At Key Business Consultants, we have many years of experience in helping companies develop the best approach to making an R&D tax credits claim. We are R&D tax relief specialists and can help you across all stages of making a claim.
Some of the areas where we have helped clients include helping to prepare a suitable business plan, financial projections, dealing with HMRC inquiries, obtaining advance assurance from HMRC and managing the tax claim process from start to finish.
There are two schemes for claiming relief: the Small or Medium-sized Enterprise (SME) Scheme and the Research and Development Expenditure Credit (RDEC) scheme for large companies. In some cases, SMEs may not be able to access the SME scheme if they are receiving grants and we can help explain the option to use the RDEC scheme.
As R&D specialists we can help you increase the size of your tax credit by ensuring that all relevant spend is included with a claim. This can include identifying valid expenditure that has been miscoded, identifying items that have been forgotten and ensuring that the highest possible percentage for R&D costs is applied.
We would recommend that you contact us as early as possible if you are planning to undertake any work that may qualify for R&D tax reliefs. Even if you are not sure if the work will qualify we can help analyse the planned expenditure and where there is qualifying spend maximise the benefits available to you using the R&D scheme. But, even if you haven’t made contact at the outset it may not be too late. You have two years to make a claim for qualifying R&D tax relief so if your company has already undertaken a project we may be able to help you make a backdated claim.
R&D tax credits are very generous, especially for SMEs and cash claims can even be made by loss-making businesses. A claim can also sometimes be made on projects that ultimately failed.
R&D stands for Research and Development.
In the Frascati Manual (2015), published by the Organisation for Economic Cooperation and Development (OECD) R&D is defined as the creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture, and society – and to devise new applications of available knowledge. This is the internationally agreed standard definition. According to the OECD for an activity to be an R&D activity, it must satisfy five core criteria. Namely, the activity must be novel, creative, uncertain, systematic and be transferable and/or reproducible.
Our government is keen to increase total investment in UK R&D and has committed to meet a target of 2.4% of gross domestic product (GDP) invested in UK R&D by 2027.
This is partly driven by concerns to boost R&D spend after Brexit. The incentives offered by the government to encourage R&D have increased over recent years to help encourage more innovation in the UK. This was reflected in the most recently published figures for 2016 with R&D spending in the UK growing to reach a new record high of £33.1 billion representing 1.67% of GDP.
The R&D tax credit schemes are a valuable tax relief that helps push UK companies to increase spending on R&D activities. The tax credits for doing so can be significant. For tax purposes, the requirements that must be met for R&D to qualify for relief include creating;
- New processes
- Products or services
- Making appreciable improvements to existing ones
- Using science and technology to duplicate existing processes, products and services in a new way
In fact, R&D activity can qualify for tax relief even if the project in question failed and both profitable and loss-making companies can benefit from making a claim. Even the mere investigation of a potential idea could qualify.
R&D tax relief is available on qualifying expenditure and reduces the amount of Corporation Tax payable by profitable companies, allows for a cash credit for loss-making companies, or a combination of the two. The amount of R&D tax relief available depends on the total qualifying spend on R&D activities.
Speak to us today to see how much your business could claim and how we can help.