Scottish SMEs missing out on thousands in unclaimed funding
Scottish businesses are missing out on thousands of pounds of unclaimed tax credits, according to new figures from innovation funding consultancy Leyton.
Leyton’s clients – 85% of which are SMEs – claimed an average of £78,000 in R&D tax credits last year.
Many businesses are unaware that they are eligible for this funding, which can be claimed against spending on research and development in a wide range of areas.
According to Government figures published in October 2019, only 48,635 R&D tax credit claims were made across the country in 2017-2018, of which just 2,195 were from Scotland.
This equated to £155m of R&D tax relief for Scottish firms in comparison to the corresponding £1.01bn of R&D expenditure (although due to the nature of the scheme, returns for the 2017/18 financial year could still be submitted past the cut-off date for publication).
Recent figures have shown the scale of the cashflow crisis facing businesses, with research from the Corporate Finance Network showing that up to a fifth of SMEs may run out of cash in a matter of weeks.
While many SMEs are struggling to access bank loans quickly due to red tape, HMRC is paying out R&D relief claims in record time. In light of these challenges, Scottish businesses – including those that have not claimed before - should be using every initiative available to support their cashflow, with many eligible for R&D relief based on initiatives they are already implementing.
In particular, companies that have repurposed their manufacturing lines to produce face masks, hand sanitiser and ventilators to support the Covid-19 relief efforts will be eligible to claim back money against the cost of staffing, consumables and the reworking of supply chains.
David Kent, head of Scotland, Leyton UK, said: “Thousands of Scottish businesses are missing out on crucial funding by failing to take advantage of R&D tax credits. While government schemes have been riddled with issues that have delayed access to cash, R&D tax credits can be claimed quickly. Many business owners assume that they are not eligible for R&D tax credits. In reality, they may be able to claim thousands of pounds.
“£78,000 is enough to make the difference between survival and collapse for thousands of businesses that are struggling to stay afloat during the current crisis, and businesses must explore every avenue for funding during this period.”