Over the years I have written numerous blogs and articles about financing high growth companies covering debt, equity and crowdfunding.
However, I have never touched on R&D Tax Credits which I have always assumed are the preserve of accountants. However, I recently caught up with my (nearly) namesake Sandy Findlay of www.jumpstartuk.co.uk. They are a niche consultancy company who specialise in claiming tax credits. They work on a completely contingent basis with their income based on a percentage of the amount they recover from HMRC.
This could be of substantial benefit to pre-revenue start-ups as, almost by definition, most of their expenditure will be involved in research and development of one kind or another to get some kind of new product to market. Loss-making companies claiming through the SME scheme can surrender their losses in exchange for a cash payment (aiding short-term cash flow) or increase their losses to mitigate future tax liabilities. While profitable companies will be able to minimise their corporation tax bills. Unlike grants which may have numerous conditions attached and may be subject to clawback, the only thing you need to do is meet the qualifying criteria.
I understand that over half of the R&D Tax Credits are claimed in London and the South East and this broadly tracks the EIS statistics with about 75% of the EIS funds being invested in companies registered in London and the South East.
It seems that the rest of the country is missing out badly on a significant source of finance and everyone involved in R&D through their business should be encouraged to check whether this scheme might be helpful to them.
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