The eagerly anticipated (at least by some) Chancellor’s Autumn Statement, that was theatrically delivered in the House of Commons on Wednesday 25th November, made no changes at all with regard to R&D Tax Credits.
Nothing had been officially promised (or ‘leaked’) in this regard, so there were no ‘U-turns’ by the government here; albeit some had speculated that the relief might be reduced significantly (as has happened with the Business Growth Service) and one or two supposedly knowledgeable ‘insiders’ had even speculated that it might be increased slightly, as has been the case on a number of occasions over the past 15 or so years. We listened carefully to the entire statement and were somewhat pleasantly surprised to find that R&D Tax Credits didn’t even get a mention!
So this potentially very lucrative and worthwhile relief (where the average claimed corporation tax saving by SME’s in the year to April 2014 was just under £50,000) is still available to both SME’s and indeed larger companies, but surprisingly less than 2% of the SME’s who could potentially claim do in fact do so. Perhaps businesses are happy paying more tax than they need to after all?
If you haven’t yet properly considered this, and do want to help your clients reduce the amount of corporation tax that they have to pay, then you may be surprised to learn that they are likely to be eligible to claim R&D Tax Credits (and thereby reduce the corporation tax that they pay) if they are:
- standing the risk / cost of the development work that they’re undertaking
- using science and/or technology innovatively
- seeking an advance in overall knowledge or capability in a field of science or technology
- resolving scientific or technological uncertainties, in developing a new or appreciably improved process, material, device, product or service
Companies from a wide variety of different sectors are likely to be eligible to claim (and indeed have successfully claimed), with companies involved in some aspect of manufacturing, engineering and IT / software development making more claims than any others.
Claiming is relatively easy (when you know how to), and claims are settled very promptly by HMRC – typically within 4 to 6 weeks of submission. The return on time needed to make a claim is quite high, both for Accountants and their clients, and it goes without saying that clients are often delighted when their Accountant has promoted something that then saves them an often significant sum of money!
Some Accountants are already familiar with this and feel comfortable claiming themselves, others think that this is quite specialist and think, as we do, that it’s better / preferable to use and be supported by an experienced independent R&D Tax specialist.
Our R&D:WISE offering was launched earlier this year with this very much in mind; we work in partnership with independent R&D Tax claim specialists, Luvo Financial LLP, who are more than happy to chat further with you about this, to establish client eligibility, to estimate what tax saving is likely to be realised by claiming and, if engaged by your client, to provide formal support in pulling together then submitting a claim via yourselves.
Please don’t run the risk of someone else raising this with your clients before you do; get in touch with Sarah Rigg at Tax:wise on 01455 852558 in the first instance about this, or feel free to drop her an Email firstname.lastname@example.org.