Aerospace industry failing to claim £millions in R&D grants

Many companies in the aerospace engineering industry are failing to claim the money that they are entitled to, according to an expert in Research and Development (R&D). Richard Cullum, managing partner of tax specialists R&T Consultants, believes that numerous engineering businesses are missing out the tax relief available to both SMEs and larger companies because they are unfamiliar with the latest tax and grant incentives. Changes in the April 2012 Budget increased the amount of tax deduction allowed for R&D activities from 200% to 225% relief. The changes are part of the Government's strategy to encourage the innovation and investment needed to promote economic growth across the UK. However, Cullum believes that many companies are deterred by the complexity of the process – or simply don't realise that they are eligible. “In the current economic climate, businesses need all the help that they can get,” he commented. “There is actually a substantial amount of R&D money available to companies of all sizes in areas such as aerospace engineering. However, it seems that many SMEs are failing to claim tax relief for their research and development activities believing that it doesn't apply to them - or that it is too much hassle.” The R&D Tax Credit Scheme is only applicable to limited companies and includes SMEs (with fewer than 250 employees, an annual turnover below £27 million and a balance sheet total not exceeding £20 million), as well as large companies. A range of activities qualify as R&D expenditure if the objective is to achieve an advance in science or technology. Costs can include staffing, subcontracts, consumables and software. The tax credit claim is based on a company's total payment of PAYE, NIC and NIC employers' contributions. In addition, any company making an application must have been trading for at least one year before an application can be submitted. The time limit for claiming credits is two years from the relevant Corporation Tax year and companies can back date their claims.

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