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MEMBERNEWS


HMRC R&D tax report - what it means for firms


HMRC has released its 2020 annual report on R&D tax credits claimed in the UK. The report sets out the value of claims made, and the regions and industries within which companies have claimed in the past 12 months. Scott Burkinshaw (pictured), tax partner at Shorts Accountants, looks at the report’s findings.


WHICH REGIONS BENEFITTED THE MOST? The most recent statistics on R&D claims produced by HMRC indicate both the number of R&D claims and the amount claimed continues to grow. However, the majority of the relief claimed goes to companies in London and the South East. Less than £200m out of the total of £5.1bn paid in R&D tax relief in 2018/19 went to companies in Yorkshire and the Humber, with just over £200m going to companies in the East Midlands. Could more companies in our region be claiming this relief? We’d


certainly encourage all companies to ensure they have explored their entitlement to claim their share of this funding.


WHICH SECTORS HAVE BEEN CLAIMING R&D TAX CREDITS? In addition to a split in claims by geography, certain sectors also claim a significant proportion of relief. Claims by companies in manufacturing still make up the most of any


sector claiming, with about 27% of all support given under the R&D scheme going to companies in this industry. Unsurprisingly, given how much software infiltrates all aspects of life


these days, claims from the tech sectors generate the second highest number of claims, although the amount per claim is lower than in other sectors – possibly because there are lower qualifying costs in this sector, with fewer consumable costs and more sub-contracted expenditure. The professional, scientific and technical sector also benefits to a significant degree, claiming almost £1.2bn of the total relief in the year.


WHY R&D TAX CREDITS SHOULDN’T BE OVERLOOKED R&D tax credits have been a key part of the UK tax system for 20 years, with more that £33bn of relief being claimed by innovative companies in that period. The relief is extremely valuable, being worth up to almost £250 in tax saved for every £1,000 of qualifying expenditure, with loss-making companies also being able to benefit by exchanging losses for a cash payment from HMRC. If your business is already claiming R&D tax relief, then the statistics


highlight a point for you to consider – about 34% of all claims made by SMEs are for costs of less than £10,000, and more than 10,000 claims made are for costs of less than £5,000. This high number of small-value claims is surprising and not in line with


‘R&D tax credits have been a key part of the UK tax system for 20 years, with more that £33bn of relief being claimed by innovative companies in that period’


our experience of the market. Typically, we see tax savings around the £30,000 mark and upwards (derived from qualifying costs of around £120,000) and so it may be that some companies are not maximising their claims. If you feel your claim is small, it may be worth obtaining an independent


review to ensure you aren’t missing out. It’s also worth noting that, for a number of reasons, the cost of supporting the R&D credits has increased substantially from 2012/2013, increasing from circa £1bn to £5bn. Going forward, it’s not difficult to imagine HMRC shining more of a spotlight on R&D claims submitted and we’d encourage anyone seeking to claim to ensure they take expert advice.


Major expansion for executive search firm


Nottingham-based executive search recruitment firm Forsyth Barnes has moved into a new office - expanding from 350 sq ft to 5,500 sq ft in just three years. The firm was originally based in


London and managing partner Scott Parsons started up its office base in Nottingham in 2017. Forsyth Barnes, which also has a


physical presence in New York, last month announced the opening of a new workspace in Friar Lane, Nottingham. It will accommodate the firm's 30 staff and has room for another 100 people, who will be recruited in the coming months. The office boasts a multitude of facilities, including video theatre


rooms, Alexa-enabled coffee machines and projectors - as well as a basketball net, putting green and fully-stocked bar. It has demonstrated impressive


growth in the past three years - having hit a record quarter for Q3 this year - with some of the original Nottingham team now progressing into management. Scott said: “I’m delighted with


how the offices are looking. I can honestly say it is the coolest office I’ve ever worked in, probably the coolest office I’ve ever been in. The £1m commitment to our offices in Nottingham will provide the home for our continued global growth.”


10 business network December 2020/January 2021


Forsyth Barnes’ new state-of-the-art office in Friar Lane, Nottingham


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