R&D Tax Credits – Are you like many others missing out?

The Research and Development (‘’R&D’’) tax credits legislation has been around for a number of years, but it is still estimated that a vast majority of eligible businesses are not making a claim.

Many businesses are unaware that their activities are R&D qualifying for tax purposes which can lead to significant corporation tax savings or cash repayable credits from H M Revenue and Customs. Such activities can include making bespoke products, product development and changes to manufacturing techniques and processes.

Tom Wilkinson, Associate Director of Blackburn-based accountancy firm Pierce, talked to the Chamber about the legislation. ‘’It is staggering how many eligible businesses there are out there who are not making a claim for R&D tax credits. Part of this is due to poor or non-existent professional advice, but a key factor is that of the awareness of the legislation with is much broader than many realise. I was speaking to a senior tax barrister just before the Christmas break who says HMRC believe some 87% of eligible businesses for R&D are not making a claim!’’

The R&D tax credits system means that companies can claim 230% tax relief on qualifying expenditure which can be attributed to directly to R&D activities, rather than a standard 100% relief. Such expenditure includes materials consumed in R&D and staffing time expended on R&D as well as software, consultancy and utilities costs incurred on qualifying activities. In numbers terms, an R&D spend of £50,000 would result in a company being able to reduce its profits chargeable to corporation tax by an additional £65,000 (£50,000 x 130% extra relief) saving corporation tax of £13,000 at the current UK company corporation tax rate of 20%. There is also relief available for loss-making businesses by way of a repayable tax credit from H M Revenue and Customs.

Tom added ‘Some people have suggested this is a sort of tax-avoidance scheme, which is not the case at all, in fact HMRC are encouraging the legislation and there are some 60 equivalent schemes worldwide. The legislation is there to encourage growth and innovation in the UK. Some of the types of companies I have done claims for include all sorts of manufacturing companies, engineering, food and drink, technological and even construction. Whilst many businesses qualifying activities can be clearly evident, it is surprising how many businesses are undertaking tax-qualifying R&D work without realising it. I recall last year going to see a client about a completely separate matter, a business restructure project, when we started discussing activities on the shop floor and it was evident some of the work being undertaken was R&D qualifying and a subsequent claim was successfully made’’

‘’My advice to businesses who believe they potentially qualify for R&D would be to have a think about what their key business technical challenges have been in the past two or three years. You can potentially go back two previous financial years to make an R&D claim. Once you have considered such potential activities, please do feel free to engage with me on a no-obligation basis and we can discuss whether a potential claim could be made with HMRC. So far we have a 100% success rate and an excellent working relationship with the specialist units at HMRC and have saved local companies over £2.5m in the process’’.

Contact

Anyone interested in finding out more can call Tom Wilkinson on 01254 688100 or email at t.wilkinson@pierce.co.uk

R&D Tax Credits – Are you missing out?

By: Tom Wilkinson   Research and Development Tax Specialist

 

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R&D Tax Credits

….. Are You Missing Out?

 

Many trading businesses often do not realise they are or have previously undertaken Research & Development (‘’R&D’’) activities in their business.  We are successfully securing R&D tax credit claims for clients.  The credits are generous and allow small and medium sized businesses to claim 230% (from April 2015) of actual R&D costs incurred for up to the past 2 financial years.

So, if you have incurred R&D expenditure of say £100,000 on a project then you can claim £230,000 as a credit against profits in the particular year(s) incurred.  This could generate a refund or tax saving of £46,000.

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Our fees are entirely success based and we will be happy to discuss these further.  Pierce have a good working relationship with HMRC’s specialist R&D tax units and have a 100% track record with all claims.
We have helped our clients claim over £2 million of qualifying Research & Development relief and we could help yours.

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The definition of R&D is quite wide and it is worth considering if you have….

  • Made bespoke products or customised products
  • Developed any new products or involved with introducing them
  • Made any environmental improvements to your processes
  • Consistently made manufacturing processes improvements
  • Carried out design work in-house or sub-contracted design
  • Carried out prototyping or made models, patterns or tooling
  • Developed or improved any in-house software
  • Changed the composition of your products in response to changes in legislation
  • Consider yourself to be a market leader in a product, process or technology
  • Regularly problem solving to meet your customers’ needs

Many companies are unaware of the activities that can qualify for R&D relief.  Pierce C. A. Limited have specialist skills and knowledge of the R&D tax system and are able to help you identify qualifying projects and formulate a successful claim.

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Client Testimonials

From David Baxendale at Promedics Orthapaedic Limited

Tom Wilkinson from Pierce proactively found and recommended corporation tax savings for our company that resulted in a 2 year corporation tax refund. He worked under his own initiative and ensured that HMRC agreed with his calculations. Tom’s drive and professionalism was first class and we would highly recommend his and Pierce’s services.”

From Richard Mottram at Hills Panel Products Limited

Pierce compiled an extremely detailed and comprehensive Research and Development Tax claim on the company’s behalf which lead to a significant corporation tax saving.

The report and associated computations were a significant improvement from our previous R&D tax advisers and was also undertaken in a very timely manner”

 

R&D Tax Relief – update

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R&D Tax Relief – Update

By: Ben Smith

Research & Development Tax Relief – update on the take up of this valuable relief

HM Revenue & customs (HMRC) has recently published its annual statistics for company claims for Research & Development (R&D) tax relief claims. There continues to be an increased uptake in claiming the generous relief, partly as the relief becomes even more generous and partly as more and more companies become aware of the relief for the first time. The data is for the 2012/13 financial year. The headline statistics are:

  • Since its introduction in 2000 over 100,000 claims have been made by over 35,500 different companies claiming in excess of £9.5 billion in tax relief
  • 15,930 claims were made in 2012-13, an increase of 26% over the previous year; qualifying costs within the claims totalled £13.2 billion, 10% higher than the previous year
  • “Manufacturing”, “Professional, Scientific and Technical” and “Information and Communication” sectors accounted for 77.1% of the claims and 80% of the total amount claimed (sector data based on SIC2007 coding for claimant company)
  • 8,740 claims by Small and Medium Sized Enterprises (SMEs) (being a very generous definition of such for this purpose) reduced their tax bills whereas a further 1,220 SMEs claimed payable credit (cash back) as they were loss making. 3,050 SMEs made a claim for a combination of tax deduction and cash back
  • Although SMEs make up the greater number of claims, 80% of expenditure claimed was made by large companies (£10.6 billion compared to £2.6 billion for SMEs)
  • 580 SME companies claimed under the large scheme as sub-contractors to large company R&D
  • 545 claims were made in the North East of England, 1,545 in the North West of England, 1,065 in Yorkshire and Humber and 905 in Scotland, claiming £25m, £85m, £45m and £45m respectively. Over 40% of claims are made by companies in London and the South East. (region data based on registered office)

What’s stopping you making a claim?

There are still many companies failing to make claims for various reasons. Our experience shows that generally business owners, like yourself, usually think that some or all of the following apply:Although SMEs make up the greater number of claims, 80% of expenditure claimed was made by large companies (£10.6 billion compared to £2.6 billion for SMEs)580 SME companies claimed under the large scheme as sub-contractors to large company R&D

  • We are not doing R&D – many companies do not initially realise that their project qualifies as R&D
  • Claiming the relief is complicated – not if you seek good advice
  • The costs of claiming outweigh the benefits – this is rarely the case and our charges are structured based on the tax savings generated
  • We cannot separately identify costs – HMRC does not expect you to reinvent your accounting records to make a claim and will accept some elements of estimation
  • We’ve received a grant towards R&D or capital expenditure, therefore we can’ have the tax relief too – this is by far the biggest misconception. The receipt of a grant may affect how much additional tax relief the company can claim but you can have both!

What tax relief is available?

The three tax reliefs for innovative companies are very generous and are:

  1. R&D tax relief as above. 125% additional relief on costs for SMEs, 30% for large companies or SMEs with grant funding or subcontractors to large companies. New Research & Development Expenditure Credit (RDEC) for large companies to allow for payable credit as an alternative to the 30% relief
  2. Patent Box – an effective 10% rate of Corporation Tax on relevant profits from patents
  3. 100% capital allowances for assets acquired, including buildings, used in R&D

How we can help you

We have many years’ experience preparing R&D claims for a range of businesses. We have a 100% record with HMRC – none of our claims have been reduced or rejected by HMRC. In the previous 12 months we have secured R&D tax refunds in excess of £500,000 for our clients. We can also help you claim R&D tax refunds for previous tax years if you haven’t previously made a claim.

We offer a free no obligation review of your business activities to identify any R&D tax planning opportunities for you. Contact either Ben Smith or Tom Wilkinson by email or phone 01254 688100 to find out more.

We’ve received a grant towards R&D or capital expenditure, therefore we can’ have the tax relief too – this is by far the biggest misconception. The receipt of a grant may affect how much additional tax relief the company can claim but you can have both!

 

GOV.UK Business Growth Vouchers up to £2k

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Growth Vouchers programme

https://www.gov.uk/apply-growth-vouchers

From: Andrew Stephenson
This government programme helps small businesses get expert advice on:
  • finance and cash flow
  • recruiting and developing staff
  • improving leadership and management skills
  • marketing, attracting and keeping customers
  • making the most of digital technology
Some businesses will be randomly chosen to get a voucher for up to £2,000 to help finance specialist business support. You’ll have to match the amount with your own funds.
You’ll be asked to take part in surveys to find out how the programme has helped you.

Eligibility

Your business must:
  • have 49 employees or less (including any employees of companies that own a stake in your business)
  • be registered in England
  • have been trading for at least one year
  • not have paid for business advice in the last 3 years
  • be independent (ie no more than 25% is owned by other businesses or organisations)
You’ll need the following things to complete your application:
  • Companies House registration number or unique tax reference
  • registered business address
  • business turnover details
  • VAT registration number (if you’re registered)
  • PAYE number (if you have one)
  • contact phone number
  • email address
Read the terms and conditions for the Growth Vouchers programme.
  • Available in England only
  • Email address required

Growth Vouchers programme

https://www.gov.uk/government/collections/growth-vouchers-programme
Organisation:

Support for small businesses to grow.

The Growth Vouchers research programme will test what works best when giving advice to business – helping small businesses to find strategic advice from private sector suppliers who can help their business to grow.
This joint programme between the Department for Business, Innovation and Skills (BIS) and the Behavioural Insights Team in Cabinet Office was launched on 27 January 2014 and roll out over the next 15 months.
Growth Vouchers offer expert advice in areas such as:
  • raising finance and managing cash flow
  • recruiting and developing staff
  • improving leadership and management skills
  • marketing
  • attracting and keeping customers
  • making the most of digital technology

Documents

  1. Growth Vouchers programme: definition of business advice areas covered

  1. Growth Vouchers programme: terms and conditions

  1. Growth Vouchers programme: trial protocol

Growth Voucher programme: primary documents

The claim form, the de minimis declaration and the guidance for recruiting and managing consultants.

  1. Growth Vouchers programme: claim form

  2. Growth Vouchers programme: de minimis declaration form

  3. Growth Vouchers programme: a guide to choosing and managing a consultant

 

Research and Development Update

In a continued effort to turn the tide of UK technology and manufacturing leaving for overseas shores, the Chancellor’s most recent budget increased the Research and Development enhanced tax Continue reading