A South Yorkshire accountant is urging companies to take advantage of a tax credits scheme after helping local firms save £½m.
The credit system allows businesses to offset spending on research and development against corporation tax, so the tax bill is less.
Andy Pearcy of Gibson Booth
Andy Pearcy, tax manager at Gibson Booth, of Barnsley, said: “This is a legitimate scheme set up by the Government to encourage businesses to invest in research and development. The problem is that lots of people just don’t know it exists.
“Under the rules companies can claim 225 per cent of qualifying costs; so it is worth more than a company actually spends. This is because the government is trying to encourage companies to be innovative and keep the UK competitive in a global market.”
Among the firms to benefit is WGH Ltd of Doncaster. WGH makes theme park rides, such as roller coasters and log flumes, for attractions including Legoland and the Jorvik Viking Centre. The company, which has a turnover of around £2m, is also involved in other diverse engineering projects, including supplying the loading platform for the London Eye and replica trams to Beamish Open Air Museum.
WGH have been helped by Gibson Booth to save £30,000 a year over the last four years by offsetting money spent on developing new rides against tax.
Tony Brown, director of WGH, said: “The savings have been vital for us. It has helped keep us afloat and meant we could get through the lean times and safeguard jobs.
“It’s been important for cashflow and means we can start work on new projects without having to keep going into our overdraft.”
The R&D tax credit scheme was launched in 2000 and a recent report* revealed more than 100,000 claims had been made nationally, leading to £9.5 billion claimed in tax relief. Most of the claims are in London and the south east.
The number of small and medium-sized companies (SMEs) claiming R&D tax credits went up 30 per cent last year compared with the year before, after the Government removed a £10,000 minimum spend limit.
Andy Pearcy said: “We have helped a number of companies in Yorkshire save a total of £500,000. But if you look at the national picture this region is lagging miles behind the south east.
“Part of that is because businesses here just don’t seem to know about the system and probably think it is too complicated. But the reality is that it is fairly straightforward and lots of companies will qualify.”
The biggest sector claiming nationally is manufacturing, followed by the professional, scientific and technical sector and then information and communication.