Larger manufacturing businesses may be able to benefit from the extension of tax incentives to stimulate research and development. Qualifying companies should start on their paperwork now to avoid disappointment when they submit their claims. Laurence Field, head of RSM Rhodes' corporate tax practice in London, who also heads up the newly launched London office of the RSM National Engineering Group, says it's vital to understand what R&D is when preparing a claim. He comments: "R&D is work which breaks new scientific or technological ground: the pre-production work. For example, it covers the design of pilot plant and prototypes to test new hypotheses, the development of formulae and the preparation of operational instructions."
The changes mean that R&D implemented after 1 April 2002 is eligible and companies can deduct 125 per cent of qualifying spend - equivalent to a subsidy of 7.5 per cent. SMEs have had similar opportunities since 2000. RSM Rhodes is warning companies to begin preparing claims now as a lot of paperwork and accurate records are involved.