The UK government has been supporting technology innovation within companies through R&D tax credits since 2000. The scheme was developed to cater separately for small and medium companies (SMB) and larger companies through two separate schemes. The small company scheme is the more financially generous and allows companies to reclaim corporation tax (CT) relief on allowable R&D costs of 230%. This means that for every £100 of qualifying costs we can identify, your company could reduce your CT by an additional £130 on top of the £100 you spent. These credits can be applied to that years tax bill, a previous years bill or, if you are loss making, cashed in to HMRC for a refund. Now that's pretty exciting!
To be considered an SMB you must have less than 500 employees, and annual turnover of <€100million or a balance sheet of <€80million. You must be involved in technology R&D, which covers all applications of science to your industry and doesn't mean you need to be a "tech company", but are using technology to innovate your business. You cannot claim for business innovations such as new business models, market expansion into other countries or licensing or technology you have developed or are licensing from someone else.
R&D Credits Claims
The qualifying activities vary between companies. In many companies the activities that would qualify are obvious, for others the qualifying activities might be much more difficult to identify as they could be deeply integrated within a project or across projects.
Similarly, not all through the activities undertaken by a typical R&D team may meet the criteria for a claim. Sifting the activities and placing them in context is what we do best. Given enough time and research you could probably do this too, but that is time away from R&D and involves management co-ordination. We take that burden away and add in our considerable knowledge and expertise.
Business innovation isn't what we are looking for. The activities have to relate to innovations in technology within the normal business of the company. Technology is defined as the application of scientific research to a practical challenge. For this reason theoretical research and mathematics are not allowable as qualifying activities. Codifying mathematical principles into an algorithm may be, depending on how that was achieved.
You can see that the area become complex very easily and an ability to navigate the legislation and relate that to your company's activities is crucial.
Having said that most companies underclass my a significant amount.
Finding the right things to include in your claim really revolves around any cost involved is R&D that isn't a tangible asset. The costs are often referred to as consumable because they are effectively used up in the process of innovation. This includes people costs for those involved in R&D and supporting those activities.
They are seen as consumable because the government recognises that innovation is speculative and may never result a product or service that you can earn revenue from. That doesn't mean you can claim for services you choose to give away!
People are normally the highest consumable spend you'll have. You need expertise to innovate, some of that will be people you choose to hire or have hired previously, or people you subcontract with. What you can't claim for are strategy consultants, who the government regards as people paid to provide an opinion. Your R&D for the purposes of a claim must be directly engaged in innovation or in functions that support your teams innovation activities.
Worrying about who those people are and calculating out how to claim for them is something we do with you. We have years and hundreds of claims under our belt so we can steer you through this process with ease.
In addition, there may be other costs that are directly or indirectly associated with R&D. Evaluating whether they can be utilised in a claim is a more complex process. Of course, we do that too!
Once we have established you as a client then our fees are wholly contingent, which means we only get paid when you receive financial benefit, and that we always work in your best interests, not ours.
We don't claim to be the cheapest but we are one of the best with a 100% record of successful claims including a few HMRC enquiries, although they are rare. Our calculations are transparent and you'll know what our fee will be before the claim is submitted. Any further work that becomes necessary is covered by the same fee and we'll never charge any more.
True guarantees are rare in life but we will guarantee to stick with your claim until it's resolved and to always act in your best interests. We guarantee to utilise our skills and experience on every claim for your best possible outcome, without placing your company at risk from enquiries or investigations and the management time that they require.
We look for a long term relationship in our dealings with clients and we are always available for discussion and financial planning.
The narrative is an essential part of the claim and no claim can succeed without a narrative that describes what you do and why it qualifies for R&D Tax Credits. This part of the submission identifies qualifying activities; these are those projects you started, completed or abandoned which contain activities that meet the criteria described in the legislation. This is the part that causes most difficulty for companies as the legislation is complex and convoluted and interpreting the claim requirements needs experience for success.
We are experts at developing narratives that support quality claims. We don't leave the task to you. What we do is get to know your company, the engineering that you have undertaken and help place that in the context of your industry and technology generally. Our team has broad and deep technology expertise, from electronics to software, from materials science to mechanical engineering. We can take your engineering notes and discussions with your R&D team and build a quality narrative that supports the scope of the claim in the format that HMRC expect.
Not every company can successfully claim for R&D Tax Credits and it is not enough to be using technology or configuring software, materials or systems for your specific needs. We look for the technology risk in what you are doing and communicate that appropriately. The claim is a formal document and failure to take account of the legislation and guidance can lead to HMRC sanctions.