Research and Development Incentives


Research and Development is an integral part of the manufacturing process. In seeking ways to design new and improved products and processes, the manufacturer is inevitably faced with the practical difficulties of turning imaginative ideas into something that is economically and commercially viable.

This is often risky in terms of the inherent technical uncertainty. However, in order to maintain the company’s position within an environment of rapidly changing technologies, it is essential for the future success of the company that research and development is carried out.

Under these circumstances it is important that research and development activities and costs are recognised so that suitable claims can be made in order for the company to benefit from the government financial support to which it is entitled.

A number of financial incentives are offered, some of which are competitive, (i.e. companies are in competition with each other to received funds). The Research and Development Tax Incentive however is not competitive and the company’s return from it is not restricted by the availability of government funds but is their legal entitlement provided technical uncertainty or innovation is involved.

Research and development costs are now claimed in conjunction with the company annual tax return. However, the actual registration for the Research and Development Tax incentive claim can be made up to 10 months after the end of the company’s financial year, provided figures correspond to those in the tax return.

This registration (or lodgement) is not a complicated process but inevitably can appear daunting and many companies are concerned with the administrative burden that it brings. Unfortunately, this can result in claims not being made, with the effect that financial support is lost where it is often most needed.

If this is the case for your business, it would pay you to seek professional advice. Of course your accountant can help but often the judgement needed is technical rather than financial, and to take full advantage of the incentive you will probably benefit more from the advice of a specialist in the field.