How the research and development tax credit could save you money
If you haven't heard of the research and development tax credit before, or are unsure of its application then it's important to review your expenditure to understand if you qualify for this relief. This is because your research and development (R&D) projects could provide a significant boost to your cash flow.
Unfortunately, many organisations fail to realise that their activities are eligible meaning they miss out on potential tax savings.
What is R&D tax relief?
Projects being undertaken with the aim of achieving a scientific and/or technological advance through the resolution of uncertainty in these areas of work, are classified as R&D. This means R&D doesn’t just apply to medical research and laboratory work, far from it.
If you’re improving processes in your organisation, or attempting to, then there may be a case for making a claim. You’re activity doesn’t have to result in a successful service, process, or end product to qualify.
All costs associated with exploring a new idea, or initiative, may be eligible even if the project fails or is cancelled.
Questions to ask yourself
- Have you developed your own software?
- Have you developed internal processes that reduce costs and improve production times?
- Are you using existing technologies in a unique way? Are you using two or more existing technologies in a manner where they've never previously been combined?
- Do you carry out any design work?
- Do you manufacture products?
- Has your organisation made advances in science and/or technology?
How does R&D tax relief work?
All R&D costs are applied to reduce your corporation tax liability. In the event of a loss making business, R&D tax losses are surrendered to HM Revenue & Customs (HMRC) for a cash refund, also known as a tax credit.
We have obtained claims successfully for businesses in a vast range of different areas and have saved our client base on average £1.6m per annum through R&D projects.
We find the following sectors tend to benefit from R&D related claims:
- Food and beverage innovators
- Software development
- University spin-offs
Things to consider
- Do you have new products or services in the pipeline that might qualify?
- Have you reviewed your existing products or services against the criteria stated above?
- Do you have any current or pending patents that might cover services or products for eligibility?
- How robust are your back office reporting systems? Can they track this income accurately in the event of a review by HMRC?
What we do
Legislation concerning R&D tax claims is complex and ever changing. It requires an in depth understanding of your organisation, the law, and how it’s applied.
In the first instance we would look to hold an initial free meeting with you to explore and understand your expenditure. Relevant work undertaken can then be identified. This allows us to assess the merit of a potential claim against the government’s complex eligibility criteria.
The process with our team is as follows:
- Identify qualifying projects and costs
- Prepare calculations for submission to HMRC
- Liaise with HMRC on any matters arising
Where there’s a successful claim, it’s applied either as a deduction to corporation tax based on expenditure, or as a cash payment from HMRC if your organisation is loss making.
By working with us you will have:
- Peace of mind, as we understand the needs of your business and aren't working to just maximise a claim
- Clarity courtesy of our transparent, fixed fee arrangement with no fixed contract
- Confidence from our experience in dealing with HMRC and working alongside them to help clients get their claims through to achieve tax savings
- Assurance, that as accountants and tax specialists, we can see the big picture, and from our wider knowledge of your business can understand the full implications of a claim
- Certainty that our links with industry specialists in this field mean we understand the full validity of an R&D claim for the sector/industry in question
Claims and pricing
There are many R&D specialists who will process your claim for a percentage of the saving achieved. We apply a far fairer formula that ensures your business can obtain a greater potential saving after professional fees have been applied.
Please note any fees we quote and service provided doesn't include tax investigation services. We recommend this product when making an R&D claim. This can be purchased at an additional fee, in the event of a potential HMRC enquiry into your financial affairs .