The Big Picture – increasingly contributing to business innovation
By Terry Toms, RandDtax
According to the latest figures on R&D Tax claims published by The Office for National Statistics (ONS) in October 2019, and projections from those, it is likely that there will be in excess of 50,000 R&D Tax relief or Tax Credit claims worth more than £5Billion covering the year to March 2018. Over the last five years the largest rises have related to claims from SMEs where claim values have risen each year by over 20%.
For year ending March 2018, we estimate that SME Claims will have increased by roughly 25% on previous year.
Yet, our experience suggests that many companies are still missing out on this vital funding by not claiming or underclaiming. The financial benefits involved and the opaque nature of the Guidelines on claiming mean that taking advice from experienced specialists will pay dividends, in both ensuring that your company receives the full benefits they are entitled to claim, and that those claims are secure.
If you have already claimed for a number of years, ARE those claims secure?
We were recently asked to help a large software company (still SME). They thought they had been claiming successfully for seven years, then HMRC questioned their latest claim. HMRC suggested that percentages of time claimed for staff on R&D work did not seem realistic given the Guidelines. The company had thought that because HMRC had processed the claims they had “approved” them. Approval is not part of the self-assessment regime. It is the taxpayer’s responsibility to claim correctly. Voluntarily this company reduced the claim by 20%. HMRC then asked them to review ALL their previous claims with the same diligence. The cost was massive.
There are TWO main aspects to claiming R&D Tax relief or credits
The starting point, the most challenging and complex aspect of claiming is understanding HMRC Guidelines. AND how these are applied in your industry sector, and in the area of science or technology in which the R&D work has been done or attempted. People apply their own definitions of R&D, which may well differ from the HMRC Guidelines and the laws on which they are based. The Guidelines help companies establish what R&D work can be claimed and where the R&D begins and ends. The rest is a more straight forward exercise of gathering the qualifying costs, which are, of course, also subject to specific HMRC Guidelines.
We work closely with more than 400 firms of practicing accountants to bring our specialist expertise to help their clients
For many accountancy firms we act as their R&D Tax department. In our last financial year, our 35 specialists advised and assisted 685 companies make 783 claims, and we have helped with around 4,000 claims over the last seven and a half years, gaining in excess of £128million for 1,200 companies.
“We thought our R&D Tax Credits were well under control. However, RandDTax were able to show us exactly how to get everything we were entitled to, and when we were entitled to it. As a company investing heavily in developing very ambitious, intelligent customer service IT portals it was very rewarding to find that the UK government would give us tax credits in cash equal to roughly 33% of our qualifying R&D spend. This has been a great help and I would be very happy to recommend the RandDTax team to any company investing in innovation. Our normal tax advisers do a great job for us for most areas of tax, but when it comes to R&D Tax Credits it pays to engage dedicated, highly experienced specialists.”
Frank Joshi, MD.
“We have worked with RandDTax for close to four years and many of our clients have benefitted from their services. They are especially good at recognising, scoping and describing qualifying R&D while our clients are often unsure of the valid interpretation of all the technical HMRC rules and guidelines. RandDTax help make the claim process simple, secure and fast. We found that on average, R&D specialist consulting firms will charge between 20% to 35% of tax recovered or tax credits paid, whereas the RandDTax charge is much lower – so great value for money.”
Ian Condie, Senior Partner.
Please get in touch for a
Terry Toms – RandDTax 01483 808301 firstname.lastname@example.org www.randdtax.co.uk