R&D tax credits provide a real financial benefit to UK companies. As part of the UK governments commitment to R&D and innovation, it is one of the most successful mechanisms to support innovation in business. And now is the time to make sure that you are receiving the maximum amount of value possible.
Surviving a period of serious economic challenge for business is priority, and cash is king. The government support in response to Covid-19 is unprecedented, but do not overlook the most immediate opportunity for cash – R&D tax credits.
Loss-making SME businesses will receive 33% of their R&D expenses back as cash and getting the process underway is critical in making sure you capture as much of that expense as possible.
Historically, companies tend to run to the deadline imposed by HMRC for anything tax related but a claim can be made as soon as the accounts and tax computations are ready. This also gets companies ahead of what can be a long queue in HMRC processing times at peak periods such as December and March.
Thinking about cashflow, and how the benefit of R&D tax is taken, can be decided at the end of the process. Today companies need to to make sure that they get to the right number in the first place. The tax credit will be based on the qualifying expenditure identified in your business – meaning every cost that touches R&D is potentially in scope. Then it’s down to the age old question of what is R&D and for tax purposes. This is broad and we urge companies to think about it pragmatically.
We encourage our clients to:
- Think about those head scratching moments the business has faced. How do you scale up production, how do these datasets come together, does this work for a different market? If you can’t easily get the answer from someone or google – you’re potentially talking about R&D
- Be happy to be challenged – all too often clients are have become complacent about the claim they make so the value never changes much. Running the track every year and challenging what the claim is vital to maximise and also create the most robust claim
- Be brave in who you involve – just because its tax doesn’t mean that it sits wholly in the tax/finance team. Tax credits may well be the outcome but everything until that point is science, technology, engineering, process improvement, product development, management… the list goes on. We know that for most claims 80% of the value sits in the column marked “people”.
We at GovGrant will stand shoulder to shoulder with UK businesses. We specialise in R&D tax relief and we know right now, more than ever, businesses are battling to survive and we are ready and waiting and will get businesses the much-needed support they need.