Why it is Worthwhile to Educate Small Businesses about Research and Development Tax Relief
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These are very hard times, when every business and every particular person leaves no stone unturned to save some as much money as they can - yet it is baffling that companies, especially smaller ones, do not avail an advantage that is very easily available to them in the form of research and development tax relief. Research conducted in October 2011 revealed that claims totaling a mere 980 million had been made in the past year. While this was a significant increase from the year preceding that, it is nothing when compared to the relief that companies could potentially realize.
This lack of interest can not be attributed to lack of encouragement on the part of the government. little companies - defined under the legislation as those with less than 500 employees - are entitled to up to 225% relief, with a 25% cash payout to small companies which are facing losses. Even with all these incentives, response is still lukewarm. The reasons for this are many, the very first one being that small organizations do not consider it worth their while. They appear to feel that the procedure is too time consuming, and they don't have the resources or the time to spare to avail research and development tax relief incentives. But, the more pressing reason - and one that is more worrying - is that business owners don't seem to realize that they actually qualify for the assistance.
The term "research and development" automatically conjures up images of scientists in lab coats hauling out difficult, maybe even dangerous, experiments inside closed laboratories. The truth is that research and development is a much wider idea, and every business concern, right down to the road vendor promoting hot dogs on the road, is involved in it in some way or another. Research and development simply means, finding a superior way of carrying out a task, whatever it may be. By this definition, every IT company, manufacturing concern, engineering firm and every graphic design firm carries out research and development, and is thus eligible for research and development tax relief. And this is exactly in which the dilemma lies: trying to get companies to realize that their simple day to day activities and approaches fall under the "research and development" banner.
Another difficulty is misunderstanding the eligibility requirements for the tax. Some business owners seem to imagine that they do not qualify mainly because they already obtain other forms of financing, for example in the forms of grants. This too is a myth: if this is the case, the amount of relief is merely decreased. Another typical misconception is that business owners feel that they do not qualify mainly because their research endeavours ended in failure, either technically or commercially. The truth is that the main motivation of the research and development tax relief is to encourage research and competitiveness, irrespective of no matter if it resulted in success or not.
Keeping the above in mind, it is clear that much work wants to be done in arrangement to educate corporations regarding the advantages of the research and development tax relief effort, in buy to encourage innovation which will In the end spur the British economy.
Article Source: Articlelogy.com
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