Leading business advisory firm Grant Thornton has helped local firms recoup more than £10 million of tax relief from ‘Research and Development’ (R&D) spending in the past 18 months.
And it is expected to increase significantly throughout 2021 as companies explore new ways to improve cashflow as the economy emerges from restrictions brought about due to the coronavirus pandemic.
The money is reclaimed through a government scheme that allows companies to reduce their tax bill or claim payable cash credits on the proportion of their expenditure incurred on qualifying R&D activities.
Peter Legge, Tax Partner at Grant Thornton in Belfast, said the surge in demand follows the building of a specialist Tax Reliefs and Incentives team at the firm, providing advice across a range of allowances for businesses.
“Companies in Northern Ireland are leading the way in R&D across a wide spectrum of sectors.
“Working with clients in industries as diverse as construction, manufacturing, technology, engineering, pharmaceuticals, and many others, we are helping them to realise significant allowances.
“By maximising the available tax reliefs and in turn reducing their tax liability, we are empowering businesses by releasing money that can then be invested in other areas.”
Tax credits for R&D were first introduced for small and medium firms in 2000 with a scheme for larger companies following two years later.
With many businesses sustaining a major decline in turnover due to the COVID-19 lockdown, many have adapted their services or introduced innovations enabling them to keep trading, diversified into new production lines or brought forward automation plans.
Peter said companies embarking on such programmes could avail of tax reliefs that will significantly improve cash flow.
“In this time of uncertainty, R&D tax credits and other tax reliefs could be an invaluable source of funding for many businesses to reduce tax liabilities and generate funds,” he said.
“We have worked with a lot of clients, throughout the pandemic, that have typically sought to diversify and de-risk their business through development of innovative new products or sought to drive increased efficiency. Such projects have ranged from those businesses which have adapted their processes to manufacture PPE to those who are investing in robots to increase automation across their workplace.
“Typically, projects that qualify for R&D tax relief are those that seek to advance knowledge in any given industry, with a focus towards overcoming issues that enable the improvement of products and processes.
“In many cases, both those in response to the coronavirus and others, what we are finding is that companies may have already gone through the claims process and believe that they have secured the highest R&D relief possible.
“When our expert team reviews their position however, we often find there are significant additional tax reliefs available which had previously been missed.”
Successful claimants have included Magherafelt-based blinds manufacturer Bloc Blinds.
The firm’s Finance Director Ciara McGonnell-Cushnahan said:
“Operating in a highly competitive industry, innovation is key to staying ahead in the market and continuing to grow.
“We constantly seek to invest in new ways of working and research and development is an important driver in Bloc to create market-leading products such as the Bloc Wand, which is providing a child safe alternative to blind cords.
“Working with Grant Thornton’s team of specialists has enabled us to fully maximise the tax reliefs available for a range of projects and ensure that we remain at the forefront of innovation in our sector.”
“Specialising in a full range of tax incentives (in addition to R&D Tax Credits) which include ‘Capital Allowances’ and reliefs such as the Patent Box, our team looks forward to saving many more millions for companies throughout 2021 and beyond.”