FINANCE
DATA SHOWS PANDEMIC STIFLED R & D INVESTMENT IN THE SOUTH WEST
According to new data released by HMRC for the year ending 2021 , there will be a smaller proportion of South West companies claiming Research and Development ( R & D ) tax credits compared to previous tax years .
The amount spent on innovation by South West businesses fell by nearly a quarter to £ 1.8bn during the pandemic , with only 2.9 per cent of firms taking advantage of the tax break compared to nearly 4 per cent from the North East and 3.5 per cent in London . Only Scotland and Wales have lower proportions of their businesses claiming .
Of the R & D tax claims in the South West for the year , 90 per cent are expected to be made by SMEs ( 6,195 ), with the average claim worth £ 38,740 , compared to the national average of £ 54,000 for SMEs .
Across the UK , innovation spending that qualifies for tax relief also fell 11 per cent to £ 38.1bn in 2020 / 21 - down from £ 42.8bn in 2019 / 20 . The provisional estimated amount of total R & D tax relief support claimed for the tax year 2020 to 2021 was £ 6.6bn - down 4 per cent on the previous year .
Conversely , the provisional estimated total number of R & D tax credit claims for the tax year 2020 to 2021 was 89,300 , an increase of 7 per cent from the previous year . The increase is driven by a 7 per cent rise in the number of R & D claims within the SME scheme to 78,825 .
This means there was a 10 per cent decrease in the average value of claims in 2020 to 2021 , which could be due to the impact of the Covid-19 pandemic , which may have prevented some companies from carrying out their normal levels of R & D activity .
According to the data , the highest number of R & D claims will be made by businesses in
Can you afford a Tax Investigation ?
the Information and Communication ( 22 %), Manufacturing ( 21 %) and Professional , Scientific and Technical ( 19 %) sectors .
London and the South East of the country claim first and second spot in terms of the amount of relief offered , like the previous year .
Adam Park , Director at tax consultancy firm Zest R & D , said , “ The pandemic has setback innovation spending in the South West , but it is encouraging to see that nearly 3 per cent of businesses in the region are still claiming . The work being encouraged by the R & D tax credit is vital to innovation and the continued growth of businesses in the region , and the skilled employment opportunities they bring . "
Adam added , " Innovation expenditure
• Businesses in the region will claim £ 325m in R & D tax relief for 20 / 21 .
• 90 % of R & D Tax claims in the South West are for SMEs .
• Average SME R & D claim in the South West is worth £ 38,740 - lower than any other region .
is recovering after the pandemic , and awareness of the tax relief available will continue to encourage this in the coming years .”
ADVERTISING FEATURE
|
" In this world nothing can be said to be certain , except death and taxes " – as spoken by Benjamin Franklin . And it seems HMRC is doing its best to live up to the Founding Father ’ s words , at least as far as taxes are concerned .
After the effects of the Coronavirus Job Retention Scheme ( furlough ) and the estimated costs of the energy support package are taken into account , Government borrowing is set to tip £ 2 trillion . Nor did the ease with which businesses could claim furlough for their employees help – quite the opposite ; around 10 % of furlough claims are estimated to have been fraudulent . The tens of billions of pounds that tax investigations bring in each and every year
|
are therefore going to be crucial to recoup some of this expenditure and HMRC is aiming to prove that it ’ s up to the challenge .
Indeed , it seems there ’ s little we can do to hide from the taxman ; a 4,100-person strong taskforce has been deployed to ramp up tax investigation activities , leading to a 116 % surge in checks from the six months up to 31 March 2021 to the six months after . And £ 34.1 billion raised from tax investigations last year .
But it ’ s not just fraudsters HMRC is after . Any taxpayer who submits a tax return can be selected at random for an investigation , even if you ’ re certain that your tax affairs are in order . This can involve detailed examination of business documents and
|
assets at your premises , requests for documents and information , unannounced inspections and even investigating your accounts over the last 20 years .
Investigations are not only disruptive and intrusive , but also extremely expensive , setting you back an average of £ 3,200 in accountancy fees to be guided through the process . The kicker is that 30 % of investigations result in no additional tax being owed , so businesses pay out fees when they ’ re entirely innocent of wrongdoing .
So , can you really afford to have your tax affairs investigated ?
Fortunately , the ‘ little ’ that can be done could save you a lot . Monahans , the south
|
west ’ s largest accountancy and business advisory firm , can protect you against the financial repercussions and stress of an enquiry through its Tax Investigation Service . This annual subscription service is designed to defend you if you are selected for an enquiry and support you through the stress and hassle of the process , whilst covering all of the costs you would otherwise be subjected to . With Monahans standing shoulder to shoulder with you through a tax investigation , you ’ ll have all the protection you need .
For more information on Monahans ’ Tax Investigation Service , visit : www . monahans . co . uk / tax-investigation
|
Shoulder to shoulder
Through all of life ’ s ups and downs , we ’ re next to you every step of the way .
Find out more about our Tax Investigation Service on our website @ monahans . co . uk / tax-investigation
8 www . tbeswindonandwilts . co . uk