These R&D tax credit examples will help you understand how R&D Tax Credits are calculated, and what it means to you and your business. In very basic terms, Research & Development Tax Relief is a government subsidy of up to 26p for every £1 you spend on innovating and problem solving.
It's a scheme that the government genuinely wants businesses to take full advantage of but they're having a tough time getting the word out about it. A lot of the time, it means that many businesses do not realise that the scheme exists in the first place or, more often, that it could ever apply to them. As a result, there's a lot of money being left on the table by businesses that really can't afford to miss out. As even loss-making companies can have valid claims, as the research is as valuable as the end results, it's often those with the greatest need who lose out.
R&D Tax Credits can make all the difference to businesses in any sector, and the range of costs and projects they cover is a lot wider than most people realise. You may still have a valid claim even if your R&D never pays off the way you'd hoped!
Factors That Can Affect Your R&D Tax Credit Claim
Your R&D tax credit claim can be affected if any of its R&D expenditure has to be ‘enhanced’ under a Large Company R&D tax credit scheme rather than the SME scheme. The following factors are the most common ways that an SME’s R&D tax credit claim can be impacted. Our R&D specialists are here to advise you on the best ways to deal with these factors within your business so as to make your claim as effective as possible and reduce the risk of an HMRC enquiry.
Grants or Subsidies
If an SME has received a grant or subsidy relating to the R&D project then all or part of that qualifying R&D expenditure may fall into a Large Company scheme, even if the organisation is an SME for all other purposes. The specifics in the R&D tax calculation will depend on the nature of the particular grant or subsidy. Our specialist advisors will help you or your accountants to understand these exact rules and what will be best for your particular circumstances.
If you are carrying out R&D as a subcontractor to a large company, then you can make a tax credit claim, but it will fall under the Large Company scheme. Sometimes the definition of what counts as subcontracted work is very fine. This can lead to wasted time, rejected claims and missed opportunities. Our experience means we can quickly determine the status of your working relationship as classified by HMRC and make sure that you have submitted the correct type of claim.
Linked or Partner Enterprises
You may not realise that your SME will be counted as a ‘large company’ for the purposes of R&D tax credit calculation if it is a ‘linked’ or ‘partnered’ enterprise . An example of this would be where 25% or more of the share capital or voting rights of the SME are held by another legal entity. When considering the definition of an SME it is important to look at the aggregated amount for each of the qualifying criteria (i.e. employees, turnover and gross assets) on either an absolute basis (for linked enterprises) or on a proportioned basis (for partner enterprises). The rules governing linked and partnered enterprises are complex and the position for an SME is not always obvious initially. We have the expertise to make sure that all your calculations are done correctly and can talk you through them to make sure that you have a full understanding of what is being submitted and why.
How Are R&D Tax Credit Claims Made?
When you come to us with your big idea, whether on your own or through an accountant or advisor, we'll take a close look at your business to see where your qualifying R&D projects are. Once we've got a clear picture of the whole business, we'll get to work digging out all the costs and processes that qualify for R&D Tax Relief. This is where the real hidden value of your business lies, and we're the best treasure-hunters in the business.
• We'll do all the work , so you get the credit. • We'll point out all your current and upcoming projects that qualify for relief. • We'll check the last two financial years for claims you could still make.
When we've crunched the numbers, we'll put all the information and evidence together for you to form the basis of your claim. From there, we'll take it to HMRC and fight your corner until you get the credit you deserve!
R&D tax credit claims can be tricky to get your head around, so the first thing to do is get in touch with RIFT R&D. We're the champions of business innovators and specialists in SMEs, so tell us about your business and projects and we'll let you know where you stand. We can do this over the phone, or even come to you if you prefer. An average claim is worth £49,000, and we've never had a claim rejected, so phone or email to make the most of the R&D Tax Credits scheme.
Call today on 01233 653008 or contact us and see how we can help you.