HOW DO I KNOW IF MY PROJECT IS ELIGIBLE FOR AN R&D TAX CREDIT CLAIM?
You will need to demonstrate that you are developing an innovative or new solution to an existing problem. To get R&D relief you need to explain how a project:
- Looked for an advance in science and technology
- Had to overcome uncertainty
- Tried to overcome this uncertainty
- Could not be easily worked out by a professional in the field
- Your project may research or develop a new process, product or service or improve on an existing one.
WHO CAN BENEFIT FROM THE R&D SCHEMES?
- You must be a UK limited company and be subject to Corporation Tax.
- Have carried out research and development projects. The project must be one that qualifies as an R&D activity. This can be creating new products and services or simply improving existing products and services.
- And money was spent on the project.
WHAT COSTS CAN I CLAIM BACK?
- Staff and Director costs working on the R&D project including NI Contributions, Pension contributions, Bonuses and reimbursables.
- Software licenses and costs. If you are sharing software use on other projects you would need to apply an apportionment.
- The cost of designing and constructing a prototype as well as all the associated materials, hardware and consumables.
- Consumables and materials that are used in the R&D projects including materials and hardware and utilities. Fixed Assets are not allowed. Note HMRC guidance on apportionment rules.
- Sub-Contractors. 65% of the payments made to “unconnected” subcontractors but 100% if “connected”.
- Payments to Research Establishments to conduct research on your behalf.
HOW FAR BACK CAN I CLAIM R&D TAX CREDITS?
The time limit for a research & development tax relief claim is two years – measured from the end of your business accounting period
CAN R&D CREDITS BE CLAIMED EVERY YEAR?
Yes if you have qualifying expenditures you can make a claim every accounting period end.
IS THERE A MINIMUM SPEND ON R&D?
There is no minimum expenditure on qualifying R&D. However, it may be difficult to prove an R&D project exists if the expenditure is very small.
WHEN WILL I RECEIVE THE PAYMENT FOR THE TAX CREDIT?
HMRC guidance is 8-12 weeks. However, this can be longer for larger claims and more complex claims. We will make every effort to work with HMRC to get you the claim as soon as possible.
CAN ALL SMES CLAIM FOR R&D TAX CREDITS?
Yes they can but they must meet the following correct criteria.
- Less than 500 staff
- A turnover of under 100 million euros or a balance sheet total under 86 million euros. You must include linked partnerships and linked companies.
- The SME is subject to UK Corporation Tax
- The company is a going concern and not going into administration
- The SME follows a trade which relates to R&D activities that it seeks to claim for
I AM IN RECEIPT OF A GRANT. CAN I STILL CLAIM R&D TAX CREDITS?
There are rules regarding eligibility for tax credits if you are grant funded. However, it is likely that you may still be eligible for tax credits for any privately funded part of the R&D project.
WHAT IS A “COMPETENT PROFESSIONAL”?
HMRC expect competent professionals to be engaged in the pursuit of R&D. However, there are no exact definitions and relevant experience may be sufficient to pass the test. Generally speaking, HMRC would expect these competent professionals to have the relevant skills for the R&D project. HMRC would expect them to be Knowledgeable about the relevant scientific and technological principles involved and be aware of the current state of knowledge. They would also be expected to have sufficient experience and have a successful track record in their field.
CAN I CHANGE MY R&D PROVIDER?
Yes you probably can but there may be a contract clause preventing you from doing so. Quite often SMEs pay extortionate fees of up to 30% and realise soon after that they have been overcharged. There are many competent R&D consultants who charge flat fees and provide an equal service at sometime 60% less. Come over to us for a flat fee with no hidden extras. Call us and we can arrange a free consultation.