Research and Development Tax Credits / Tax Relief

Tax relief on your Research and Development costs? 

So, what is it

R&D Tax Relief

This Government led initiative helps compensate companies that are pushing the boundaries of innovation – especially when it comes to the costs that those companies have incurred improving their solutions.

This Research and Development (R&D) tax incentive is a way for the Government to give something back to businesses that are improving or developing systems, materials, products, and processes.

The express intention of the Government is to boost the UK’s ability for creating wealth.  

R&D tax relief could apply to any business that is operating at any level in profit or loss.   This relief has the ability to help lower a companies corporation tax liability.  It may even be claimed as a cash sum paid back to a company by Her Majesty’s Revenue and Customs (HMRC).

The typical costs for R&D ranges from software, utility bills, subcontracted work and staff costs.  In some cases, these can make up a 130% return – even including materials.

 

The Process (in detail)

The Process begins with the business owner completing a ‘Client Instruction Form’ (CIF).

This is a simple document that can be completed in a matter of seconds authorising our Tax specialists to carry out initial research to establish eligibility for an R&D claim.

Our tax specialists will then arrange for a Research & Development specialist to call the company.

The specialist collects all of the information and photographic evidence required to substantiate our comprehensive R&D report.

The specialist’s role is to identify all of the R&D qualifying activities within the business.

The information is then rigorously analysed by an experienced report writer.

The report is then written in a format accepted by HMRC and submitted.

The final step is for the client to receive the initial tax benefit, and then benefit from further reductions to their tax liabilities going forward.

Our aim is to deliver an efficient and quality service with out taking
up valuable client time.

The aim is to keep client involvement to a minimum.

 

What next?

Drop us a line and we’ll be in touch

Claims made in retrospect

Retrospective Claims

R&D tax relief is complex.  If you add the constantly changing Government legislation and case law, then that adds up to a point where a lot of companies that do R&D works, just do not make a claim.

Tax Relief experts, advise that most companies who have R&D are, unfortunately, in the dark when it comes to making R&D tax claims – especially some of the restrictions that are in place.

For instance, any claim may only be made for the previous two open tax years.

The best practice advice is that Companies nearing the financial year end, seek specialist advice and consultation that ensures that repayments or tax credits are not missed.

Missed Opportunities

Missed Opportunities – only 5% make a claim

R&D tax relief can provide a valuable cash injection to limited companies of all shapes and sizes.

As we said earlier, the objective of the tax credits are to give incentives to  companies who are making leaps, thereby helping mitigate their risk profile in their innovative ways.

However, many companies, due to lack of awareness or expertise, are not exploring their entitlement and are losing out nancially as a result-often to the tune of tens, or even hundreds of thousands of pounds.

Based on numbers from HM Revenue & Customs, only 5% of Limited companies in the UK, that are  eligible to claim, actually have submitted a claim for Research & Development tax relief.

Market Sectors – who qualifies?

So, who can make a claim

The main sectors are: –

Automation, Energy, Manufacturing, Food, Pharmaceuticals, Engineering, Software and Waste

 

Some of the sub-sectors include: –

Aerospace, Animators, Architects, Chemical Companies, Clothing Manufacturers, Computer Gaming Developers, Construction, Electrical Engineers, Electronics, Film Industry, Finance, Food & Drink, Fossil Energy, GRP Moulders,  Horticulture, Hospitality, Injection Moulders, IT Software, Mechanical Engineering, Motor Industry, Music Industry, Pharmaceuticals, Printing Companies, Prototype Developers,  Recycling, Research Laboratories, Renewable Energy, Sound Engineers, Telecommunications, Waste Processing

Frequently Asked Questions (FAQ)

Some of the more common questions around this are: –

Do I qualify

If you own a Limited Company that has been trading for more than 12 months and has developed new or improved existing products, processes, systems, devices or materials then there is a significant chance you will be eligible to claim for Research and Development tax relief.

Irrespective of whether your company is currently making a profit or operating at a loss, it may still be possible.

What can I claim for

Typical claim items include staff costs, consumables, utilities, travel costs and sub-contracting costs.

Specialist R&D Tax firms have a detailed understanding of Research and Development practice and legislation and will conduct a detailed audit of your business to ensure that every opportunity for Research and Development tax relief.

What could it be worth

The amount of tax relief available will depend on the amount of money being spent by the business and the profitability of the business when the work took place.

Our average claim size is in excess of £42,000

In some cases the relief can extend to around 30% return on the investment undertaken by a business in Research and Development.

The tax relief will typically take the form of a cash rebate from overpaid tax in year 1 and 2.

 

What is HMRC’s role

HMRC created Research and Development law as an incentive to encourage Limited Companies that are developing new, or appreciably improving existing, products, processes, systems and materials thereby increasing the country’s capacity for wealth and creation.

There are regional HMRC departments that will analyse and check each Research and Development report and the costs identified. HMRC are therefore very skilled at processing these claims.

Our specialist advisors liaise with them on a daily basis on your behalf. In the unlikely event of any issues being raised it is part of our commitment to you to resolve these.