UK Offers Substantial R&D Tax Breaks: Consultants

By George Backwell
Friday, July 11, 2014
Technology abstract: File image

Accounting and consulting network Moore Stephens inform that as part of the UK government’s continuing aim to attract new companies to the UK to create growth and jobs, significant changes have been made to the tax rules over the last few years to encourage research and development (R&D) activities and valuable corporation tax reliefs are available to companies undertaking such activities. Extracts from this notification follow:

It is often the case that companies incorrectly view the R&D tax reliefs as only being available to ‘traditional’ R&D industries, such as pharmaceuticals and medicine. However, R&D relief is not restricted to particular industries. It is available to all companies provided the activities undertaken are qualifying R&D activities.

Qualifying R&D activities

To qualify for R&D tax relief, the company’s activities must fall to be accounted for as R&D under generally accepted accounting standards. The tests for identifying eligible R&D activity are found in the guidelines issued by the Department for Business Innovation and Skills.

The guidelines state that to make a claim for R&D relief a company must be able to demonstrate that the activities it is carrying out relate to a technological or scientific uncertainty and the activities seek to achieve an advance in overall knowledge or capability (meaning the activity cannot not be for the benefit of the company alone). Projects can include the improvement of existing products or methods, or the creation of new ones.

A claim for R&D tax relief can only be made where there is sufficient evidence to prove the activities undertaken and the costs incurred. Accounting systems must therefore be set up to ensure that the correct records are kept and R&D expenditure is easily identifiable. To achieve this the finance department must communicate with the department undertaking the R&D activities so that qualifying activities are properly identified and the necessary supporting information is captured.

Relief for SMEs
The effect of R&D relief is that a small or medium sized company (SME) may claim a deduction equivalent to 225% of the qualifying R&D expenditure against its taxable profits. Qualifying expenditure includes staff costs (including national insurance contributions and pension contributions), materials, utilities, software, subcontractor costs and externally provided workers. For example, if an SME incurs qualifying R&D costs of £10,000, the company can claim a tax deduction of £22,500 for those costs.

In addition, where the enhanced deduction results in the company making a loss, the loss can be surrendered for a tax credit which is payable to the company by HM Revenue and Customs. The tax credit is calculated at 14.5% of the loss surrendered and there are no restrictions on this credit, the company may spend it however it chooses. These additional funds can be particularly helpful for companies starting-up and the tax credits are not taxable.
Further information is available in our factsheet here.

Relief for large companies

Any company that does not meet the definition of an SME will be a large company for the purposes of R&D relief. The super deduction of 225% is not available to large companies, neither is the payable credit. However, there is an enhanced deduction of 130% available.

Summary

The R&D relief can prove valuable for companies of any size and should always be kept in mind by any company developing new products or ideas. It is essential that detailed records are kept to support any R&D expenditure and the basis for any apportionment of expenses between activities.

Source: Moore Stephens

http://www.moorestephens.co.uk

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

QinetiQ Signs Contract with ASV

QinetiQ, as part of a new Marine Surface Target Service, has signed a contract with Autonomous Surface Vehicles (ASV) for the supply and operational support of autonomous surface target vessels.

GTT Wins DSME Order for 9 More Icebreaking LNGCs

Gaztransport & Technigaz (GTT), a designer of membrane containment systems for the maritime transportation and storage of Liquefied Natural Gas (LNG), announced

Bollinger to Build 6 More FRCs for the USCG

Bollinger Shipyards, Inc., Lockport, Louisiana, announced the award of six additional USCG Sentinel Class Fast Response Cutters (FRCs). The U. S. Coast Guard

Technology

ABS, MPA to Collaborate on Maritime R&D

ABS and the Maritime and Port Authority of Singapore (MPA) signed a memorandum of understanding (MOU) today to promote maritime research and development (R&D) and innovation.

GTT Wins DSME Order for 9 More Icebreaking LNGCs

Gaztransport & Technigaz (GTT), a designer of membrane containment systems for the maritime transportation and storage of Liquefied Natural Gas (LNG), announced

Maritime NZ Oil Spill Response Review: Submissions

Maritime New Zealand (MNZ) says it invites submissions on its draft updated New Zealand Marine Oil Spill Response Strategy 2014 (the draft Strategy). The draft Strategy, (available at http://bit.

Finance

House Subcommittee Hearing Highlights “Dismal State” of U.S. Icebreaking Capability

At the July 23, 2014, hearing of the House Subcommittee on Coast Guard and Maritime Transportation on “Implementing U.S. Policy in the Arctic” the committee chairman, Rep.

Thome Is the First to Sign up to IMPA Act

Leading integrated ship management service provider Thome Ship Management has become the first ship management company to join IMPA ACT, the responsible supply chain management initiative,

Legislation Grants Funding for EU's EMSA

EU Council Adopts Regulation on EMSA Funding The European Union Council adopted a regulation yesterday to finance the actions of the European Maritime Safety

Government Update

House Subcommittee Hearing Highlights “Dismal State” of U.S. Icebreaking Capability

At the July 23, 2014, hearing of the House Subcommittee on Coast Guard and Maritime Transportation on “Implementing U.S. Policy in the Arctic” the committee chairman, Rep.

Iraqi Kurdish Oil Nears US Port Despite Concern in Washington

A tanker carrying crude oil from Iraqi Kurdistan is just two days away from arriving at a U.S. port, according to ship tracking satellites, despite Washington's

China Issues New Rules on US DDG Imports

China's Import Inspection Authority, AQSIQ, is now requiring U.S. distiller's dried grains imports to be officially certified free of the MIR 162 GMO trait, the U.

Consulting

Nigerian Piracy Threatens UK Interests: New Report

The UK economy is heavily exposed to lawlessness off the coast of Nigeria, a new report published today by the UK Chamber of Shipping says. The report found that almost all of the UK’s annual £6.

Containership Consortia Set for Further Expansion: Analyst

The formation of 2M is only the conclusion of the latest round of mega-alliance negotiations. Much more lies ahead, considers Drewry Maritime Research in their latest 'Container Insight' analysis,

Giant Vessel to Change Offshore Decommissioning Game: Analyst

The new Allseas vessel, 'Pieter Schelte', is able to replace the previous slower method of removing topsides piece by piece with one lift, meaning a decommissioning

 
 
Maritime Standards Navigation Offshore Oil Pod Propulsion Port Authority Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1231 sec (8 req/sec)