Missing out on grants and R&D tax credits
12 Feb 2013
Article by Greville Warwick of MCS Corporate:
Many in the process industries are continuing to misunderstand and, so, miss out on the potential worth of Capital Grants and R&D Tax Credits to their companies.
At present two grants – Regional Growth Funds and Grant for Business Investment –.represent what is currently available in England for companies seeking investment support for capital projects.
The scope for investment is wide; however, in these two cases the minimum grant that can be requested is £1,000,000 for RGF and it is announced that the minimum for GBI is to be £2,000,000.
Clearly, in both cases, the grant amount will be a function of the total investment amount proposed, this can expected to be made over a project completion time within three to five years, dependent on the type of the investment, and it is time for construction and development to commissioning and operation.
The grants are aimed at UK firms seeking support to invest and spread risk and expenditure and cost of capital. Equally, these sources of funding will be open to foreign companies that can be persuaded to inwardly invest. In these terms, the grants are attractive and worth weighing up and considering as the basis and stimulation to construct a business plan to be used to support an early claim.
We have written from time to time in Process Engineering on the overall attractiveness of firms investing in this way and staying around to take full advantage of Research and Development Tax Credits and the 10% Patent Box that comes into effect as from the 1st of April 2013.
This package of investment and tax management options beats any fancy off-shore arrangements currently touted as just about legal and about to be scuppered by future actions of the Chancellor.
It makes sense for Government to offer sensible and accessible alternatives for both investment and real corporate tax management that is approved, sustainable and relatively simple to understand and administer.
Study of what is available will show that both shorter term investment capital funding is available as well as long-term working capital from generous corporate tax policies that allow and encourage firms to use R&D Tax Credits as well as the equally generous terms of the 10% Patent Box.
These options are either already on offer, or are about to go live, so it is incumbent on companies, groups and their directors and advisers to wake up to the possibilities and attractions of investment now.
Global growth is beginning to happen and to gain traction in those parts of the world and within economies that have a much more positive outlook than is, perhaps, yet current in parts of the EU.
Boldness is required to contemplate putting proposals together and fitting them for consideration for the various forms of active corporate support outlined. Government can only do so much in terms of incentives.
It is suspected that UK firms and their directors should become much more proactive in their willingness to take up the offers for generous co-investment to get things going and then be able to access means of sensible tax management to keep the profits generated to create the reinvestment cycle that leads to real and sustainable wealth creation.
It is worth considering at all times the need to be aware of grants and funding and how these interact with Notifiable State Aid requirements; however, with the right advice, policies and strategies, Capital Grants and R&D Tax Credits can be reconciled and used to best effect and your company’s advancement.
