Food firms ‘miss out on millions of pounds of tax relief’
Up to three quarters (74%) of British firms involved in food manufacturing – from producers to packagers – could each be eligible for historical research and development (R&D) tax rebate worth at least £39,000, claimed Catax.
The survey of 500 senior managers and business owners published today (September 25) also found that more than a third (36%) had never even heard of R&D tax relief. Of those who had, one in three (34%) incorrectly believed it was restricted to specialist hi-tech science or pharmaceutical companies.
More than half (53%) of managers or owners who have heard of R&D wrongly assumed the research and development needed to be successful to qualify for a tax relief claim.
Often at great cost
Catax ceo Mark Tighe said the R&D tax relief available to companies in the food manufacturing sector is being overlooked and often at great cost. This was most evident with smaller companies, which typically don’t have access to the tax resources and expertise of bigger firms.
Commenting on the survey, Tighe said: “With raw ingredients getting more expensive by the day, the importance of this sort of tax relief has never been more apparent.
“In our experience of working with companies in this sector, claims can run into hundreds of thousands of pounds, which shows how crucial it is that firms seek advice about the tax relief they could be due.”
‘Tax relief they could be due’
R&D tax credits can help to reduce a limited company’s corporation tax bill or be claimed as a cash sum reimbursement from Her Majesty’s Revenue and Customs. R&D tax relief only applies to those businesses that are liable for corporation tax, including businesses making a loss.
In July, business consultancy RSM UK claimed manufacturers could be potentially missing out on £2bn of government support each year by not claimed R&D tax credits.
RSM head of manufacturing Mike Thornton said: “Accessing development funding is crucial to the prosperity of the sector, particularly at a time when Brexit negotiations could undermine the current EU funding streams available.
“The £2bn R&D commitment from the government offers reassurance. But, as our findings highlight, there is a lot to do to change business perceptions surrounding funding eligibility.”
