Small businesses could be missing out on tax credits in respect of €0.5 billion worth of research and development spending. Analysis of official figures by Joe Tynan, a tax partner at PwC, suggests that no tax credits were claimed in respect of €500m worth of R&D spending in 2012 - the most recent year for which numbers are available. Over 1,500 firms claim these credits each year but it appears that many others do not.
Joe Tynan says there is a perception that this kind of tax credit is only available to very large companies, but this is not the case. The CSO collects the data and are aware of companies doing research and development, but these figures do not correlate with the numbers the Revenue Commissioners have. Mr Tynan says the €500m figure could even be bigger because some companies are carrying out R&D activities and are not even aware that their work could be classified as such. He says that frequently when PwC talks to companies, they talk of their efforts to innovate and the company is actually carrying out research and development. This R&D sees a business try and resolve uncertainty as they develop new products or perhaps move their products to a cloud environment. The tax credit also applies to more sectors than just technology, he adds. The development of an app could qualify as R&D, as well as new innovations in food production and new methods of manufacturing.
Mr Tynan says the Government is really interested in creating innovative companies so they contribute 37.5% of what a company spends on R&D. There is no grant application form, a company has to document what it does from an R&D prospective and can be audited by Revenue as there is a lot of money involved, he says.
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MORNING BRIEFS - Domino's pizza sales in Ireland are on the up and the pace of growth is increasing: Sales over the year to the end of September were €37.6m here according to its interim management statement this morning. Like-for-like growth over the most recent quarter - which excludes the impact of new shop openings - was 5.3%.
*** A trader in Japan accidentally placed orders for $617 billion worth of shares yesterday in 42 separate companies before cancelling the trade just in the nick of time. The Japanese Securities Dealers Association confirmed the incident, known on financial markets as a "fat finger error", but said it did not have an impact on the market. The erroneous trade involved huge numbers of shares in blue-chip companies including Toyota and Honda. At $617 billion the order would have been slightly larger than the annual economic output of Sweden.
*** While that "fat finger" did not move the markets yesterday, economic data from the US certainly did. Shares on Wall Street finished down around 1% overnight and Asian markets followed suit after unexpectedly poor manufacturing figures from the US, Germany and China. The main focus today will be the European Central Bank's monthly governing council meeting. The ECB is meeting in Naples rather than the ECB's home town of Frankfurt today as the governing council takes one of its twice-yearly trips to that part of the euro zone which exists outside Germany. We expect to hear details of the ECB's plan to buy certain assets from banks to help pump credit into and stimulate growth in the stagnant euro zone economy.
