New figures show that Wales is lagging behind England and Scotland when it comes to claiming valuable incentives for research and development, according to Newport-based independent accountancy Broomfield & Alexander.

Figures released by HM Revenues and Customs show that fewer than five per cent of manufacturing and technology companies in Wales claimed research and development tax credits in the financial year ending 2013.

These tax credits are a tax relief designed to encourage greater spending on R&D. They were introduced more than a decade ago. Incentives have been extended under the current government in the hope that it will lead to a surge in innovation, putting the UK in a strong position to benefit from hi-tech, high-value sectors.

The number of companies across the UK using the credits has almost tripled over the past decade, but the Welsh figures do not reflect that trend, with just 425 claims made in 2013 from a possible 8,700 technology and manufacturing businesses in Wales - and a total of 52,117 companies registered in Wales at Companies House. Only 45 claims were made by large Welsh businesses in the entire year.

Denise Roberts, tax director at Broomfield & Alexander, said: “These figures are disappointing and concerning. These tax reliefs were brought in to encourage innovation and stimulate growth but Welsh businesses aren’t making the most of them. It could be that there is a lack of awareness of the scheme or how it works, or that companies think they are not eligible. It also may be that companies who do work on behalf of another company don’t realise they count too. I don’t believe that the figures necessarily mean that Welsh companies are not investing in R&D, it’s more likely that Welsh companies are failing to identify that they are doing qualifying R&D and can make claims that can significantly reduce their tax bill and help to fund opportunities for further innovation.

“This tax relief can be claimed by any company developing innovative products and processes, whether it’s an SME or a large business. Companies need to ensure they are getting the right tax advice or they could be missing relief designed to support them and Wales’ economic future as a whole.”

Broomfield & Alexander has provided accountancy and professional advisory services to individuals and businesses for more than 100 years.