Firms warned they may be missing out on tax incentives

Neil Sevitt, Partner at Baker Tilly
Neil Sevitt, Partner at Baker Tilly
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Low awareness of tax incentives among small and medium-sized businesses could hamper their prospects for growth, according to a new survey by Baker Tilly.

It said that Yorkshire firms account for just seven per cent of UK claims for SME research and development tax relief.

The accountancy firm said only 15 per cent of the 750 SMEs surveyed knew about research and development tax credits, despite the Government launching the scheme nearly 14 years ago.

Other tax incentive schemes also appeared to have a low profile, with only eight per cent knowing about the Seed Enterprise Investment Scheme and four per cent aware of the Patent Box.

Research and development tax credits were introduced to encourage greater investment among UK firms. Tax breaks have become more generous and the Government has expanded the rules to stimulate innovation.

The latest figures show that most of the research and development tax relief claimed in 2011-12 was by large companies (£780m) rather than SMEs (£420m).

SMEs in Yorkshire and the Humber only filed 695 claims for R&D tax relief worth £19m in the year 2011-12, which is seven per cent of the UK total of 9,875 claims.

The survey found that once businesses knew about an incentive, they tend to use it, suggesting that knowledge is the main issue rather than effectiveness.

Neil Sevitt, Baker Tilly’s head of SME services in Leeds, said: “Our survey supports what we already suspected that many UK SMEs are missing out on generous tax incentives, and this may be particularly true in Yorkshire where SMEs account for only seven per cent of UK claims for R&D tax relief.

“The Government certainly needs to do more to raise awareness, but firms in the region should also be asking more
questions to find out what’s available.”