Businesses in the North of England and Midlands are still far less likely to make an R&D tax credit claim compared to their peers in the South of England, according to HMRC data.
R&D tax specialists Made.Simplr believe that this issue needs addressing to ensure the UK enjoys a swifter and more equal economic recovery.
HMRC’s R&D tax credit report for the last year suggests that most claims for this generous tax relief are still being made by business with a registered office in London, the South East or the East of England.
While Made.Simplr says that figures are slightly skewed by the fact that the data is based on where a business’s registered offices are located, rather than were the R&D took place, they still feel that there is significant potential in other parts of the UK to make a higher number of claims.
“This is a historic trend that is repeated year in and year out in HMRC’s R&D tax credit data,” said Dimitris Vassiliadis, Marketing and Business Development Director at Made.Simplr.
“While it is clear that the method for recording claims does complicate matters, there are clearly fewer claims being made in the North and other parts of the UK, like the Midlands, which is difficult to explain.”
The firm believes that a lack of understanding of the R&D tax credit system or limited access to advice may be an issue for some businesses.
Dimitris said: “The South contains a higher concentration of firms offering advice on R&D than many other parts of the UK, but we know that there are still many fantastic accountancy firms out there in the North and the Midlands working hard to provide advice and support to their clients.
“Unfortunately, it may be that many SMEs in the UK simply aren’t aware of what is on offer or they do not consider themselves suitable for the scheme.”
Made.Simplr says that potentially thousands of claims may be being missed as a result, preventing innovative businesses from a wide range of sectors from claiming millions of pounds of tax relief.
For example, preliminary data shows that £5.3 billion of R&D tax relief support has been claimed for 2018-19, corresponding to £35.3 billion of R&D expenditure – a further increase in the tax relief claimed on the previous years.
Made.Simplr believes the cloud-based technology that it has developed may be the solution, as it is able to pull data from existing sources, such as online accounting platforms to produce HMRC-ready R&D claims using the latest automation.
Dimitris added: “Now is the perfect time for accountancy firms to invest in technology, such as our own platform, to help automate the claims process.
“This can help to reduce man-hours, expand their capacity to provide advice to more clients and significantly reduce the costs and burden of making a claim.
“More must be done to help businesses across the UK access this vital tax relief, especially during difficult times such as these.”