Accountants at PwC have urged Research & Development (R&D) leaders across industry to take the credit for their work and claim from the £1bn pot for R&D tax credits.
The firm has said that it is vital for firms to feed into new consultation with the government into how R&D credits are granted within the new scheme, which is due to become legislation from April 2013.
PwC estimates there are over 2,000 large firms applying for the credits each year, but claims are almost always handled by the tax teams in the businesses instead of those in R&D. R&D and Patent Box partner at PwC, Diarmuid MacDougall, said: “Change is afoot to help the R&D leaders apply for and secure the cash directly so they can spend it on developing the products.”
Large firms in the UK (500 plus employees) spend around £10bn on R&D each year and PwC estimates that the change to the new credit scheme could encourage businesses to spend an extra £700m in developing new technology and products, which could create up to 30,000 new jobs.
Around £700m of a £1bn pot is available for large firms, and from April 2013, the £700m will be given as a credit directly against the cost of R&D, like a grant, regardless of whether the firm pays corporation tax or not. If the company has tax losses the credit will still be payable.
R&D and tax partner at PwC, Diarmuid MacDougall, explained: “This is no longer a tax issue. It is about allowing British manufacturers to literally take the credit for the work they are doing. If you are responsible for R&D or product development, it is your budget that will be affected by the new R&D credit and the design of the scheme is yours to shape.”
The Chancellor George Osborne made a commitment in the 2011 Autumn Statement to introduce an “Above the Line” (ATL) credit in 2013 to encourage R&D activity at larger companies.
Companies wishing to take part in the consultation have until the 29 June 2012 to do so using the details in this link www.hm-treasury.gov.uk/consult_above_line_credit_rd.htm