HMRC R&D Statistics 2020 – released 30 September
As anticipated, today’s numbers from HMRC show continued percentage increases in the number of claims and value of support provided through R&D tax relief. Although on the surface an increase is good news, we haven’t seen the type of exponential growth year on year that we would have expected. This is crucial if the UK stands a chance of hitting the Government’s ambitious target of £22 billion of public funding for R&D per year by 2024-2025.
The increase of 10% for first time applicants is also lower than we would have hoped and indicates that the Government still has a long way to go in terms of making tax credits more accessible. We know that there are businesses who find the process of claiming convoluted and are reluctant to divert valuable resources. In addition to this, the current mechanism can be slow with reports of some claims taking in excess of 6 months to process.
It’s broadly understood that innovation is crucial to the economic growth of the UK. With so much uncertainty facing businesses due to the pandemic, the Government needs to act urgently to ensure that the R&D tax credit process is more accessible and provides timely support for those who may already be struggling with cashflow. However there is a fine balance of making sure that these funds are appropriately directed to companies that are driving forward R&D, whilst mitigating any risk of increased fraudulent claims that could occur under the pressures of the current economic climate.
SME Claims on the increase – how can they claim quickly?
The stats show that growth has been driven largely by a rise of 19% in SME claims. Although the continued year on year growth is extremely positive, this is a lower rate of growth than we would have expected and more can be done, particularly as traditionally SMEs are at the forefront of a lot of innovation.
Many SMEs are equipped with less resources than bigger organisations which means that undertaking R&D activity presents even greater financial risk for them. If the Government is to achieve its R&D targets, it needs to do more to ensure that the system is fit for purpose to support them through the process, particularly with the current economic uncertainty.
At Ayming we have seen the scale of knowledge and resource gap at SMEs first hand which is why we launched our Rapid Claims service, which completes R&D tax credit incentive applications for certain claims in less than one week. This helps to significantly streamline the process for businesses meaning that they can be assured of speedy submissions and do not have to divert precious resource to a complicated process.