Though many businesses can and do prepare their own R&D tax credit claims, it can be a tricky and risky process that may not pay off.
There are some occasions where a SME needs to use the RDEC Scheme, including when they have received grant funding or subsidy, or have carried out sub-contracted R&D activity on behalf of a large company.
Intangible assets are often a poorly understood category and are frequently left for the accountants to work their magic on when preparing the year-end accounts. This can lead to them being overlooked when identifying the R&D costs for a claim.
How R&D Tax Credits affect your company accounts will depend on which scheme you're claiming via - SME Scheme or RDEC Scheme.
Even if a company has received grant funding, they can still obtain R&D tax credits for the same development work! It is highly likely that at least some of the development work funded by a grant will be eligible for an R&D Tax Credits claim.
There are a number of additional qualifying intellectual property rights that can be attributed to Patent Box. These include IP such as regulatory data protection (also called ‘data exclusivity’), supplementary protection certificates and plant variety rights.
Companies must elect into the Patent Box Scheme within two years after the end of the accounting period in which they received the relevant income.
You work out your tax benefit by subtracting an ‘additional trading deduction’ from your Corporation Tax profits. To do this, you first need to work out what your relevant profits are.
Only companies liable to pay Corporation Tax are eligible for the Patent Box UK. The company also needs to be making a profit from commercially exploiting patented inventions to receive the reduction in corporation tax.
To claim Patent Box tax relief, there are four key eligibility criteria that your business must meet. If your business meets this criteria, you must then elect in to the Patent Box scheme.
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