Almost three quarters of Scottish businesses classed as ‘innovative’

More than 7 in 10 Scottish companies (73 per cent) can been classified as ‘innovative’, according to new research by Catax.

The specialist tax relief firm says companies that have spent time and money developing new products or business processes in the past two years could be in line for valuable Research and Development (R&D) tax relief.

R&D tax credits can help to reduce a limited company’s corporation tax bill or be claimed as a cash sum reimbursement from the HMRC. R&D tax relief only applies to those businesses that are liable for corporation tax, including businesses making a loss.

Catax Scottish research comes after official figures revealed businesses in Scotland are spending more on R&D with year on year growth of 4.5 per cent to £1.07bn.

Today’s findings are released to mark the official opening ceremony of Catax’s brand new Scottish office, in the nation’s capital, Edinburgh.

The satellite office will be used as a base for operations north of the border as the Manchester-headquartered company embarks on its ambitious growth strategy to treble in size by 2021.

Scottish businesses will be key to achieving this but new Catax/Censuswide research has found that many of them are throwing away millions of pounds a year because they’re unaware of lucrative Government tax breaks designed to encourage innovation.

Surprisingly, 81 per cent of businesses in Scotland are unaware of the requirements to claim R&D tax relief and less than a third (31 per cent) of potentially eligible firms report claiming it in the past. This is well below the UK average of 45 per cent of firms that report claiming R&D relief.

Meanwhile, Scottish senior managers underestimate the value of the average SME R&D tax relief claim by £26,443.

Executives believed the average value to be just £19,557 when the true figure is £46,000 for firms in all sectors nationwide.

Those Scottish firms that have undertaken research and development over the past two years report spending £217,476 on average.

R&D doesn’t even have to have been successful to qualify and claims can be backdated at least two years.

Catax CEO, Mark Tighe, said: “Scotland continues to be a leading light when it comes to innovation. It’s refreshing to see that nearly three quarters of all firms north of the border are now classed as ‘innovative’.

“Economic growth is dependent on firms expanding and innovation is an essential ingredient. The process is nearly always expensive, which can be off-putting for smaller companies, but the good news is that the Government realises this and tries to encourage R&D by providing this tax relief.

“Firms need to be more aware of the help available and we’re ready to offer advice wherever necessary.”