According to the latest calculations HMRC actually owes a total of nearly £85billion to UK SMEs.

Over half of the three and half million SMEs in Britain qualify for R&D tax credits. But only a staggeringly low estimate of 1% actually submits a claim. There are around 1.96m SMEs leaving their money in the Treasury’s coffers, to the tune of around £84.2bn, and are owed some backdated tax relief.

What’s an R&D tax credit claim worth?

£43,000 is the amount of the average R&D tax credit claim – imagine how you could invest that in your next innovation. You can either use it to bring down your Corporation Tax bill or get it as a cash refund, depending on your circumstances. You can backdate an R&D claim for three years, two years after the tax year end you are claiming for.

Who is eligible to claim R&D tax credit rebate?

Basically, any SME that pays corporation tax and participates in ‘eligible activities’ (innovative development) is eligible to claim an R&D tax credit rebate. This includes companies that are making a loss and all R&D projects whether they were successful or not. That is just the starting point and it is quite complicated to identify your qualifying activities and costs, but there are experts like us who specialise in maximising your R&D tax credits.

The government are currently benefitting hugely from the lack of uptake for the R&D tax credit scheme. To put the £84.2bn in perspective, that is almost double the Ministry of Defence budget.

Given that the government have touted their R&D tax relief policies as a main motivator for innovation in business and a crucial part of driving the economy, its lack of use is baffling.

Why don’t more SMEs use the R&D tax credit scheme?

Broadly speaking, this problem mainly seems to be lack of advertising on the part of the government. Many businesses still don’t even know such an opportunity exists, or they have assumed that it is only for the science and tech industries. This is partly due to the wording of the scheme and partly down to a failure to educate and disseminate clear information.

Many Accountants aren’t fully up to speed with research and development scheme which often means little or no advice is passed on to the companies that qualify.

What should happen next?

The government need to invest in a widespread advertising campaign to raise awareness of the scheme’s existence. But it also needs to rectify the misconception that only science or technology based companies can apply. Successful applications are made by SME’s from all sectors, it’s about looking at what your business does through the lens of R&D tax credit regulations.

At DSM R&D Tax Credits, we help lots of business put together solid, backdated claims for R&D tax credits. You deserve to be paid the tax relief you qualify for and our experts will walk you through the process from beginning to end. We also suggest changes you could make to the management of future projects so that all the evidence for your R&D tax credit claim is gathered cumulatively, instead of at the end. You don’t have to figure it all out yourself and you are already thinking about the next innovation your rebate can fund…aren’t you?

Give us a call for a free on 0330 0539 112, no obligation chat about your R&D tax credit tax rebate claim. Or fill in our contact form below and we’ll get back to you straight away.


Jamie Smith