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R&D Claim Value Optimisation
R&D Tax Relief is not simply an opportunity for UK businesses to get funding; it’s an entitlement for any innovative UK business satisfying the definition of R&D for tax purposes.
However, did you know that a large number of companies are not still taking advantage?
Many are simply unaware of the scheme and that they are undertaking eligible ‘qualifying’ activities; worse still, others are being told that they DO NOT qualify. On many occasions, Innovation Tax have found this not only to be untrue, but have then engaged with these businesses and gone on to identify a significant cash benefit for them.
The definition of R&D per HMRC can be applied to a variety of industries. At Innovation Tax, we never rule out any company based on a predefined criteria; instead we talk to businesses and discuss the activities being undertaken before making a recommendation on eligibility.
Some companies we talk to are already claiming internally (using their own staff or their accountant). In many cases we offer a free no-obligation review and find that, whilst a robust and accurate claim is being made, many are significantly lower in value than we would have calculated. This is due in part to a lack of understanding of the legislation and also to a lack of relevant industrial experience in fully identifying all qualifying expenditure. Responsibility for claim outcome is effectively placed firmly on the clients’ shoulders, and the outcome is that the claim is not maximised and the company has not claimed their full R&D entitlement.
Under-claiming businesses tend to capture a small percentage of staffing costs in the mistaken belief that only the most ground-breaking of projects qualify. In truth, the tax definition of R&D is far broader and when we look beyond the people in the ‘R&D Department’, we often find significantly more staff were actually involved; qualifying activity is often hidden around the business.
Another area regularly under-claimed is ‘Consumables’, materials used up during a project and deemed to be of no further value as a result. Our ‘walk-the-floor’ approach ensures all your potential R&D activity is captured, even the modifications to that rusty piece of equipment sitting behind the workshop that’s waiting to be scrapped!
First-time claimants also tend not to have particularly good record-keeping procedures in place. And whilst HMRC accept this and are reasonably comfortable with a reliance on best estimates (a form of point estimation used when records are not available) in compiling your initial claim, it’s important to establish good record-keeping protocols to track future R&D, both in terms of the activities undertaken and the persons involved. This not only helps to eliminate the need for estimates, but helps maximise future claim values and improves the robustness of compliance which HMRC expects. Innovation Tax offer record-keeping guidance as part of every R&D claim or consultation we undertake.
Working with both SME’s and Large Companies across multiple industry sectors has helped us identify that each business is unique and that to fully optimise the value of your claim requires a tailor-made methodology to be developed and applied which fully harnesses activity and expenditure across all areas of the business.
It brings great satisfaction to see clients benefiting from claiming R&D Tax Credits, boosting on-going levels of innovation and leading to growth and even greater tax benefits in the years ahead. There is no doubt the HMRC Tax Credit Scheme is helping to keep the UK at the forefront of technological innovation.
Innovation Tax have the right team to ensure your company’s R&D claim is both MAXIMISED and ROBUST. Take a look at the profiles of our senior team and the experience they have within the sector.
We strive to take the pressure of doing an R&D claim off you and your team, allowing you to get on with what really matters…… knowing that your R&D claim is in capable hands.
Contact the Innovation Tax team by clicking here for a no obligation review and assessment on eligibility.