A greater focus on sustainability and efficiency is driving innovation in the construction sector with a staggering 49 per cent year-on-year rise in the number of research and development (R&D) claims submitted by construction firms. The new statistics from HMRC show the level of support has risen by 36 per cent.
Latest data shows that constructions companies submitted 2,025 claims for R&D tax credits in 2017-18, up from 1,360 in 2016-17 reported in September last year. £130m has been claimed as qualifying R&D in 2017-18, up 63 per cent from last year.
The national statistics, covering all sectors, show an interesting trend relating to age of claimant companies. Just over 40 per cent of claims are made by companies less than 10 years old. This suggests that despite continued efforts by both HMRC and the adviser community, businesses still perceive R&D tax credits to be predominantly for young companies. However, more established companies continue to innovate year on year to remain globally competitive and may be failing to recognise their entitlement to claim.
'With more emphasis on sustainability and gaining efficiency through innovation, construction projects involve more R&D than ever before. The number of claims are increasing showing a fundamental change of perception in the industry.
'Given the increase in the use of BIM technology and the trend towards seeking alternative environmentally friendly solutions, we expect to see a continued rise in both claims rates and values for the foreseeable future.
'However, the number of claims submitted in the sector only represents 4 per cent of all claims. Far too often we find that many companies working in the construction sector still do not recognise the R&D opportunities they have.
'This recent rise in claims has been challenging for HMRC. Companies applying for R&D tax reliefs saw significant delays in the processing of claims, with some taking up to nine months.
'Thankfully, new resource has cleared the backlog and HMRC is now able to deal with an increased number of claims. The processing of claims has now moved to a larger team in Cardiff which should be able to cope with the fluctuations in demand. Timely processing is important to ensure the time lag between R&D spend and receiving the relief is reduced, this will be especially beneficial to businesses where cashflow is an issue.
'While much is still uncertain with Brexit, enhancing the R&D scheme is an obvious lever available to the Government to try and boost the UK economy.'