Companies Missing Out on Thousands in R&D Credits
The UK is a leading hub for research and development. Helping encourage and reward innovation is a Government backed tax incentive scheme known as R&D Tax Credits.
Specialist consultancy randd UK has recovered around £80 million under this scheme and has been supporting BPMA members secure money. randd has supported first R&D claims of £38,500-£58,000 each for CHX Products, First Editions, Great Central Plastics and WCM&A. It has also supported smaller claims of a few thousand pounds. This money has enabled firms to invest in new equipment and staff to further drive their innovation programmes. These are not one-off payments – R&D tax can be claimed annually, adding thousands to the bottom-line.
“You may think that your company doesn’t do any real R&D, but the definition is surprisingly wide, covering product and software developments but also processing and production improvements leading to gains in capacity, productivity, pricing and quality,” says Paul Wallace, R&D consultant with randd UK. “In addition, the trial and error required to integrate new equipment and optimise its use within your existing production processes can also be classified as R&D.”
Often, the challenge for companies is recognising what activities qualify for R&D. For example, new working methods are often overlooked, even by accountants. It’s about having a detailed understanding of the scheme and how to present the R&D claim in the right way. Most claims revolve around problem solving on existing products, processes and systems, not inventing new ones.
Total qualifying costs are enhanced by up to 130%, meaning that circa £2,600-£3,300 can be claimed back for every £10,000 of qualifying spend, depending on the company’s tax position. You can make a retrospective claim up to two years from your current financial year-end. Since these awards are tax relief against corporation tax, only limited companies or PLCs qualify.
If you can answer yes to any of the following, you may be eligible:
- Have you created, developed or introduced new or improved products, processes, systems or services to achieve efficiency improvements, increased outputs, reduce wastage or to comply with new legislation or regulations?
- Have you applied innovation creating bespoke new products, systems or processes for your clients?
- Have you undertaken the above activities on unsuccessful projects?
R&D tax credits have been around since 2000 but HMRC estimates that around 90% of eligible companies are either yet to claim or do not recover their full entitlement.
For guidance or an exploratory discussion on R&D Tax Credits, contact Paul Wallace on 07834 747871 or firstname.lastname@example.org.