Naturally, innovation is a word that can be used overly freely by businesses to signify virtually any kind of thinking that is slightly different from the usual. In this case, however, we are thinking of something that will benefit companies looking to grow. Innovation in the terms we are discussing here refers to the creation of products, services, processes and ideas that can help not only your business to succeed but represent a new type of thinking in your industry. 

Having defining this, you could argue that we are ultimately still talking about ideas that will make the business money through sales. But the truth is that many innovations require a great deal of time and financial input - and not all of your innovations, sadly, will be successful. This can discourage companies from pursuing innovation, as despite the potential upside, there can be no guarantee of success. 

Businesses can innovate with R&D tax credits

Thankfully it is well established that innovation is a fantastic thing - not just for businesses themselves but for the industry, the economy, and for society in general. As such, the government has a scheme that it is designed to reward companies for innovating them - reducing their tax bill if they are in profit, or reducing their losses if they are not. 

There are two main types of tax relief offered by the government: research and development (R&D) tax credits and Patent Box tax credits. These can be fantastic ways to make the best financial use of your innovations and ensure that your company is rewarded for the work it is doing. 

But there is a problem: many organisations are not claiming the kind of R&D tax relief that they could.

There are two main types of tax relief offered by the government: research and development (R&D) tax credits and Patent Box tax credits.

Why aren’t organisations claiming as much as they can?

There are actually many reasons that companies might not be claiming what they are owed through R&D tax credits. Firstly, it is a complex procedure to claim back R&D tax and some companies may have attempted it in the past and actually found the whole job too confusing. Even standard accountants struggle when dealing with R&D tax relief and will outsource some of the work to those with more specific expertise.

It’s no surprise then that less experienced businesses are finding it challenging to claim tax relief. But there is another issue too. 

“Unfortunately, it is the case that many businesses assume that they can’t possibly be eligible for R&D tax relief," says Simon Bulteel of R&D tax relief specialists Cooden Tax Consulting. “They might assume that R&D purely refers to the field of science – however, this is a misconception. Actually, R&D refers to innovation across a wide variety of sectors”. 

Lack of understanding of what R&D tax relief is meant for can play a huge role in the fact that businesses aren’t taking advantage of the tax credits they are owed. Companies across industries as varied as entertainment, marketing, transport, construction and many more apply and get R&D tax relief every year.

Final thoughts

Innovation is a vital tool for growth for businesses across many different industries, especially under the present circumstances where making further sales and growing your business through profit may not be feasible. If businesses are missing out on valuable R&D tax credit relief it is because they are not working with specialists who can help them.

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It is advisable for any organisation that carries out any kind of innovation as a part of their business to speak with experienced professionals in R&D tax relief, who will be able to guide and advise them on whether it is possible for them to claim. 

Failing to do so is missing out on money and isolating your businesses from a very legitimate form of growth.