17 Dec 2019

TBAT’s R&D Tax Relief Naughty and Nice List

Sam Stephens

Merry Christmas and Happy New Year

Our team of expert R&D Tax Credit Consultant’s have pulled a ‘Christmas Cracker’ this year and put together a list of their essential Do’s and Don’ts when building an R&D Tax Relief claim.

In the Christmas Spirit, we’re delivering them as a ‘Naughty and Nice List’ with added Christmas puns, for your delight!

Naughty List

Don’t get left outside in the cold.

A lot of the businesses that we speak to, do not realise that they qualify for R&D Tax Relief. The term ‘research and development’ is often represented as engineers and scientists doing experiments; however, for the purpose of claiming R&D Tax Credits – it’s all about making an advance in science and technology.

If you’re unsure whether your company and activities would qualify, speak to an R&D Tax expert at TBAT!

Don’t leave everything until Christmas Eve.

We work with numerous company’s ahead of their financial year-end, to ensure their retrospective R&D Tax claim for the previous 2 years is utilised, before beginning their current financial year’s claim.

Planning your R&D Tax claims early can also allow you to make decisions regarding how to re-invest the benefit you receive from HMRC.

Don’t be elf-ish.

It’s important to remember that you cannot simply claim for 33p in every £1 spent! The HMRC guidelines include rules regarding apportioning your costs accordingly. These include items such as; profit on invoices from sub-contractors; staff costs when they conduct activities not relating to the project; and, for software when it’s not used solely for the project.

A TBAT R&D Tax Consultant will be able to identify all items in your R&D expenditure that will require the appropriate apportioning.

Don’t be a Scrooge.

Don’t despair – an R&D Tax Credit claim can still be made, even if your project didn’t produce the desired end-results!

Trial and error is a crucial part of all scientific and technological advances – you don’t always get it right first time. HMRC fully recognise this and reward you for undertaking research and development activities, regardless of whether the project was successful.

Don’t get snowed in!

Take the time to collect all the information you need to build your R&D Tax Credit claim. TBAT’s Consultant’s will provide you with a checklist of all the documents they require for your Financial and Technical report.

Some examples of what we will require are:

  • payroll report
  • full accounts for the year
  • year-end trial balance report
  • a list of employees involved in R&D
  • costs for sub-contractors, materials, software and expenses.

Nice List

Remember Santa’s little helpers!

When claiming R&D Tax Credits, you can include the cost of your internal PAYE staff conducting R&D, the cost of work you have sub-contracted to other businesses and for work performed by Externally Provided Workers (agency workers provided by an external company).

You can also claim for employees that are contributing to the running of the project, even if they’re not directly involved in R&D activities e.g. administration and project management.

Ho-ho-how was the project funded?

A grant funded project is subject to a set of HMRC guidelines regarding Notified State Aid/Non-Notified State Aid rules which can be difficult to navigate, but let’s stick to the basics:

Most Grant Funding is only for a percentage of your project costs e.g. 70% – a proportion of that may be claimable under the RDEC scheme, which we carefully consider on a case-by-case basis. The remaining self-funded proportion can be claimed under the SME scheme.

Although Grant Funding can make your claim slightly more complex, it shouldn’t be overlooked!

HMRC have the final sleigh.

Whether you are claiming £100 or £1,000,000 in R&D Tax Relief, you must justify your projects technically, clearly addressing how they have advanced overall scientific and/or technical knowledge.

Without a robust and comprehensive Technical Report, HMRC may submit queries or simply reject your claim as there isn’t sufficient evidence to support your R&D Tax claim.

When you work with our Consultants on your claim, we will deal with any HMRC queries – should they have any – free-of-charge.

Wrap it all up with a pretty ribbon and put it under the Christmas Tree.

We can submit your R&D Tax Credit claim on your behalf, or we can liaise closely with you and your company Accountant (internal or external), to ensure all the documents are submitted to HMRC in a timely manner.

To make the process as seamless as possible, the following should be submitted to HMRC:

  • Financial Report
  • Technical Report
  • Completed CT600 detailing your claim costs
  • End-of-Year Accounts

We highly recommend providing HMRC with all the information they require, in a neat little package, to avoid any delay in receiving your benefit.

It takes one to snow one.

While the amount of businesses claiming R&D Tax Relief is steadily increasing, there are still thousands of companies not yet taking advantage of the generous schemes and claiming the benefit they are entitled to – especially SME’s!

It’s essential that you spread the word throughout your business connections, recommending that they, at the very least, speak to an R&D Tax Credit expert to check whether they’re eligible to make a claim.

As an added bonus, you can join the TBAT Partnership Programme and receive a financial reward for any business you refer to us.

Get in Touch

If you’d like to speak to one of our team and discuss your eligibility to claim R&D Tax Credits – we’d love to hear from you – get in touch via our contact form, phone – 01332 819740 or email – info@tbat.co.uk

If you already know your business is eligible and want a quick way of finding out how much your R&D Tax Credit claim could be worth – use our online R&D Tax Calculator.

We hope that you and your nearest and dearest have a wonderful Christmas and a Happy New Year! We look forward to working with you in 2020!

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