R&D Tax Reliefs are Government backed in initiatives which is aimed at promoting investment in innovation and to encourage spending with the overall aim of protecting the UK economy from overseas competition. If a claim is successful it can result in a valuable cash injection back into your business.
Before we move on and consider this further Let us consider some caution.
I cannot stress enough how important it is now to submit a claim through a reputable source. We are now seeing, following an HMRC investigation, some claims being deemed as fraudulent or incorrect. This has come about due to the fact that HMRC view that in some cases this tax relief scheme has been abused and they are now clamping down on new claims as well as reviewing previous ones.
A lot of accountants and other professionals are now breathing a sigh of relief that they did not get involved in calculating these claims. Some I hear of are now insisting you take out insurance against any claim! This does not instil much confidence does it!
It is vital to remember that R&D claims are not free money and there is always the possibility that with any claim an investigation can be opened.
However, if you are eligible to claim, make that claim. As with most things please seek professional advice before submitting.
So let us consider now the criteria that HMRC use, as this is very broad and include:
- Developing new products or processes with tangible or intangible outcomes.
- Appreciably improving an existing product or process.
- Seeking new IPO within the field of technology or science.
- Looking for new knowledge or capability within software and data management technologies.
The R&D costs are based on revenue expenditure.
So, if you can think of the everyday costs the business occurs in the seeking or creating this new knowledge, such as, direct labour, out-sourced expertise and scrap from prototypes and software to name a few of many.
Let us now consider some of the key questions HMRC will ask to ascertain eligibility, which include:
- Is the company working on a project?
- Am I seeking an advancement in the field of technology and science?
- Does this advancement benefit not only the own company`s state of knowledge or capability.
This is really just a snapshot of the activities to identify if an R&D tax claim can be applied for.
One other point to remember is that the claim is time sensitive and you can only go back 2 years to amend a Corporation Tax Return.
Where can you find help on Research and Devlopment Tax Credits?
This is another question here at Tandem Business Solutions we get asked regularly. To ensure not only total 100% compliance for the claim but also to ensure that every allowable cost is claimed for, we have partnered up with Innovation4Business to deliver a fully compliant and thorough process in delivering this.
We always advise it is worth chatting to us to see if there is any eligibility for a claim and we will deliver a professional and compliant service that you would expect.
To find out if you are eligible for a R&D Tax Relief claim then you can find help on this website www.tandem-solutions.co.uk to book a discovery call click on the Book a Call button right at the top of this website.