R&D Tax credits

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HMRC’s latest published data on R&D tax credit schemes shows the rate of increase in the total number of claims has more than doubled over the past year, driven largely by more claims from SMEs say Harris & Co chartered accountants Northampton as part of their accountancy services to SME"s.

Its 2011-12 annual report Research and Development Tax Credits Statistics says the number of claims was up 16.5% to 12,190. SME claims rose in number by 20% and, large company claims by 8%, while large company sub‐contractor claims decreased by 5%.

HMRC’s analysis shows that although the numbers claiming under the SME scheme are much larger than those claiming under the large company scheme, most of the relief claimed has been by large companies, because the amounts they claim are generally much larger than those claimed by SMEs.

In 2011‐12, 81% of total R&D expenditure used to claim the R&D tax credit was for support under the large company scheme. The year‐on‐year increase in R&D expenditure by companies claiming under the SME scheme was 13.9%, more than double the 6.8% increase for those claiming under the large company scheme.

The statistics show £1.2bn of tax relief support was claimed for 2011‐12 (£420m under the SME scheme and £780m under the large company scheme), representing a year on year increase of 8.6%. The figures indicate a concentration of claims in the business services and manufacturing sectors.

The total R&D expenditure was £11.9bn, with the bulk coming from those claiming under the large companies scheme at £9.7bn, compared with just over £2.2bn for those claiming under the SME scheme.

The most common way for SMEs to claim R&D tax credits was by deduction from CT liability, with 6,710 such claims in 2011‐12, as against 790 claims for a payable credit (for loss‐making companies which have no CT liability against which to set the deduction).

HMRC says that since the R&D tax credit schemes were launched in 2000‐01, nearly 85,000 claims have been made and over £8bn of relief has been claimed. More than 24,000 different companies have made claims under the SME scheme since it began in 2000‐01, and 6,300 under the large company scheme, which launched in 2002‐03. There have also been a steady but very small number of claims under the Vaccines Research Relief (VRR) scheme of around 10 per year, with support claimed less than £3m each year.

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