Business advisers Khan Thornton has warned of the difficulty of identifying R&D tax relief when applied to automotive firms.

Investing in new systems or exploring new avenues in technological fields are only a few of the examples which are labelled as R&D; yet, the great majority of businesses are not aware that tax relief is available, or that its availability extends to numerous fields, from manufacturing to engineering, IT and software development. Many specialists, for example, develop their own branded parts (brakes, aftermarket kits, motorsport upgrades). Such activities may fall under R&D’s remit.

Commenting on the issue, principal Dino Khan said: “Whether a business invests in R&D through capital or revenue, R&D tax relief is rarely a straightforward concept; depending on the business, such investment can take different forms and have different objectives. “

HMRC is actively encouraging businesses to explore R&D as a way to grow and expand, but only experts may be able to spot opportunities where none may originally be seen. For example practical applications such as integrating new technology with existing systems or process alterations aimed at reducing waste or achieving cost reduction may fall under the radar, yet qualify for a refund.

Claims can be backdated up to two years, funds are delivered within 6/8 weeks from HMRC acceptance of successful claims, and benefits apply to both profitable taxpaying and loss making firms.

Khan Thornton claims to be able to secure between £28k and £200k tax refunds for their clients in the last two years, by identifying activities within the business which counted as R&D.