Can you claim for R&D Tax Credits?
What are R&D Tax Credits?
R&D or Research and Development tax relief is an opportunity to reduce your company’s corporation tax bill annually.
There are two R&D Schemes that offer this reduction:
The SME scheme: Since 1 April 2015, a company can get an increase of 230% on their qualifying R&D costs. Loss-making companies can in certain circumstances surrender their losses in return for a payable tax credit.
Research and Development Expenditure Credit (RDEC) scheme: Since 1 April 2015 a taxable credit is available at 11% of qualifying R&D expenditure. For loss making companies the tax credit is fully payable (subject to certain restrictions).
Do I qualify for R&D tax credits?
To qualify, your company must be carrying out research and development work in the field of science or technology.
The relief is not just for ‘white coat’ scientific research but also for ‘brown coat’ development work in design and engineering that involves overcoming difficult technological problems.
This can include creating new processes, products or services, making improvements to existing ones and even using science and technology to duplicate existing processes, products and services in a new way.
Pure product development in itself does not qualify.
Some examples of qualifying activities include software development, engineering design, new construction techniques, bio-energy, cleantech, agri-food and life and health sciences.
What to consider when considering R&D Tax Credits
Am I seeking an advance in a field of science or technology?
Does the advance extend the overall knowledge or capability in the field of science or technology and not just the company’s own state of knowledge or capability?
Rather than thinking of the product, process or functionality itself being developed, consider what scientific or technological advance is being sought. This will focus your attention on the project’s aim for an advance.
Science doesn’t include work in the arts, humanities and social sciences (including economics).
Does the project involve an uncertainty that competent professionals can’t readily resolve and where solutions aren’t common knowledge?
Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, isn’t readily available or deducible by a competent professional working in the field.
Uncertainties that can be resolved through relatively brief discussions with peers are routine uncertainties rather than technological uncertainties. Technical problems that have been overcome in previous projects on similar systems aren’t likely to be technological uncertainties.
I want to discuss an R&D claim
Mirandus Accounts helps clients claim back money invested in R&D, product development, innovation and technology, through the government’s R&D tax credit scheme.
Please get in touch if you would like to discuss further.
