Manufacturing firms urged to “do their homework”
One of Northern Ireland’s leading business representatives has called upon manufacturing firms to “do their homework” when it comes to tax incentives.
Stephen Kelly, Chief Executive of Manufacturing NI, on a visit to R&D Tax Credits specialist firm The Momentum Group, said organisations within the sector do not completely understand the opportunities that are available to them.
“Seeing 2.7% year-on-year growth, our manufacturing sector has been a key contributor to Northern Ireland’s global success. As the home to some truly world-class companies, we have become standard bearers for excellence and innovation.
“The UK Government has made it clear that it wishes to increasingly reshore manufacturing as opposed to outsourcing overseas. With a vibrant talent pool and a continuous demand for our services, it stands to reason that manufacturing firms should see positive results. However, one thing that we are noticing is that, despite our successes, we are actually in the dark when it comes to understanding and making use of government incentives.
“For example, Northern Ireland has a hotbed of transport and agricultural equipment manufacturers that are developing innovative solutions to what most people would assume is run of the mill work - but it’s not. There are methods for firms to recoup what they have invested into their business, with the government’s R&D tax relief scheme being one example that can be used to support developmental activities. I would urge more manufacturing companies across Northern Ireland to look into how this incentive could optimise their business.”
Mr Kelly’s comments follow on from the recent announcement that Northern Ireland companies have become the least active in innovation across the UK. He believes the slowdown in innovation could be linked to an unwillingness to engage with official schemes aimed at supporting firms through the tax system.
The comments are supported by Tom Verner, Managing Director of R&D Tax Credits specialist firm The Momentum Group, which is partnering with Manufacturing NI to develop a strategy for the sector.
“A dynamic manufacturing sector lies at the heart of Northern Ireland’s economy. However, we have found that certain sub sectors are not making use of all financial incentives available to them.
“The manufacture of motor vehicles, trailers and semi-trailers makes up 3.4% of all manufacturing R&D tax relief claims across the UK, yet the total amount actually claimed across the sector comes to £215 million (21.7%). Likewise, the manufacture of other forms of transport equipment makes up 2.4% of all sectoral R&D tax relief claims UK-wide, but the total amount claimed across the sector is sitting at £155 million.
“These statistics highlight the money on the table that local firms could be missing out on. Manufacturing NI’s recent State of Northern Ireland Manufacturing report highlighted that 30% of local manufacturing firms felt opportunities presented by HMRC were too bureaucratic and, in our experience, that simply is not the case. I would however encourage all organisations to thoroughly do their homework when it comes to tax incentives available. After all, they’re there for a reason.”