BUSINESS ADVISORS HELP ENGINEERS TO APPLY FOR TAX CREDITS
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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.”