News
Issue date - 25 August 2006
Featured - www.creativematch.co.uk
Title - Design Council says small firms should claim design tax credits
Investing in design to drive innovation has potentially become a lot more attractive to UK businesses with news that Nissan has succeeded in claiming a substantial tax credit for design costs.
The car maker’s UK design studio has claimed several hundred thousand pounds under the government’s R&D tax credit scheme, and the Design Council is now investigating whether smaller businesses could enjoy a similar boost.
Already, the government has responded positively to Design Council Chairman Sir George Cox’s call for more promotion of the credit scheme to stimulate R&D. It is setting up a number of expert teams to help deal with complex claims, which could benefit businesses looking to recoup design spending in the future.
Recently, Sheffield knife manufacturer Harrison Fisher was able to claim back half the design costs it incurred developing an award-winning new product range, and was used in a Treasury leaflet publicising the credits.
But there is still a lot of publicising to do. Design Council research has suggested that only 10 per cent of businesses know that R&D tax credits exist. Meanwhile, financial advisors Deloitte estimate that only 55 per cent of SMEs eligible for a claim have actually submitted one since the scheme started in 2000.
Now the Design Council has teamed up with Deloitte, which advised Nissan, to shed more light on the issue.
Design Council Deputy Chief Executive Harry Rich said: ‘The Cox Review wasn’t calling for a change in the rules. It seems that the rules as they stand allow claims for design work under certain circumstances and we’re now in the process of testing that.’
Deloitte advisors are currently working with 50 businesses which have invested in design during project work with the Design Council.
Partner David Cobb said: ‘When people think of R&D they think of science – men in white coats and so on. But a great deal of it is actually at the development end of the spectrum. There’s a degree of design, testing and prototyping that’s essential to creating new products or better products.
'It’s about demonstrating that you’ve departed from routine practice to do something that’s new, different and not obvious.
'If you’ve done that, you then have to explain to the inspector the challenge or constraint you’ve overcome in a way that doesn’t confuse them, but that isn’t so straightforward that it doesn’t appear to be a challenge at all!'
The effort could be worth it, adds Cobb, as businesses could claim credits for work going back to 2000, in the case of SMEs, or 2002 in the case of companies with more than 250 employees, though that limit will be upped to 500 employees following the Budget. ‘Any business owes it to itself, its investors and its shareholders to give it some thought,’ he says.
For more information visit the Design Council's website.