The R&D Tax Credit incentive was launched in the year 2000. Since then it has gone from strength strength and is regarded as resounding success. UK limited companies have been claiming in the region of £4.3 billion in research and development tax relief which is a great way to add another source of funding for existing or future projects.
All UK limited companies can benefit from R&D Tax Credits which can assist you with the process of growing and expanding your company. We are aware at how costly this can be and this is why the UK government has implemented the research and development tax relief scheme. With additional funds you can improve infrastructure and processes. Design and build new technology and software or take on new contracts and have the funds to carry out the work.
R&D Tax Credits is a globally recognised scheme which many counties enjoy. The government offer this incentive to drive economic growth which is a very effective stimulus. We often speak to companies who are unaware of what qualifies as R&D so they often miss out on thousands of pounds in R&D tax relief or R&D tax credits.
1. R&D Tax Credits don’t qualify if your project fails. FALSE
In some circumstances, projects fail or cease to continue. If you don’t succeed in obtaining your goal, this doesn’t mean that your company hasn’t expended valuable resources and funds in its pursuit. Your company has taken the time to undertake extensive R&D work which will almost certainly qualify. The process of the project and what is entails are still costs which have been expended. HMRC often view a failed project as more corroborating evidence of R&D work carried out. Ultimately this is more likely to qualify and at least allow a company to recoup some of the costs it has laid out.
2. Profitable companies are the only ones eligible Only companies that are in profit can claim. FALSE
Companies often extend themselves to complete a project and in many circumstances this means they aren’t in profit. This can relate to a variety of reasons such as reduced turnover, increased spending in investing within the business or unforeseen costs. It is a severe mistake to think this means you will not qualify. The criteria for claiming R&D tax credits are unchanged and in these instances it would be a greater benefit to apply and claim your maximum benefit to either reduce your corporation bill with tax relief and in some instances you can claim a tax credit.
SMEs that have made a loss can claim an enhanced amount of 230% of the R&D expenditure. Ask us more about the eligible amounts.
3. You hired a sub-contractor to complete your project so you cant claim. FALSE
If your project requires outsourcing to sub-contractors for specific skills or machinery, you will still qualify as the project is for the benefit of your UK limited company.
There are specific terms surrounding this and you can currently claim up to 65% of their costs within the projects you are claiming for. It depends on your companies size and this is particularly beneficial to companies with fewer than 500 members of staff.
4. R&D tax relief is only conducted by scientists in white lab coats. FALSE
The criteria for R&D Tax Credits is wide and varied and simply needs to demonstrate that an appreciable improvement has been made. You may have made a new drug which will revolustise the market, created a gluten free cookie recipe or perhaps you have automated or combined your internal software processes with some bespoke coding. The possibilities are endless! The R&D tax relief incentive is open to all UK limited companies no matter what sector they are in.
5. Making a claim is quick and easy and anyone can do it. FALSE – Seek professional help to avoid pitfalls.
Technically anyone can submit a claim and HMRC will review the information provided. Without correctly amending or submitting a CT600 tax return and the essential documentation which accompanies this claim you will however encounter difficulties and further investigation from HMRC.
The legislation is extensive and ever evolving. To go it alone is possible and brave. You may succeed and complete an accurate claim. The likelihood however is that you will not claim for everything eligible and potentially miss out on thousands of pounds or you have to face an enquiry from HMRC and justify everything you have submitted.
If your calculations are incorrect, you use the wrong language and terms in your application or miss something entirely, HMRC will take a dim view of this and require an in depth explanation and could possibly reduce or refuse your claim.
The facts detailed in a report produced by Counting King will show all the key information HMRC need to grant your claim swiftly. Its fast, efficient and stress free.
How Counting King can help your limited company
We are a specialist tax advisory firm dedicated to finding clients the most efficient, legal and trustworthy services and incentives on the market. If you have any questions regarding your R&D Tax Credit application then we are here on standby to help.
We can walk you through the entire application process so you are constantly up to date and understand what the next step is. We conduct all the work for you so you don’t have to worry about a thing.
Counting King are R&D Tax Credit Consultants based in Manchester, UK but are happy and keen to work with all UK limited companies no matter where you are based.
If you think you may be eligible then please contact us by message or call 0161 399 0152. We look forward to working with you soon.