Support is, however, available to help finance R&D activity through a government scheme which can return up to 30 per cent of a company’s cost in innovative projects and developments.
The UK has some of the most effective tax relief schemes available for this type of expenditure in the form of R&D tax credits – but is, surprisingly, still a largely untapped resource.
A huge number of organisations are eligible to take advantage of the scheme, yet miss out, either because they are unaware they are able to claim, or are put off by the perceived paperwork and legwork involved.
History of R&D tax
The scheme was first launched by the government in 2000 and Chantrey Vellacott has achieved a 100 per cent success rate with the claims we have made for our clients ever since – the total for which is around £45 million.
So why have we been so successful? Our R&D Group is primarily comprised of engineers, software programmers and scientists, as well as specialist tax accountants. This diverse level of expertise across the group demonstrates our commitment to the tax relief and ensuring that our client’s claims can be maximised.
Who can claim?
If your company performs any activities that fall within the definition of research and development you should be claiming the generous additional R&D tax reliefs that are available.
SMEs can enhance their qualifying expenditure by as much as 125 per cent – as well as having the option to convert tax losses created by the relief into cash.
Large companies can also benefit by virtue of a 30 per cent enhancement to qualifying costs. Further, since 1 April 2013 they can alternatively elect for a 10% tax credit in their accounts that can trigger a tax repayment even in the event they have not paid any corporation tax.
These credits are aimed at companies that are actively involved in research and development. This includes the innovation, improvement or development of a process, product or service.
The R&D work is not restricted to any one industry and goes beyond the typical ‘men in white coats’ scenarios.
We’ve made successful claims for companies operating across the following sectors:
- Life sciences and pharmaceutical
- Software development
- Industrial and mechanical engineering
- Electronic products
- House building and construction
- Food technology
Supporting a claim
We have extensive experience in assisting companies to identify those activities and associated costs that could be included in a claim thereby either yielding an increased tax deduction or a tax repayment.
Once finalised, the information is summarised and we write a report that is then submitted to HMRC. If HMRC opens an enquiry into the claim, we would negotiate with them on a client’s behalf and seek to ensure that this is settled without delay.
Furthermore, even if companies are already claiming R&D tax relief, we often find that our specialist group are able to identify additional qualifying projects.
In fact, we have reviewed many claims and have submitted replacement claims to HMRC where we believe the previous claims to be understated. Our second opinion service operates on a standalone basis and we can structure our fees dependent on success.
Overcoming the myth
From speaking to companies across all sectors since the scheme was launched a clear picture has emerged.
The system is a thoroughly laudable and worthwhile incentive to help companies to develop new and cutting-edge products, but has arguably not attracted the interest it should have done.
Perhaps one of the main reasons behind this is that when the relief was originally launched, there was a lot of emphasis on the “research” side of the relief, thereby focusing attention on pharmaceuticals and life sciences companies and the “development” side of the relief that focused on engineering and related sectors was left behind.
I think it is fair to say that this barrier has remained in the mindset of many companies right through the life of R&D tax credits as there is a still a common misconception of R&D only taking place in laboratories.
This means that innovative work and problem-solving in many other industries such as construction, software development, clean technology and manufacturing can easily be missed.
The complexity of the R&D tax relief scheme also means that companies that do make a claim often make the wrong type of claim or don’t claim for the full amount.
R&D covers all sectors but so many businesses do not think they are eligible that they do not explore the possibilities at all, and that is such a shame.
How to get the ball rolling?
Our team has a tried and tested approach to identify, secure and maximise claims while keeping disruption time for the client to a minimum.
We can also operate on a no-win no-fee basis, so if businesses are in any doubt of whether they can make a claim they should contact experienced professionals and let us do the leg work.
So don’t miss out on funds you could be reinvesting in further projects and expansion. It’s also important to note that claims can also be backdated as far as two years.
If you would like to know more about R&D tax credits, please contact:
|Steven Levine, PartnerChantrey VellacottT: 07837 397 033E: firstname.lastname@example.orgW: www.cvdfk.com|