INVESTING in your business to create new products, processes or services is often a profitable activity. But as business owners know, there's significant risk attached to it. But more than ever, governments on both sides of the border are doing what they can to mitigate that risk and support the innovative business owner.
Prime Minister Theresa May has announced new plans for state intervention to boost the post-Brexit economy. We know from the autumn statement that the government has earmarked £4.7 billion in funding for R&D by 2021 - the biggest increase in R&D investment by any parliament since the 1970s.
And according to the European Commission, Ireland is now among the top 20 countries for scientific output and scores, with enterprise spending more than €2.1 billion on R&D last year.
There are now intriguing possibilities for limited companies operating in the UK and Irish tax jurisdictions.
So, what support is available from tax regimes north and south of the border? Whilst there are many similarities between the UK scheme and the Irish scheme, there are also significant differences.
For example, the UK offers incentives for SMEs and large companies in separate schemes while the Republic has a single overall R&D scheme that applies to all companies.
In the UK, businesses can claim against five main pillars of cost - staffing costs, utilities, consumables, software, and R&D carried out by sub-contractors. Companies in Ireland claims for these as well as for buildings, plants, machinery, rent and even rates.
The other main difference is that a business claiming from the UK can backdate by up to two financial years, whereas claims in the Republic may only go back one financial year.
What many may not realise is that R&D activity can mean anything from investigating project failures (wastage), or exploring new technology, to fine-tuning new business processes. R&D occurs across all sectors – for example, we are working ever more closely with the food and drink sector across the island. These companies may seem a world away from the STEM or tech sectors, but their need to innovate is no less urgent.
In general, applications within the Irish revenue system can take slightly longer than in the UK, but that is not to say they are less valid. Needless to say, the process is made smoother with the correct guidance and support in submitting the application.
It’s wise to lean on trusted advisors who have the prudence and the technical know-how to make an efficient, successful and defendable claim. Irish revenue can carry out audits on applications dating back four years so it’s best to engage with professionals who can field queries and deliver an evidentially robust claim in the first instance.
With governments across the island deepening their support for R&D activity, it’s vitally important - particularly for SMEs - to ensure they’re claiming all the credit that’s due.
:: Chris Maylin is managing partner of Belfast-based Amplifi Solutions (www.amplifi.solutions)
