Have you done eligible R&D projects, but haven’t yet claimed your R&D tax relief?
Anything you have accumulated up to the end of November 2017 could be lost, if your accounting date is April 2020 and you don’t get your R&D tax credit claim sorted by 30th November.
What are the rules to making a backdated R&D tax credit claim?
HMRC’s guide to ‘Research and development tax relief. Making R&D easier for small companies’ explains their rules for backdated R&D Tax credit claims:
“If your company has been undertaking qualifying R&D and has not yet claimed R&D relief, you may make a backdated claim within the anniversary of your filing date — generally two years after the end of the accounting period.”
It works like this because it’s a Corporation Tax relief and you have 24 months after the end of your accounting period to make any changes to your Corporation Tax return.
Lots of companies neatly tie their accounting period in with the financial year change in April. So, you’ve got until the end of November to get your R&D tax credit claim submitted, or you‘ll lose out.
Does my company even ‘do’ R&D?
This is usually the first line of enquiry we get from our clients. Business people, in particular, understand that HMRC have very specific definitions for the words they use in their policies. R&D for tax relief purposes, as determined by HMRC, may not be exactly the same as your company’s definition for your R&D department.
For your projects to be eligible for R&D tax relief, they need to be resolving a scientific or technological uncertainty. This does not mean that only companies operating in the science or tech industries can apply. One of the many great things about this tax relief is that any type of business can use it, as long as they can prove their project meets the criteria.
What does this actually look like?
Even if your R&D work does not have an overall science or tech purpose, you can claim for the parts that do. This might be:
- Creating a brand new product, system or service
- Modifying an existing product, service or system
- Software made specifically to resolve an issue
It must be a problem that doesn’t already have a solution somewhere else in your industry. If you can research existing answers, or ask a consultant, your project probable isn’t within HMRC’s ‘R&D’ definition. But a new problem, no matter how small the change, will be something that adds to the overall knowledge in your field and be eligible for R&D tax relief.
Is it worth claiming?
Put your figures into our free R&D Tax relief calculator and see the potential for your company. There are options for both profit and loss making companies. You only enter your approximate figures, with no identifying information. So we are not storing or selling your data.
Our average claim is £49,000. Definitely worth a little bit of time collating your information and chatting to us.
There are specific costs that you can and can’t claim for. Among those that can be included in your R&D tax relief claim are:
- Consumables used during your project
- Employee costs, including subcontracted staff
- Utilities used during the R&D project
If an allowable item is also used for work outside the R&D work, you can claim for the proportion that is spent on your project.
Why are so many companies missing out?
We are constantly trying to combat this problem. Only around 10% of the companies eligible are actually claiming for their R&D tax relief. There are various reasons why the others don’t, including:
- No idea how lucrative a tax relief it is.
- Think they can’t claim because they are not making a profit – this isn’t true.
- Simply don’t know the R&D tax relief schemes exist.
- Wrongly assume that they have to ditch their current accountant to get in an R&D tax relief specialist. This couldn’t be further from the case. We only deal with R&D tax relief claims and work with businesses’ accountants to get all the necessary information.
- Sometimes people just don’t have the time to investigate which scheme to use and put their misapprehensions to rest. There is a lot to consider.
- Scared of penalties from HMRC for making a mistake during the application process.
None of these are good enough reasons for you to miss out on substantial investment you can put into your next innovation.
You don’t have to sweat the details of the schemes’ admin – we’ll do it all for you. Just give us a call and we’ll identify your eligible projects, find all the applicable costs and sort out the rest of your claim. Just give us a call on 0330 0539 112, or drop us an email to firstname.lastname@example.org, to get the ball rolling. Just don’t leave it languishing on your ‘to do’ list for much longer.