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SMEs 'throwing away free money'

Published On 9 May 2007 at 16:19:56

Small and medium-sized enterprises (SMEs) are still missing out on financially lucrative research and development (R&D) tax relief, KPMG has suggested.

The consultancy firm revealed that just 20 per cent of the businesses questioned felt they understood the R&D tax credit system well enough. Only half of these companies said that they had bothered to actually apply to the scheme.

Similarly, 70 per cent of SMEs were unaware that changes to the rules governing R&D credits which would reduce the application window from six to two years are due to be introduced in March next year.

"Companies are turning their backs on what is effectively free money," said David O'Keeffe, head of KPMG's R&D tax credits team. "Our findings clearly demonstrate the widespread lack of understanding of the huge breadth of the definition of R&D in the tax legislation.

"Forget the classic images of white coats and test tubes, the vast majority of claims are by companies outside the pharmaceutical industry. R&D is by no means just about blue sky research."

In April, the Federation of Small Businesses (FSB) praised the government for the work it was undertaking to help SMEs protect their intellectual property (IP).

"If a small business can protect their ideas and bring them to market it will reward them for those ideas and encourage others to follow in their footsteps," explained Mike Cherry, the FSB's financial affairs chairman.

 

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