Agricultural firms urged to make more use of R&D tax credits

UK agriculture companies are making up less than one per cent of the total made nationwide in R&D tax credit savings.

Analysis of the latest HMRC figures show that the wider agriculture industry constitutes a mere 1.3 per cent of all claims made, with this making up 0.7 per cent of the total monetary amount claimed.

On a UK-wide scale, the figures show a concentration of claims (64 per cent) in the ‘Manufacturing’, ‘Professional, Scientific & Technical’ and ‘Information & Communication’ sectors, with this making up 69 per cent of the total monetary amount claimed.

At a local level, SME companies across Northern Ireland could still be losing out on a potential tax rebate of tens of thousands of pounds in R&D tax credit savings every year compared to their counterparts across the rest of the UK.

That’s the message according to Bangor-based specialist R&D tax credit consultants, The Momentum Group.

The statistics show that Northern Ireland businesses across all sectors accounted for £135 million of all R&D tax credits claimed across the UK for 2019-2020.

However, this accounts for just 2.65 per cent of the total number of claims on a national level and only 1.8 per cent of the total monetary benefit claimed.

Of the 2,280 Northern Ireland claims, 2,160 were claimed by SMEs with the remainder claimed under the scheme for large companies.

Of those 2,160 SME claims – an increase of 13 per cent from the previous year – 1,980 were under the SME scheme whilst 180 were undertaken by SMEs under the large company scheme.

The average amount claimed by companies in Northern Ireland was £59,210, with the average for SMEs being £46,296. For SMEs, this represents no significant change in the monetary value of claims.

However, there has been a serious shift in how Northern Ireland’s larger companies are benefitting from the scheme.

Statistics illustrate a 33 per cent increase in the number of claims, yet the monetary value of these have significantly decreased by 25 per cent.

Tom Verner, Managing Director of The Momentum Group, commented: “Despite the one-two punch that Covid-19 and Brexit have served a number of industries and sectors over the past year, companies across Northern Ireland are increasingly making use of the R&D tax relief schemes.

“However, many companies across Northern Ireland are not aware or fully optimising the financial benefits available.

“The latest figures from HMRC show that, on a directly comparative level, Northern Ireland firms hold their own against the rest of the UK.

“With the red tape caused by Brexit and the economic downturn caused by the pandemic, it is important that innovative firms do not pass this generous initiative by.”

Once again, continuing recent trends, London and the South East of England made the highest number of claims over the course of the year, accounting for one-third (35 per cent) of all claims and nearly half (49 per cent) of the total monetary amount claimed.

Mr Verner continued: “Whilst uptake of the UK Government’s R&D tax credit schemes are increasing across the UK as a whole and is very healthy in certain regions, not all companies in Northern Ireland are reaping the full benefits of this valuable tax initiative.

“The statistics also show there is an increasing number of claims being made across nearly every sector, including those that would be considered less obvious, such as ‘Agriculture’ and ‘Mining and Quarrying’.

“Additionally, local companies could be under-claiming or over-claiming because their technical project activities and associated expenditure are not being accurately interpreted against Government legislation.

“As well as the introduction of increased scrutiny over claims by HMRC, the process of claiming is very much a technical assessment, so it is important that companies of all sizes instruct a specialist advisor to handle this for them.”

Since its inception, Momentum has helped its clients identify over £150 million in eligible R&D expenditure.