BUSINESS ADVISORS HELP ENGINEERS TO APPLY FOR TAX CREDITS
With Scottish Engineering’s latest survey revealing that rising prices and skills shortages are causing concern among engineering companies, requiring them to consider innovation, product leadership and efficiency drives, Wylie & Bisset, is advising engineering companies to apply for R&D tax credits for qualifying projects.
Shehzad Ashaq (pictured above), corporate tax director at Wylie & Bisset, said that with engineering firms facing shrinking margins and rising prices of materials and gas and electricity costs, R&D tax credits could be considered as another form of funding that can improve cash flow as well as bottom-line profits.
R&D allows SMEs to deduct an extra 130% of their qualifying costs from their taxable profit. And if the company is loss making, the surrenderable loss can generate a repayable tax credit. Companies claiming under the large scheme (RDEC) can claim a tax credit of 13% of the qualifying R&D expenditure.
Mr Ashaq said: “As long as there is an element of technological or scientific uncertainty involved in getting from A to B in a business process, there is scope for a potential R&D claim.
An engineering company might be doing the same thing day-in, day-out and not realise that it is undertaking any R&D, but even the smallest change (subject to scientific or technological advancement via the resolution of uncertainties) in a business process has the potential to qualify for a claim.
The definition of what R&D is is so wide that there are many more processes that could be eligible for R&D tax credits than what people are currently claiming for.”
According to Mr Ashaq, a common misconception is that R&D tax credits are tax avoidance schemes. He advises any engineering companies that consider they may be eligible for an R&D tax credit to seek professional advice from an advisor who has advised in this area of tax relief.
He added: “R&D tax credits are not a tax avoidance scheme – it’s a tax incentive scheme. The Revenue seeks to use this scheme to incentivise business owners to progress their companies technologically and scientifically through research and development.”