Food businesses missing R&D tax credits

Food production companies across the UK are missing out on research and development (R&D) tax credits worth tens of thousands of pounds due to the fact that they are unaware of their eligibility to claim, according to Compass Accountants.

The accountancy firm, which specialises in R&D claims, says a key issue in this failing is that many food production companies are misjudging the extent to which they can claim, with smaller to mid-sized businesses being the most likely to forego the credit.

Kerry Lawrance, director at Compass Accountants, says, “Whilst there has been an increase in R&D tax credit claims in recent years, a majority of these are being made by larger organisations. Many small- to medium-sized companies are eligible to claim, but do not. The main reasons for this is that they are either entirely unaware of the opportunity, that they do not believe that these credits are available to them, or that they lack the knowledge required to document and demonstrate projects, expenditures and activities that can be claimed for.”

Many businesses consider only the greater advances in R&D as eligible processes, however, making a technical change in some aspect of the food production process may, if properly documented, be entirely appropriate for the R&D tax claim.

Lawrance adds, “If an organisation in the food processing sector makes technical adjustments to the process to enhance flavours or to improve the appearance, nutritional content or shelf life, then the labour spent, materials used and consumables lost throughout these developments can also be claimed. These often overlooked elements can lead to a substantial R&D claim.”

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