billion R&D tax relief claimed in 2011-12. Yet in Scotland only 585 SMEs filed claims for R & D relief, and this relief was worth just £24 million. What’s even more concerning is that only 8% of the 750 SME respondents were aware of the Seed Enterprise Investment Scheme (SEIS) to assist early stage companies in raising equity funding, whilst only four per cent knew of the Patent Box measure, under which firms pay tax at lower rates on profits earned from the intellectual property they develop.
Unfortunately this lack of awareness could mean that many SMEs are missing out on significant savings according to Robert Ross, managing partner of Baker Tilly. He believes that many small businesses could benefit significantly if they were to take advantage of such tax breaks as the 225% relief from Corporation Tax on allowable R&D charges:
“Our survey supports what we already suspected that many SMEs are missing out on generous Research and Development and other tax incentives,” said Mr Ross. “The Government should do more to raise awareness of these tax breaks.”
Steven Glicher accountants are here to help your small business benefit from such tax breaks.
We can offer information and advice on Research and Development tax credits, tax planning, business structures, book keeping, business planning and growth, raising finance and VAT registration. Whatever your small business needs, speak to Steven Glicher accountants on 0161 485 8007.