Research and development tax reliefs: making a claim

by | May 14, 2019

If your business is working on new, cutting-edge products or processes, you could be eligible for corporation tax relief through research and development (R&D) credits.

These offer support to companies that work on innovative projects in science or technology, by allowing small companies to deduct an extra 130% of their qualifying costs from their profits.

This works on top of the existing 100% of qualifying costs that can be deducted, making a total deduction of 230%.

In 2018 alone, we helped businesses to claim in excess of £750,000 in R&D credits – so if you think your business might qualify, it’s well worth getting in touch.

Understanding what qualifies

This is perhaps an obvious step to take, but one that many businesses miss out. 

To make sure your work is genuinely eligible for the relief, you should understand the main conditions for a qualifying project.

The work must be part of a specific project to make a scientific or technological advance, but it can’t be within a social science or a purely theoretical field.

It also has to be related to your company’s trade, whether you’re already trading in that area or intend to start doing so based on the results of your project.

HMRC’s guidance says that for any project to get R&D relief, you need to explain how it:

  • looked for an advance in science and technology
  • had to overcome uncertainty
  • tried to overcome this uncertainty
  • couldn’t be easily worked out by a professional in the field.

Getting the report right

When you’re making a claim for R&D, it’s important to communicate clearly to HMRC what your project is, and why it qualifies for R&D.

For example, we recently worked with a client who was carrying out innovative work in the technology sector.

After discussing with this client whether they would benefit from R&D relief, our tax specialists sent a detailed report to HMRC, illustrating the cutting-edge technology our client was producing.

This claim was approved, resulting in a tax credit of £75,000.

Minimising risk

It’s also important to consider that not every claim will be approved, even if you have every reason to believe you’ll be eligible.

For another one of our clients, what seemed like a groundbreaking product didn’t qualify for R&D relief as it turned out that other companies, which this client was not aware of, were doing the same thing.

Because of cases like this, it’s generally a good idea to gain prior approval from HMRC, saving you the time and money you might otherwise have put into making a full claim.

We go through this process for each of our clients, minimising the risk involved in claiming relief.

Talk to us

We have helped businesses in a wide variety of industries to claim credits, including dentistry, biotechnology, software and games, financial services, architecture, mentoring and recruitment.

Contact us to talk about whether your business could qualify. 

You deserve more

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