Tag: r&d

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Business tips Cash Finance Function Tax Uncategorized

More money for your business – tax savings during covid 19

More money for your business than you know

Even with a little glowing light at the end this unimaginably long tunnel, it does feel like for 2021, things just managed to get worse. But we’re not here to spread doom and gloom. We want to bring hope and open your eyes to options that until now you might not have considered for your business.

More options than you realise.

You’re probably feeling like you’ve exhausted all of the support, funding and loans available to you. However, as Accountants and Advisors we have a duty to ensure our clients leave no stone unturned in these remarkable conditions we find ourselves in. And there are ways, many ways.

As expected, we have seen the government extend initiatives, pumping more money into the pot. Money to give businesses and individuals the necessary support to try and survive. But government support and loans are not the only options for businesses right now.


Cashflow from Tax Advice & Reliefs

We highlighted it back in March but still tax advice seems to be getting missed out of the opportunities. 

Now is the time to consider tax reliefs and advice for your business

And there’s a lot to consider – see the image and summary below:


Tax is a very real cost to businesses. To fail to reduce it, is to miss out on money that should
be working for you, in your business. Having an awareness of the tax consequences of grants and loans when using them is vital. You don’t want to walk into unexpected tax charges. But with the right advice you can identify major cash injections.


If you’re a business owner reading this, valuable tax savings could help counteract some of the damage you and your business are feeling right now. There are essential and popular advisory opportunities that can get money back in a relatively short timeframe with HMRC.


And tax savings don’t need to be paid back. No debt hanging over your head. Just money back
into your business. Take R&D Tax Relief as an example, you could claim up to 33%
of the costs incurred on activities that are considered eligible. This money
can be used for absolutely anything.

Don’t leave any stone unturned

Work with us, or your Accountants and Advisers, and do not leave any stone unturned. Don’t miss out on any opportunity for money back into your business when you’ve come this far.

Take a look at the image and summary, see if anything flags up for you. If they do, let’s talk.

We can help get you through this. 

 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

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Cash Finance Function R&D

Can businesses making a loss claim R&D?

Can businesses making a loss claim R&D?

This is a question that comes up a lot. The quick answer, if a business is making a loss, yes they absolutely can claim R&D tax relief (as long as they’re eligible ). But many businesses aren’t claiming because they don’t realise that even if they’re not turning a profit, they are entitled to R&D tax relief.

The truth is the cashflow benefit is actually greater for loss-making SME’s. Here’s the numbers:

Loss 
If a company has made a loss then HMRC will make a cash payment to them of up to 33.35p for every £1 spent on R&D activities.

Profit
If a company has made a profit then HMRC will make a cash payment to them of up to 24.7p for every £1 spent on R&D activities.

It may be the case that your business was making profits prior to the R&D claim but following the application of the tax relief the business is now making a loss (from a tax perspective). In these circumstances, the amount of R&D benefit they receive will sit somewhere between the ranges set out above depending on their specific circumstances.

Quick recap

R&D tax relief was introduced by the government to support and incentivise innovation amongst small and medium-sized UK businesses. A company can claim cash payments of up to 33% of the costs incurred on activities that are considered eligible and these funds can be used for any purpose including the payment of dividends!

All businesses are potentially eligible to claim the relief, provided funds have been spent on developing new or existing products, processes, and other technologies.

To make a claim, a business must:

Make a considerable improvement to existing technology

This does not always mean it is ground-breaking or innovative work. If a business is working to make its product, services, or processes, faster, less expensive, or better in some way, then this may be eligible for R&D tax relief.

If you would like to understand if you are eligible then why not jump onto a quick 15 minute “rule in, rule out” call with our R&D expert. Click here to book.

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

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Business tips Finance Function R&D

Finding R&D tax relief in: Construction

trends

Finding R&D tax relief in: Construction

AM I ELIGIBLE TO MAKE AN R&D TAX RELIEF CLAIM?

The key questions to ask
yourself for any project you have undertaken are:

1.   Have you gone beyond “the norm” within your industry?

This could be using new techniques, or re-thinking how something can be achieved because you were constrained by conventional methods. This could be from the types of materials used, all the way to the overall process and project management.

2.    Have you then had technical difficulties and challenges in achieving what
you have set out to do?

Also remember that this type of work could be for projects you have tendered for but have not ended up doing the work. So, if you have tendered for a project where the design involved technical advances and challenges, but you didn’t go ahead with the project, you could still claim for your time and costs in tendering.

TYPICAL PROJECTS

·     Integrating new technologies into builds / restorations that improve efficiency/ reduce costs:

Example: Testing heating systems or insulation that needs to be tested
because of technical uncertainty over whether it will work in a specific
environment.

·     Trying or testing new materials that are improved

 


Example: Materials that are stronger, cheaper, more environmental – whilst still conforming with regulations.

·     Innovative energy saving techniques that are challenging to implement.

 

·     Time spent on tendering for contracts, even if unsuccessful.

 Example: If you had to think about technical problems and design solutions in order to tender for a contract, this can also qualify, even if you didn’t get the relief.

 ·     Designing or using new equipment that is new to the industry and needs to be technically upskilled on.

 ·     Changing processes to improve efficiency, reduce costs, or reduce waste. For example, recycling a waste product which has to be processed in order to make it disposable.

 Example: Removing hazardous materials

from old buildings and separating out parts to be re-used or made recyclable.

·     Anything software related – if you’ve adopted technology like apps or platforms which you have built or modified yourself, then you may be able to claim for that.

  

CASE STUDIES

Incorporating new materials into building design and construction:

Our client was designing a set of new build apartments. They trialled and
tested a new heating system to be incorporated into the building. Costs claimed
were staff time, some testing materials and a subcontractor who installed some
of the units.

 

CLAIM SIZE: £40k of costs, £10k corporation tax saving.

Incorporating new materials into building design and construction:

Our client was building a large recycling plant and was finding methods to reinforce the concrete forecourt to increase the life of the ground used by heaving goods vehicles. Costs claimed were subcontractors – designers and engineers – and materials used in the testing phase.

CLAIM SIZE: £120k of costs, £40k tax credit from HMRC.

 Development of residential properties in a historic mill in north of England:

Client was attempting to design the layout of the building to (a) maximise energy efficiency and (b) retain original features. This involved several technical challenges such as incorporation of different materials and complex CAD designs.

CLAIM SIZE: £75k of costs, £25k tax credit refund from HMRC.

 Software design to create lighting systems to maximise light and efficiency in a given space:

The brief from the customer was to achieve a level of natural lighting throughout the building. The team investigated and designed techniques to achieve this using different models. Given the wide number of variables and uncertainty over how different aspect would interrelate, it took considerable time and technical work to come up with the best solution.

CLAIM SIZE: £25k costs, £6.5k corporation tax saving

 Design of an off-grid containerised weather station that could be moved into place and withstand extreme weather conditions:

This involved the experimentation of different materials and structural design. Due to the unique elements of the location and environment, the majority of the design and implementation was a technological advance and incurred several technical challenges.

CLAIM SIZE: £220k costs, £74k HMRC refund

If you would like to find out if you are eligible then book a 15 minute “rule in, rule out” call with our specialist here

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 
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Cash Finance Function R&D

Why now? Preparing for your R&D claim. People costs

Running people

Why now? Preparing for your R&D claim

People Costs

Beginning preparations for R&D claim well in advance of the deadline is key to ensuring you secure the maximum claim. But what if your business is only in the very early stages? Making your R&D claim is unlikely to be on your radar. Or, perhaps you know you’ve got loads of time before you need to make your claim, it’s two year window after all….what’s the rush? 

Well, here’s just one reason why it’s important to be prepared: People costs.

 

Meet Our Client – Intelligent Data Software Business

We delivered their first R&D Claim.

As a start-up business heavily focused on developing a software product to take to market; unfortunately, they hadn’t kept specific records of all employees R&D time spent.

This is perfectly normal for many businesses and so they reasonably estimated the time spent for a Project Developer over the last 3-year period, as 60%.

The Project Developer had a salary & pension of £50K/annum.

Working together for the future claim, we setup appropriate systems for timekeeping. For this client, this was through a monthly review, taking only 15 minutes at the end of each month.

When calculating the Project Developer’s time spent for the next claim, it was recorded at 70%.

That’s an additional £1,675 additional cash back, from, just 15 mins of work a month.

 

LET’S START NOW

 

We will work with your business, to establish the right systems now to monitor your people costs. Keeping in touch quarterly we’ll check these are still working for your business and make any required changes – we want to help maximise your claim.

 

Through establishing the right systems, the value of your claim is likely to increase. You’ll also have the peace of mind you’re claiming the right amount: no under, or over claiming.

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

https://www.linkedin.com/in/southbourneaccountancy/ 

https://www.facebook.com/debbie.hancockSA 

Categories
Business tips Finance Function R&D

Why now? Preparing for your R&D claim

Why now? Preparing for your R&D claim

Subcontractor costs

For businesses that know they can make an R&D Tax Claim it might feel like you have all the time in the world prior to submitting that claim. With a deadline of 1 year after the year end filing date – so 2 years from end of the year you incurred the costs – the pressure isn’t really on. But should it be?  

 

Well the truth is yes. Planning early for your R&D claim be very advantageous, leading to a larger claim value and less risk of the claim being challenged.  

 

Depending on the complexity of the project there may be several costs involved – the more estimations that are made, the less accurate the claim. 

Here’s an example of the impact it can have on your businesses claim: 

 

Meet Our Client – Holiday & Leisure Business 

 

This client came to us, as they’d prepared an R&D claim for themselves, but they were really struggling to make the time to claim. Unfortunately, they’d missed deadlines and had lost out on money back into their business. 

 

When we checked out their previous claim they were working with an existing subcontracted developer on a number of different things: maintenance & server work, website builds in other countries and finally the website build qualifying for R&D. However, the subcontractor wasn’t separating out the R&D work on their invoices. Nightmare. 

 

As a result, they’d spent at least 4 hours going through every invoice to estimate what related to the R&D project. The business estimated the time spent by the subcontractor over the last 3-year period, as 50%. 

 

The subcontractor had an average annual fee of around £50K/annum. 

 

Working together for the future claim, we setup appropriate systems for clearly identifying the time spent by the contractor on R&D project work. For the client, this was through making changes to their invoicing system, taking only 30 mins to setup. 

 

When calculating the Subcontractors actual time spent for the next claim, it was recorded at 65%. 

 

That’s an additional £2,500 cash back, from, just 30 mins of accounts work. 

 

LET’S START NOW 

We will work with your business, to establish the right systems now to monitor your all of your project costs. Keeping in touch quarterly we’ll check these are still working for your business and make any required changes – we want to help maximise your claim.  

 

Through establishing the right systems, the value of your claim is likely to increase. You’ll also have the peace of mind you’re claiming the right amount: no under, or over claiming. 

If you would like to find out if you are eligible then please book a quick 15 minute “rule in, rule out” call here

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 
Categories
Business tips Finance Function R&D

The very real cost of DIY R&D claims

business journey

The very real cost of DIY R&D claims

If I’ve caught your eye with this, I’m going to guess you’re either the business owner, or you’re the lucky person tasked to compile your R&D Tax claim; FD perhaps? Thought so. You lucky devil. No doubt you’re already experiencing the very real cost of doing R&D yourself….the lack of time, and additional responsibility. Ever considered the cost of that? 

Here’s four very real costs of going R&D yourself: 

COST OF YOUR TIME 

Think about why you were hired. Was it to be an R&D Tax Specialist? Probably not. You’re an expert in your field, as I am in mine. Taking on a project like an R&D Tax Claim requires time; time researching a complex tax system to determine the savings your business can make. 

Logic suggests that if you bring something in-house, you’ll save money on the fees to outsource – correct. But it’s a false economy. Let me explain. 

Case study: As an FD, with such a high impact role, falling behind on your work can ultimately slow down the productivity of your business. You have an FD. Through changes implemented and processes introduced, she/he makes the business £500k. Any time taken from the FD’s area of expertise will ultimately have a negative impact on the revenue of the business. 

Makes sense when you look at it like that. 

An FD of a software business once fed back to me: “The main benefit was how quick the process was and the auto feed into Xero – in other words it saved me and the team valuable time pulling the claim together.” 


COST OF UNDERCLAIMING….OR OVER 

You can’t be expected to be an expert in finance, and an expert in tax. Knowing what constitutes as R&D is where I see mistakes time and time again. And it’s hardly surprising; tax is forever changing minefield. Unless you have your head in it every day, I really don’t understand how you can be aware of all the many nuances this relief holds. 

For example, you’re probably aware, you cannot include rent in your R&D claim. However, if you are renting a property with bundled power and utilities, did you know HMRC accept claims of 10% of the total rent? 


Knowing the boundaries of R&D is critical to ensure you are maximising your claim, this is true for subsequent years also; one year is never the same as the next, what might qualify one year, might not the following – overclaiming could mean a potential HMRC enquiry. 

Case study: A pharmaceuticals company we worked with paid £30k/year for a utility and rent package; looking back over 2 years we secured them an additional £2K. 

In another scenario, a client building a prototype for a heating system, had two employees – paid £100K in total – completing preparatory work for a month; we identified an extra £2.5K on top of the claim. Every little counts. 
 

COST OF MIND FREEDOM….STRESS 
Responsibility for making an R&D claim can carry a lot of stress. Although it’s not a direct cost, the cost of stress is very real. Unless your area of expertise is R&D, it is very difficult for you to have peace of mind that your R&D claim is 100% accurate. 

Case study: We helped a client who had an enquiry as they had put the claim in themselves & they didn’t know how to answer some of the queries, we assisted in resolving that without reducing the size of the claim but it took nearly 6 months to sort. 

 
With HMRC’s approach to procedures and policies constantly changing, coupled with a risk of under/overclaiming, it’s a heavy burden to shoulder. 

 
COST OF EXPERTISE 

The biggest challenge and risk of all, is down to having the right expertise. Your R&D claim will require you to draft up and understand a technical specification of the project carried to justify the claim. If you have a technical person capable of producing this content in the right format, then great! If you don’t, then it falls to the FD to step into that pseudo technical role, which is likely to be outside their expertise. 
 
This is the primary reason FD’s pass claims our way, – it simply falls outside the scope of their expertise. 

  

Cost of time. Cost of under/over claiming. Cost of stress. Cost of expertise. 

It’s all at a cost. 


If you would like to save yourself time, stress and money then speak to our specialist R&D consultant. A quick 10-15 minute call with determine if your business may be eligible. What is there to lose?

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

https://www.linkedin.com/in/southbourneaccountancy/ 

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Business tips Cash Finance Function R&D

3 businesses lose £150k in R&D tax relief

3 businesses lose £150k in R&D tax relief

The tales of R&D

At first glance you might think this is an article about claims that have gone horribly wrong….but oh no, it is so much worse. Read on to find out how three businesses have missed out on a collective sum of £150k. 

Here’s the tale of three businesses who innocently lost their rights to £150k. By simply doing nothing. Shudder. 

It all begins with a DEADLINE:

You can make a claim for R&D relief up to 2 years after the end of the accounting period it relates to. Miss this?

Your tax relief is gone forever.

Misfortune of imagination construction

Dave and his team developed a new piece of construction equipment back in 2015. They’d invested heavily in staff for the project, testing materials and working with a subcontractor for aspects of the build. 

But there was a problem. Dave’s accountant told him he wasn’t eligible to claim R&D tax relief. It wasn’t until 2019 when an accountant friend approached him with the facts. 

MONEY LOST……£40k CASH BACK FROM HMRC

Disaster of NewHorizon Digital

NewHorizon were a digital agency specialising in building client communication strategies. They always thought R&D tax relief could apply to their mobile app & web builds. Unfortunately, as an SME time was precious and never on their side. One day the FD received an email advising there was a deadline for making R&D claims.

A deadline??

MONEY LOST…….£98k CASH BACK FROM HMRC OVER 2 YEARS

Trials & Tribulations of Taste First

Marco & his team at Taste First bistro huge amounts of time and effort carefully crafting the perfect menu with beautiful tasting options to cater for all kinds of diets, without losing the appearance, taste, texture and experience of their original dishes. As a small bistro with only a handful of staff Marco had no awareness at all of the relief until an R&D specialist approached him out of the blue….

MONEY LOST…..£14k CASH BACK OVER 2 YEARS

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/

2. Download our free guide on “7 mistakes to fix, to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/

3. Download our free Coronavirus support guide: https://debbiebaileymoney.co.uk//coronavirussupport/

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Cash Finance Function R&D

5 ways R&D could save your business

5 ways R&D could save your business

1. R&D Tax Relief for a business with no previous claims

An SME company that qualifies for R&D Tax Credits can receive an extra deduction of 130% of qualifying costs against their taxable profits. This is in addition to the 100% revenue deduction already given. For loss-making companies, the loss can be given up (so can’t be used in future) for an immediate tax credit equating to a maximum of 33.4% of the qualifying costs.
Claims can be backdated for costs incurred up to a maximum of 3 years ago.

Example:

A company with an April year-end incurs R&D costs of £100k per year and has been loss-making as they are currently in the development phase with their product.

They can make an immediate R&D claim for their April 2018 and April 2019 periods. They have already deducted £100k of costs from their annual revenue but can also deduct another £130k per year due to R&D tax credits (130% of £100k). In total, the £100k spent allows them to deduct £230k from revenue.

If losses are large enough, they will receive a tax credit of nearly £67k (£100k x 2 years x 230% x 14.5%). This will be received by the company as tax-free cash.

2. R&D tax relief where a business has built up losses

Some companies have made R&D claims in the last 2 years and decided to carry forward losses made into the future – as it will save them corporation tax in the future. They should consider amending their tax returns now to change the carried forward loss to a tax credit.

Example:

A company has made R&D claims for the last 2 years which has built up an “R&D loss” of £500k. Due to their projected product launch and projected profits from commercialising, they had decided to carry this forward to get future corporation tax relief of £95,000.

 

Instead, they can file amended tax returns and claim immediate cashflow of £72,500.

3. Maximising previously claimed R&D tax relief

It is worth reviewing all previous R&D tax relief claims to ensure the claims were maximised. If they have not been maximised, amended returns can be submitted to claim additional tax relief.

Example:

The company has not claimed for all materials, heat and light costs, smaller subcontractors, support staff e.g. HR, admin, finance.

The total of all these costs come to £15k a year.

If they resubmit the R&D claim with these costs included, it could give a further £10k tax refund immediately (£15k x 2 years x 33%)

4. Obtaining advance funding for R&D tax relief

Advance funding may also be available for a claim in the current year.

Example:

A company has been making R&D claims for the last 3 years and gets £25k a year back from HMRC.

They have a June year-end, but their accounts and tax usually take 10 months to finalise. Advance funding is available in April 2020 for the June 2020 year-end, which would otherwise only have been received in June 2020. This effectively brings the cashflow forward by 15 months, with only the financing cost to the client.


5. Shorten year-end to accelerate tax credit

For a loss-making company, shortening the year-end so that an R&D claim can be submitted sooner is worth considering.

Example:

A company with a June year-end has R&D costs of £100k and total losses of £100k up to 31 March 2020. They anticipate a much-reduced R&D spend up to June.

 

They decide to shorted the year-end (9 months to 31 March 2020) which allows them to submit an R&D tax credit claim of £33,350 to HMRC 3 months sooner than otherwise would have been the case.

If you would like to understand if you are eligible then book a 15 minute “rule in, rule out” call with our R&D specialist, book here. 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 
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Business tips Cash Gym R&D

Finding R&D in Software (Sports and Fitness)

Finding R&D in Software (Yes even in Sports and Fitness)

Normally, when it comes to software, R&D is found in developing new techniques for building software and new software builds themselves – so your software development businesses. However, customisation of software to fit a business’s needs WILL also qualify where a technological advancement has been made for the industry. This takes R&D projects beyond the software sector, giving scope to every industry – even the sports and fitness industry. 

 

AM I ELIGIBLE TO MAKE AN R&D CLAIM? 

The key questions to ask yourself for any software projects are: 

Have you gone beyond “the norm” within your industry? 

This could be using new techniques, or re-thinking how something can be achieved because you were previously controlled by standard methods. For example, development of software capability to improve a system, enabling existing technologies to work together. 

Have you then experienced technical uncertainties and challenges in achieving what you have set out to do? 

Did you know how you were going to achieve the end goal when you started? Or was it uncertain because of the new or different way you were approaching it? It must not have been simply adapted from freely available knowledge. 

 

R&D SOFTWARE PROJECTS 

Here are some examples of software projects that qualify for R&D Tax Relief: 

  • new software projects, or new functionality for existing R&D projects 

  • methods for integrating hardware and software platform 

  • development to increase the functionality of software programs or of an operating system 

  • innovative software development tools 

  • new data management techniques 

  • methods of obtaining, transferring, securing and manipulating data 

  • software to operate new computer hardware 

  • software to operate on devices like mobile phones & tablets that have operating systems pre-installed 

  •  

Case Study: Academic software 

Continued development of an existing academic software application for students to access software across any device, from any location. Costs claimed were predominantly for professional staff, subcontracted developers and software licenses. 

Claim size £75K Corporation Tax Reduction from HMRC. 

 

Case Study: Catering & Hospitality Software 

A business invested in the development of a web and mobile application for a digital menu, ordering, and marketing platform. Costs claimed were predominantly for subcontracted developers, cost of supplies and software licenses. 

Claim size £8K cash refund from HMRC. 

 

Case Study: Restaurant & Takeaway Software 

A restaurant developed an application to consolidate social media and marketing platforms within the restaurant and takeaway industry. Costs claimed were predominantly for subcontracted developers. 

Claim size £35K Corporation Tax Reduction from HMRC. 

 

Case Study: Staff & Recruitment (indirect) 

A business developed existing software systems to advance the insight and operations of the business. Costs claimed were predominantly for professional staff and subcontracted developers. 

Claim size £7K cash refund from HMRC. 

 

Case Study: E-commerce (indirect) 

An e-commerce retailer, developed a specialist shipping integration software. Costs claimed were predominantly for professional staff and subcontracted developers. 

Claim size £7K cash refund from HMRC. 

 

If you think your business may be eligible to make an R&D claim then please get in contact and speak to our R&D specialist. A quick 10-15 minute call will determine whether the activities fall into science and tech and the size of the claim. 

What do you have to lose? 

 

 1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 

 

Categories
Business tips Cash Finance Function

R&D – How to get more cash back into your business

Research and Development - How to get more cash back into your business

 

In February 2020, the government pledged to increase public investment in R&D to £22bn a year by 2025, meaning there is a significant opportunity for businesses to invest more on innovation and get cash back into their bank. 

R&D is a tax relief which is massively underclaimed by UK businesses, it is money that many businesses need right now. You can claim up to 33% of eligible costs incurred and better still you can go back up to two years. The average claim made by SMEs in the UK is £53,714 (2017-18). 

You can decide if to receive a cash payment now or a corporation tax reduction. R&D exists in every sector, it is not just for scientists in white coats. 

How can R&D help your business get more cash? 

There are two schemes available, this article will concentrate on the SME scheme (companies which have less than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups, fall into this category.) 

A SME company that qualifies for R&D tax credits can account for an extra 130% of qualifying costs on top of the 100% already deducted. Loss making companies can in certain circumstances surrender their losses in return for a payable tax credit. 

If as a loss-making company you decided to carry forward that loss for future tax benefits, you may want to consider changing your tax return to so the carried forward loss is a tax credit. This would give you cash now when you might need it most.   

What is R&D? 

HMRC are looking for R&D that seeks to make a worldwide advance in some area of science or technology. It doesn’t have to be earth-shattering and it doesn’t have to succeed. In fact, failure on technical grounds e.g. it was too technically challenging. is often some of the best evidence of a qualifying R&D project!  

The work needs to involve technical ‘uncertainty’ i.e. it’s not straightforward and requires some iterative work and testing; and the work is carried out by staff who have either training or experience in the area of science or technology being advanced. 

Who can claim? 

To be eligible for R&D tax relief, your company must be Limited, and subject to corporation tax. Your company must have fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups, fall into this category. 

What are the criteria: 

1) There must have been at least one technical goal.  

2) There must have been at least one significant technological or scientific difficulty to overcome while trying to achieve this goal. 

3) There must have been people with the right skills and experience involved in overcoming this technical goal. 

What do you need to do: 

Once you have established if you have a valid R&D claim you will need to: 

  1. Work out when the R&D project starts and ends. 

  1. Collate qualifying costs 

  1. Complete the calculations 

  1. Send HMRC details to support your R&D claim, you may wish to use the online service. 

  1. Submit you CT600. 

This article does not go into the specifics of the claim and qualifying costs. Please speak to a trained professional if you require additional information and support.  

So, don’t wait to make a claim, assess your projects to determine if your business has been involved in Research and Development and get that cash back into your business’ pockets.  

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