In this week’s Money Matters – Ask the Experts column, from Goldwyns Accountants, based in Southend, Sam Blundell ACA, a chartered accountant and a manager at the company, consults on how to capitalise on Research and Development Tax Credits.
I keep hearing R&D tax credits being mentioned by politicians and the press as being a great source of support for the UK. What are they? Who qualifies? And how do I apply for them?
Sam Blundell answers:
R&D (Research & Development) Tax Credits can be a real benefit for qualifying companies. First introduced by the Government in 2000, they have provided over £6 billion in benefit to UK companies in the form of reductions to Corporation Tax payments. However, the take-up remains low as many companies do not know they are eligible for the scheme.
A common misconception is that R&D is only undertaken by those wearing white coats and working in labs. In fact, the majority of claims are made by those in technology fields including precision engineering, architecture, manufacturing, software development, construction, recycling, brewing, publishing, kitchen design and many more.
Any limited company can apply for R&D Tax Credits as long as they are undertaking research and development work to overcome a scientific or technological uncertainty. Understanding what this means can be a challenge but, in general terms, it applies to projects where the desired outcome may not be achievable. To assess this research, testing and trialling needs to be carried out and, of course, there is a genuine possibility that the project may fail and that associated expenses may not be recoverable.
Even loss making companies can benefit from R&D tax credits. In fact, this is actually a very useful relief for loss making companies as R&D losses can be surrendered for a cash payment, injecting much-needed funding into companies which may otherwise fold.
Eligible companies can make an R&D claim via their tax return, even if this has already been submitted and Companies have 2 years from their year-end in which to make an R&D claim. Some companies are also eligible for the Advanced Assurance Scheme, as long as they have not made an R&D claim before.
In addition to seeking guidance from your professional accountants, you may wish to also seek R&D advice from a consultancy specialising in this area. We are aware that such firms can be highly successful in helping businesses who previously assumed they would not be eligible to make a claim and often this can be done on a no win, no fee basis so that in seeking help, you have nothing to lose and much to potentially gain.
This article was first published in the Southend Echo on 31 October 2017 and was prepared in conjunction with Vicky Kwenda of R&D Consulting, specialists in the topic.
For more information on R&D tax relief please call Vicky Kwenda of R&D Consulting on 0330 660 0474 or via firstname.lastname@example.org; or visit www.randdconsulting.co.uk . Alternatively speak to Sam Blundell at Goldwyns on 01702 351412.