Food and drinks firms urged to explore tax savings on R&D

Scottish food and drink businesses are being urged to explore potentially significant tax savings that are normally associated with manufacturing or scientific companies.

Tayside firm EQ Accountants say that although research and development (R&D) tax credits can potentially apply to any companies developing or creating new products, innovations or processes, food and drink firms may be unaware of their eligibility to claim.

David Morrison, head of EQ taxation, said: “Despite growing awareness of R&D, many businesses think that R&D tax credits only apply to pure research but there are so many sectors who are entitled to make a claim, from agriculture, software and engineering to design.

“Food and drink companies also now make up a substantial proportion of our claims yet many are missing out because they don’t associate their line of work with R&D tax credits, or think their practices are not ‘scientific’ enough.”

There are different types of R&D relief depending on the size of the company and whether the project has been subcontracted or not.

An SME can claim R&D relief if it has fewer than 500 staff, a turnover of less than €100 million or a balance sheet total under €86m.

The system allows, among other things, firms to deduct an extra 130% of their qualifying costs from their yearly profit.