Relief from Recession with R&D Tax Credits with Access2Funding
14th October 2020
For the first time in 11 years, the UK is in recession, one that is predicted to be the worst we have seen in decades.
Daniel Moss from Access2Funding looks at what this means for SME’s, and how they can secure their position throughout the economic downturn.
During the most recent financial crisis in 2008, it took five years for the UK’s GDP to recover. In this time, the economy shrunk, unemployment increased, and employers stopped hiring, which from the latest figures, we are looking to face once again. In most developed countries, economies shrunk between January and March as coronavirus hit. In the UK, GDP fell by 2.2% in the first quarter. Official figures, published on the 12th of August, confirmed many predictions that the UK would enter a recession, with the second quarter (April to June) displaying the sharpest fall on record, of 20.4%. The bleak news does not end there, however, as the International Monetary Fund (IMF) released their growth projections, with the UK predicted to fall 10.2% in GDP for 2020. Their data also suggests that they foresee the world’s economy to shrink by 4.9%.
While it does appear that the current and future financial situation is dire, there are some positives to take away. The Bank of England predicted the economic decline will be less severe than expected, predicting the economy will shrink by 9.5%, compared with an earlier estimate of 14%. Although the impact will be felt from the recession for longer, data suggests that the UK economy will grow in the third quarter, with the Office for National Statistics (ONS) stating the economy improved as government restrictions eased in the past month. The economy is predicted to continue this growth into next year, too, providing there is no ‘second wave’.
Although the situation may not be as serious as first thought, the impact will be felt for longer. Issues surrounding increasing unemployment figures are only now starting to be more apparent because of the recession. So how can SMEs secure their position and their workforce to ride the wave of the recession?
The Government have already introduced several options to provide financial support to businesses including CBILS, the furlough scheme and competitive grant-funding, yet there is an existing hidden gem that many businesses could be benefitting from for work they have already completed.
Research & Development Tax Credits are available to businesses who have carried out work to advance their industry, whether through developing a new product, or adapting a process. It enables businesses to claim up to two years of costs which is then uplifted as a gift from HMRC for investing time and money into innovation, something which, unlike loans, does not need to be paid back.
Access2Funding’s Daniel Moss who supports SMEs in South Yorkshire and Derbyshire suggests not to delay investigating R&D Tax Credits - “With R&D Tax Credits, the claim process can be started as soon as you contact an R&D claim specialist and it should take no longer than a couple hours of your time to extract the information required. Tax specialists like ourselves will aim to make the process as straightforward as possible and to maximise your claim potential, making a significant ROI. HMRC are committed to paying claims out in under 6 weeks, so your business could have a vital cashflow boost which can support you through the economic downturn.”
Access2Funding have already secured over £5.5m in tax savings for SME’s since the beginning of lockdown. From this, Servaclean, a Yorkshire based company who largely work alongside those in the hospitality industry, have been able to invest this money back into the business by hiring new staff, buying new machinery and developing new products. With the unemployment downturn, it is vital that companies can maintain their workforce and continue to thrive, and R&D tax credits could be that vital lifeline.
“Most businesses don't realise they are practicing R&D - this is where myself and our team of specialists will delve into your business activities and uncover any hidden funds. We also offer a free diagnostic review, meaning if currently claim tax relief you can get peace of mind that you’re claiming the maximum potential.”
Now is the time to explore the potential for R&D Tax Credits to restart growth, and survive recession. Talk to Daniel Moss at firstname.lastname@example.org / 07936 938 179 / 0333 990 0125 or visit www.access2funding.co.uk for more information.