Lets look at what you need to know about Research and Development Tax Credits!
Some people think Research and Development Tax Credits are a grey area, but its only ‘grey’ if you don’t understand it. First of all, lets look at the HMRC definition in words one can understand!
What is Research & Development tax relief?
It is the Governments way of rewarding innovative businesses that are developing new, or improving existing products, processes, systems or materials. There must be some uncertainty in the project and the improvements will be of a scientific or technological nature.
This relief can help to reduce their corporation tax bill or can be claimed as a cash sum to be paid back into the company by HMRC, due to an over-payment of tax.
In our experience, R&D can be undertaken in virtually every industry. With R&D Tax Credits the government wants to encourage companies to innovate. The claim process is straightforward and the rewards are significant. An average claim is generally worth around £40k per annum.
The rest of Europe have a greater understanding of R&D claims.
Some countries in Europe are claiming a greater percentage than the UK. For instance Finland, Sweden, Denmark and Germany claim the most on R&D. One big consequence of the financial crisis is that manufacturing has jumped up the political agenda in Europe with governments across the continent clamouring to proclaim themselves “pro-manufacturing”
Post Brexit what happens then?
Nothing has yet been decided however, in our personal view Brexit should be viewed positively, after all once we are independent from the rest of Europe for trade, we will need to build on our own research and development. The UK will need to be innovative in its own right and arguably the Government will need to support business growth in any way it can. In the last few budgets the Government has already increased the percentage allowed to large businesses, and no prit may be that they decide to increase the percentage paid to SME’s meaning a higher proportion can be claimed.
Who is Eligible to make a claim, under the SME Scheme?
You can claim R&D tax relief if you’re a Small, Medium Enterprise with:
- Less than 500 staff
- You are a limited Company
- Have a turnover of under €100m or a balance sheet total under €86m
For a more in depth understanding you can download the government guidelines here http://www.hmrc.gov.uk/gds/cird/attachments/rdsimpleguide.pdf
Your Questions and Answers
What is the Process and how long will it take?
· With both the clients and their accountants’ co-operation, the claim should take no longer than 4-5 weeks.
· Once we establish your eligibility, you will be assigned to a member of our technical team
· You will provide certain financial information
· We will need to gain a close understanding of your project, product or service
· We will prepare a full HMRC report and submit it on your behalf
Is this completely legal and above board?
This is Government Legislation that has been in existence since the year 2000 and due to lack of awareness there are still far fewer claims in the UK than in other parts of the world, In fact last year there were still less than 23,000 businesses that made a claim which equates to just under 2% of eligible SME’s.
What are the fees?
We work to minimize the client’s involvement and take the pain away!
There are no upfront fees, no fees to submit the claim and our fee is based on a 70/30 split, the client obviously taking 70% of what in many cases they did not know they could claim for. We take a forensic view of the claim to ensure that it is maximised and in many cases we can go back 2 financial years as well.
Why haven’t I heard about this before or my Accountant told me?
This is a benefit which is not widely advertised, plus it is a very specialised area of tax law. Few Accountants are trained in this area and in fact we team up with many Accountant businesses to service their clients and free up their time to do what they do best, manage clients Accounts.
Why is it important to use a specialist company?
A specialist organization are equipped with the necessary knowledge and experience to carry out these claims and are fully versed with the government legislation required. In addition by using a specialist you will be protected against Inland Revenue enquiries resulting from a claim which may not compliant with HMRC guidelines.
I have some more questions; may I arrange to speak to someone?
Absolutely, please click this link which will take you to an online Calendar where you can schedule a call to discuss this at your convenience.
Want to just see if you might be eligible?
Share you website address and name and we can start to examine your business initially from the work that you do, then we will contact you if we think you might have a claim. (Important you leave a name and website address)