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SME Business

April 9, 2019 by Tania Toriello Leave a Comment

R&D (Research & Development) is a tax relief scheme which was introduced by the Government in 2000 to help and reward innovative businesses thus allowing them to progress.

What is R&D?

R&D takes all allowable expenditure incurred during the R&D project and allows you to gross it up by 130% meaning you can effectively deduct 230% of relevant costs from your profits. This equates to more than double of the allowable expenditure incurred.

Qualifying expenditure includes raw materials, staff costs, subcontractor costs and apportionments of overheads that are relevant to the R&D project. Loss making companies also benefit as they can opt for a cash payment of 14.5% of the losses made which increased from 11% as of 1st April 2014.

The R&D claim is submitted with a written report outlining why the project(s) undertaken qualify for R&D and backing schedules with details of costs incurred.

How far back can you claim R&D tax relief?

You have two years from the end of your accounting period to submit an R&D tax credit claim for any qualifying expenditure that you’ve identified during that period. This is because R&D tax credits are a Corporation Tax relief and the deadline for amending your Corporation Tax return is typically 24 months after the end of your accounting period.

Who qualifies for R&D?

The main requirement for a successful R&D claim is that your company is undertaking work which seeks to achieve an advance in science or technology.

The activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are also eligible for R&D relief.

The common misconception is that the R&D tax relief only applies to those companies working in a scientific sector. In actual fact any sector could qualify for R&D relief if they can prove the project lead to an improvement in that field.

Here are some examples:

  • Food & drink
  • Pharmaceuticals
  • Electronics and Electricals
  • Engineering
  • Foundries
  • Software & IT
  • Manufacturing
  • Chemicals & Glues
  • Waste Recycling Plants
  • Video Games Development

If you think your company could be eligible for R&D tax relief, there are a number of things that we can help you do in order to maximise your R&D claim.

These include:

  • Collecting information on what R&D projects you have done or will be doing so that we can advise whether you qualify for R&D relief.
  • Establish what costs were incurred during the R&D projects and ensure you have the evidence for these in the event that HMRC request further information.

If you would like to speak to us regarding R&D tax reliefs and whether you would be eligible, please contact us using the details below:

01908 219100

enquiries@advaloremgroup.uk

Filed Under: News & Insights, R&D, SME Business Tagged With: R&D

October 9, 2018 by Tania Toriello Leave a Comment

If you’re wondering whether your business is eligible for an R&D tax claim, then take one step further and find out…

Our dedicated R&D Tax Team have over five years of experience in providing professional and exceptional Tax Relief services to many clients and accountancy practices. Our consultants have a superb working relationship with the R&D offices within HMRC and they will adequately agree and submit the quantum of the claim with HMRC.  We work on a contingent basis, so there is absolutely no financial risk to you and offer no minimum claim level, complete transparency and 100% success based fee structure.

Click here for more information.

So, what are R&D Tax Credits?

R&D Tax Credits are a tax break situated by the UK Government for limited companies paying corporation tax. The R&D reliefs help a range of businesses that work on unconventional projects in sectors such as Science and Technology. For small to medium enterprises (SME’s) the R&D relief enables companies to take off an extra 130% of their qualifying costs from their annual profit, as well as the standard 100% deduction, giving you an overall total of 230% deduction. The costs that can be claimed include consumable items, staff costs, subcontractor costs and other overheads that are applicable to the R&D project. On the other hand, if you’re a loss making SME, you can still claim 14.5% cash credit into your bank and if your project was unsuccessful, there is still a possibility of making a claim on the losses made.

Are you eligible for R&D Tax Relief?

Most companies think that R&D tax claims are only limited to specific sectors, original ideas and completely new products, but that is not always true. The principle requirement for a successful R&D claim is if your business is undertaking work which directly makes a boost in human knowledge. If your business is taking a chance by enhancing, innovating or developing a process, service or product, then there is a high possibility of your business qualifying for R&D tax credits. Common sectors like Science and Technology are known to be  more beneficial in getting a tax credit, but Ad Valorem have proven to have successful claims in the following sectors:

  • Manufacturing
  • Energy & Renewables
  • Software
  • Food & Drink
  • Mechanical & Automotive Engineering
  • Electronics
  • Robotics
  • Digital Media
  • Health & Safety
  • Animation

Statistics show that the R&D Tax Relief Scheme has been existing for over 15 years and almost £2bn per year is currently being claimed. Ordinarily, SME’s are claiming £46,000 each per annum.

Click here to find out more information.

How do I claim?

Our tax consultants will fill in all the necessary paperwork, make the claim through your company’s tax return and then submit an R&D tax claim report to HMRC for assessment.

Usually, the process can take as little as four weeks from initial meeting to receipt of confirmation from HMRC. There is also no minimum claim level and no requirement for a multi-year tie-in agreement.

Therefore, if you believe that your company may be eligible for R&D tax relief, then please let us know.

Contact:

Duncan Bruce – Sales & Marketing Director

duncan@advaloremgroup.uk

01908 219114

Filed Under: Innovation, News & Insights, SME Business, Staff - Tax Team, Tax Tagged With: R&D

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