DIGITAL companies that are seen as part of the future of the region's economy are losing up to £2.5m in research and development tax credits, an accountant will say today.

David Cobb, a partner at professional services company Deloitte, will address about 100 delegates from the region's technology companies today and show how they can claim the money.

Mr Cobb said that based on there being about 600 companies in the digital technology and new media sector in the region, there could be up to £2.5m not being claimed.

He said: "Research and development (R&D) tax credits are a company tax relief which can either reduce a company's tax bill or, for some small or medium-sized companies, provide a cash sum.

"The R&D tax credit works by allowing small or medium-sized enterprises (SMEs) to deduct 150 per cent of their qualifying expenditure on R&D activities when calculating their profit for tax purposes.

"SMEs can, in certain circumstances, surrender this tax relief to claim payable tax credits in cash from the Inland Revenue. Larger companies can claim a 125 per cent tax deduction, but with no facility to reclaim cash."

The Government's aim in introducing the system was to encourage greater R&D spending in order to promote investment in innovation. In the past four years, about £570m of support has been provided to UK companies.

Mr Cobb will explain to Codeworks Connect members how the R&D Tax Credit system works and how it could work for qualifying companies.