12-months on from the emergence of the COVID-19 pandemic, now more than ever before, businesses are doing whatever they can to survive, especially to ensure cash flow is in the best possible shape. Ian Batkin, Partner at Luvo Financial, says Research & Development Tax Relief can really help business cash flow, and explains who and how it is a quick, easy way of generating cash.
Maintaining cash flow is crucial for keeping businesses running. Whilst having a profitable business is the goal, during times of crisis, survival is more important. But sufficient cash flow is the key as it guarantees businesses can continue to operate and trade.
How can R&D Tax Relief help?
Research and Development (R&D) Tax Relief, also known as R&D tax credits, is a UK tax incentive designed to encourage companies, of all sizes, to invest in R&D.
Claiming R&D Tax Credits under the government’s SME R&D Tax scheme can provide SMEs with a minimum 25% cash return on any R&D expenditure, rising to 33% for loss-making businesses. Claims are normally processed within four to six weeks and the cash is paid directly into a bank account.
R&D Tax Relief has been available in the UK for over 20 years. It is fully legislated by HMRC and businesses can claim for each year that they are eligible.
How do I know if my business qualifies for R&D Tax Relief?
Many businesses do not realise they are eligible for R&D Tax Relief. In fact, it is estimated that only 10% of SME’s who are eligible to claim actually do so.
If your business invests time and money into developing new products, processes, services or enhancing new ones, it is likely that you are eligible to submit a claim. There is a common misconception that the relief is only available to business involved in science-based research and development, which is not true. Luvo Financial has helped companies from a variety of sectors – including science-based and pharma companies, but also manufacturers and service sector firms – to make successful claims.
To be eligible to claim under the SME R&D Tax scheme; a business needs to:
• Be undertaking eligible qualifying R&D
• Have less than 500 staff
• Have either a turnover under €100 million, or a balance sheet total under €86 million
Many businesses have been forced to adapt and diversify during the pandemic, often developing new products and services, almost by accident. It’s worth taking a moment to consider if these activities could qualify as R&D.
I think my business may be eligible, what do I need to do next?
The easiest and quickest way to get a claim submitted and processed is to use an R&D specialist who will advise whether your business might be eligible to submit a claim.
Luvo Financial is a specialist independent firm that supports clients with R&D Tax Relief claims. We work on a no-win-no-fee basis and only support claims where we are sure that there is clear eligibility to claim. We make the process as easy as possible and work on your behalf to submit the claim. We’re proud to have a 100% claims success record.
If you’re still not sure if your business is eligible to submit a claim, please don’t hesitate to call or email us for an initial, confidential chat. There is no cost or commitment required for this initial advice; however, it may just provide you with some extra cash to help your business to stay afloat during these difficult times.