Recent government stats confirmed that 23% more SME’s had claimed R&D Tax Credits in 2013-14, compared with the previous year, but this is still a tiny proportion of the number of companies who are likely to be eligible and could therefore claim. This is clearly quite surprising, and flies in the face of the popular preconception that, if they had a way to, almost everyone would like to pay less tax!
R&D Tax Credits has been around in the UK for more than 15 years – it’s an enhanced Corporation Tax relief and has been successive government’s main way of encouraging limited companies to invest more in innovative development work. The average corporation tax saving / rebate for the initial two previous years that can be claimed is now c.£50,000 and there’s no de minimis level for claiming.
The four key rules that determine eligibility, are that claimants:
- must be taking the risk / standing the cost (of the R&D)
- must be using science and/or technology
- must be seeking an advance or improvement in a product, process, service or system (which can’t be trivial)
- must be dealing with and seeking to overcome problems and uncertainties
Claiming is relatively straightforward and easy (when you know how) and the companies who are claiming come from all sorts of sectors (some you’d never even think of!) – the important initial task is to clarify the scope of the R&D that’s been undertaken, confirm eligibility to claim and then pull together the claim in an appropriate / acceptable way (including summarising claimable costs and providing a report that justifies the claim from a technical perspective).
If you think that you’re paying too much tax and would like to see if you are eligible to claim R&D Tax Credits (and thereby pay less), then please contact your Accountant ASAP. If they can’t help or would like to discuss this with an independent specialist then please ask them to contact us at R&D:WISE Tel: 01902 244210 or Email: Enquiries@luvofinancial.co.uk
(R&D:WISE is a value-adding service promoted by TAX:WISE and supported by Luvo Financial, who work on a contingent basis and have a 100% success record)