The Research and Development (R&D) tax credit scheme was introduced in 2000 as a welcome benefit by the Government for many businesses. The incentive was introduced as an encouragement for UK businesses to become more globally innovative and competitive by investing into R&D towards technological advancements in products, services or processes. Unfortunately HM Revenue and Customs (HMRC) statistics indicate that up to 90% of companies are currently missing out on the benefit due to lack of understanding or awareness.
How to claim the R&D Tax Relief
The process of claiming is carried out through HMRC, who will give businesses either a reduction of their Corporation Tax owed (if profitable), a cash sum (if making a loss), or a mix of the two.
There are two types of schemes available that allow businesses to reclaim up to 33% for eligible project expenditure:
- SME scheme for businesses under 500 employees and turnover under €100million or balance sheet under €86million
- The Research and Development Expenditure Credit (RDEC) scheme for larger businesses.
The following is required to make a claim:
- Detailed report of project and why there was technological uncertainty in this particular area
- Explanation of why no competent professional in the field had knowledge or capabilities to make the advancements you are seeking
- Only include claims for the company’s last two accounting periods
- Must be liable for Corporation Tax and have a UK LTD company to be eligible under the scheme
- Records of costs incurred in projects eg: staff wages, subcontractor costs, software and consumables directly involved in the R&D project.
Further information about R&D Tax credit
The government wants to reward businesses that are investing into innovation, therefore it is important to claim everything you deserve. In order to take the stress away from claiming, many businesses choose to acquire an R&D tax relief specialist to support and advise businesses through the process. Swanson Reed R&D Tax Advisory Specialists will provide you with the answers to any questions you have and check your eligibility before you spend time filling out your claim. As tax advisory specialists are completely up to take with HMRC legislation, they can also claim R&D tax credits on a business’ behalf. This can save time, maximise your company’s claim and ensure your application is successful on first submission.
If you think you have a claim for R&D tax relief, contact Swanson Reed R&D Tax Advisors today to prevent missing out on any benefits that your company may be eligible for.