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A recent study has revealed that many small to medium sized enterprises (SMEs) are losing research and development tax credits through a poor understanding of the system and tax planning.
The KPMG report claims that many firms are losing out despite the tax communitys attempts to encourage them to apply for the credits.
The study revealed that 20 per cent of middle market outfits thought they were sufficiently well informed regarding tax mitigation and the research and development (R&D) tax credit scheme.
However, just half of companies surveyed had actually applied for their own scheme.
David OKeeffe, KPMGs head of research and development, commented: "Companies are turning their backs on what is effectively free money. Our findings clearly demonstrate the widespread lack of understanding of the huge breadth of the definition of R&D in the tax legislation."
He stressed that it can take several months to put a claim together, adding: "If companies don’t take steps soon to ensure these claims are submitted in time, the opportunity will be lost forever."
Around half of business start-ups that admitted they knew something of the R&D tax credit scheme but did not have a high level of awareness said they thought that tax relief was not important to their industry.
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