As the UK starts to roll out 5G technology, many businesses with highly skilled individuals working in deep tech environments are being set up in the West Midlands in what has been dubbed ‘cyber valley’.
The speed at which start-ups are entering this market, and other tech areas such as cyber security, artificial intelligence, augmented reality and robotics, appears to have outpaced the Government’s ability to support them effectively. A recent CBI report which highlights how far adrift the Government are from their R&D investment targets, also calls on the Government to make it easier for businesses to navigate innovation support, calling for a ‘one-stop shop’ to simplify access.
One such area where awareness is low is in relation to R&D tax credits. We have come across a number of fledgling software development companies who are unware that they can significantly benefit from HMRC’s R&D Corporation Tax relief. This relief aims to support companies working on innovative projects and those taking risks pursuing a new technological challenge are very likely to be eligible.
The CBI’s concerns about a dearth of Government information are certainly valid, and there are other factors which contribute to a lack of awareness about tax reliefs for start-ups.
Understandably new entrepreneurs will be mindful of costs, particularly where so much is already invested in state of the art equipment. They are likely to turn to smaller, more affordable accountancy firms or individuals for their compliance work who don’t have the expertise in-house to advise on complex tax matters. Good accountants, like the many we work with, will be aware of the potential for tax relief and refer the client on to a specialist like us. Unfortunately this is not always the case. Start-ups will also fall under the radar of the boutique R&D claims advisors and miss their marketing drives.
We support the CBI’s call for the Government to be more proactive in informing businesses about R&D tax credits. The relief provides companies with vital funds, just when it is most needed, and can be worth up to 33.35% of the company’s R&D expenditure.
In the meantime, we will continue to spread the word and support those brilliant entrepreneurs who are shaping our future.
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