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 July 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

ISS Announces CEO Transition

Captain Claus Hyldager yesterday decided to step down as the Chief Executive Officer of Inchcape Shipping Services (“ISS”).    The current Chief Financial Officer,

CME Lifts Force Majeure for all Illinois River Grain Terminals

CME Group has lifted its declaration of force majeure at all Illinois River terminals that are regular for Chicago Board of Trade corn and soybean futures delivery,

FURUNO of Japan Increases Investment in ENL

ENL Group and FURUNO Electric Co. Ltd of Japan have announced that FURUNO has increased its investment into the New Zealand company to a total of 29.5%. The

Technology

Bergeron to be Keynote Speaker at SHIPPINGInsight

Scott Bergeron, CEO of the Liberian International Ship & Corporate Registry (LISCR), has agreed to serve as a keynote speaker at the SHIPPINGInsight 2015 Fleet Optimization Conference & Exhibition,

Tanker Retrofitted with Dual Fuel Engine

Caterpillar Marine informs it has begin a dual fuel engine retrofit conversion onboard the 472-foot Fure West tanker, owned by Furetank Rederi A/B. The MaK M 43

VARD SeaQ Bridge gets Lilaas touch

‘Finger-grip’ vessel control offering precise tactile feedback may seem radical for those accustomed to conventional levers, but the combination is proving a

Finance

FURUNO of Japan Increases Investment in ENL

ENL Group and FURUNO Electric Co. Ltd of Japan have announced that FURUNO has increased its investment into the New Zealand company to a total of 29.5%. The

Pressure for Australia Sub Deal Grows

Australia to spend A$65 bln on ships and subs over 20 years; PM pledges A$40 bln for domestic shipbuilders. Australia will spend A$89 billion ($65 billion) on

S.Africa Considering Ship-Based Power Generation

South Africa could deploy power barges using gas to generate electricity to help overcome chronic supply shortages, a senior government official said on Tuesday.

Government Update

Pressure for Australia Sub Deal Grows

Australia to spend A$65 bln on ships and subs over 20 years; PM pledges A$40 bln for domestic shipbuilders. Australia will spend A$89 billion ($65 billion) on

S.Africa Considering Ship-Based Power Generation

South Africa could deploy power barges using gas to generate electricity to help overcome chronic supply shortages, a senior government official said on Tuesday.

Asian Nations Call for Stop to South China Sea Land Work

Calls grow for China to halt land reclamation. Southeast Asian countries on Tuesday backed a U.S. call to halt land reclamation in the South China Sea, underlining

Consulting

Jonathan Appointed LOC Group's London MD

In line with LOC’s continual global growth and strengthening of the senior management team,  Britain has been appointed as Managing Director of the London operation.

Ross is Fleet Manager, Heidmar

Heidmar announced the promotion of Duncan Ross to Fleet Manager. Duncan joined Heidmar’s London office in 2012 as vessel manager.  Prior to joining Heidmar,

Rolls-Royce Takes Davies on Board

Rolls-Royce appointed Alan Davies as a Non-Executive Director. He will join the Board with effect from November 1, 2015 and will become a member of the Nominations and Governance Committee,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Offshore Oil Pipelines Pod Propulsion Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | 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: 0.1563 sec (6 req/sec)