Corporate Magazine - 2013, June (PDF) - Invest Northern Ireland

Investin June 2013 11Research Focus on & R&D Development and InnovationR&D Tax CreditsThe existing tax credit regimehas been enhanced to includean ‘above-the-line’ credit forlarge company R&D investment.This credit is designed to makeR&D relief more visible to thosemaking investment decisions.Tax-paying companies will seethe benefit of the credit in theform of reduced tax liabilities,while those with no corporationtax liability, such as those withtax losses, will be able to accesspayable cash credits.The headline rate of the credit will be 10per cent, up from the 9.1 per cent rateproposed at Budget 2012, making theUK a more attractive location for largecompany R&D activity by further reducingthe after tax cost of investment.The R&D Tax Credit scheme is the longestestablished measure and remains a keyTax Rulesand theIP LifeCycleCreation of high-tech and scientific IP•Intense research activity - business••incurring substantial up-front costs.uncertain future reward•CreationR&D TaxCreditsSchemeDevelopmentR&D TaxCreditsSchemeelement of the overall R&D relief regime.First introduced in 2000 for SMEs and2004 for larger companies, the schemeallows qualifying R&D costs to beenhanced for the purpose of calculatingcompany tax liability. To qualify, the R&Dmust be part of a project or plannedobjective; it must seek to increase theoverall stock of knowledge or capability ina particular field, or it must seek to resolvescientific or system uncertainty.The SME R&D tax credit 1 has beenmaintained at its April 2012 rate of225 per cent and continues to providetargeted support for SMEs, early stagecompanies and start-ups investing in R&Din the UK. What this in effect means isthat for every £1 spent by an SME, it canbe treated as if the company had spent£2.25 for tax purposes. Large companiescan opt to continue to claim the 130per cent rate of relief under the LargeCompany Scheme until April 2016, afterwhich it will become mandatory for themto take the credit ‘above the line’.Turning an initialpatent or conceptinto an initial product.Further R&D on the•IP or processrequired tomanufacture / deliverproduct / serviceCommercialisation>>Graphic shows UK Government support available at each stage of theproduct/process development journeyPatentBoxFurther high value•activity requiredfor successfulexploitation in theglobal market.How wecan helpTo help businesses understand these newincentives and how they can benefit them,Invest NI is working with HMRC and PWCto develop a range of supporting materialand cross-sectoral case studies.The supporting material includes a decisionmakingtree which will help companies tonavigate the R&D grant and HMRC tax relieflandscape, and a cost/benefit analysis tool.We want to encourage businesses to lookat these incentives and see if, and how, theycan work for them.Tax credits and the Patent Box recognise theimportance of business investment in newideas and technologies. R&D provides growthopportunities not only for the companiesinvesting but also for the wider economythrough the development of new skills andtechnology, and improved goods and services.That’s why R&D continues to be one ofInvest NI’s core priorities and why we offera range of advisory and financial supportfor businesses at every stage of theR&D journey.For further information about the newR&D relief measures please contactGillian Gregg, Invest NI’s R&D Division:gillian.gregg@investni.comFor further information on the PatentBox please visit:www.nibusinessinfo.co.uk/patentboxFor detailed advice on R&D tax mattersplease contact HMRC’s NI CorporateTax Office at 03000 599 000 or viawww.hmrc.gov.ukFor information about Invest NI’ssupport for R&D please call 0800 1814422 or speak to your Client Executive.1HMRC’s SME scheme is a notified State Aid (and not therefore compatible with Invest NI’s Grant for R&D).SMEs availing of Grant for R&D may elect to claim under the Large Company Scheme at 130%.