Research and Development Tax Relief Update & FAQ
With substantial cash payments and tax refunds available, generous R&D Tax Relief could help cashflow and be a welcome financial relief for many businesses. With this in mind, we thought it would be useful to update businesses on how they can utilise Research and Development (R&D) Tax Relief and Credits.
Many businesses often miss out on this generous relief as they incorrectly believe that they are not eligible to receive it. Our specialist R&D team is more than happy to review your specific circumstances and advise if you are eligible to claim. There is no cost for the review, and our competitive fees only apply if a claim is successful.
Understanding R&D Tax Relief
Businesses with a qualifying project may be able to claim a corporation tax repayment/reduction in their liability if they are carrying out qualifying R&D projects. For profitable companies, the repayment/reduction in liability is equal to 25% of the qualifying costs. For loss-making companies, the claim can be up to 33% of the qualifying expenditure.
If you are a director who has been furloughed from your own company, you are still able to work with us to carry out a claim as it is considered part of your statutory duties.
We work on a contingency fee basis (though fixed fee can also be quoted for if required) and all R&D consultations are free of charge. Therefore, we only charge if HMRC accepts the claim and you get a repayment/reduction in your liability. The claim will be prepared by a Chartered Tax Advisor and should only require 2 to 3 hours of your time.
Who is eligible for R&D Tax Credits?
A common misconception is that R&D tax relief only applies to science and technology companies, or those with specialist research and development departments. In fact, all industries can reap the benefits from R&D Tax Relief, providing the project either:
- Seeks to advance their knowledge
- Improves a service or product
- Solves uncertainties in a process
The project does not need to be unique, there just cannot be a readily available solution. Neither does the project need to succeed.
Claims can also be made where the R&D has been subcontracted out to another party.
Examples of successful R&D claims on behalf of our clients
A few examples of the many projects where we have successfully assisted our clients include:
- The development of an easily installable false ceiling, by a timber moulding company, generating a tax repayment of circa £35,000.
- The design of bespoke machinery for two different manufacturers in relation to paper products.
- The development of new bespoke software to support a client’s product development, resulting in a tax saving of £267,062.
- The development of a unique app by a startup, involving a data investigation system, resulting in a tax saving over £11,000.
- An innovative product information system distributed under the SaaS (Software as a Service) model, generating a tax repayment of £42,000.
- Several claims relating to new products and processes that clients have developed, where they are either completely new or an improvement on what is available in the marketplace.
It is always worth discussing with us how your business operates, to ascertain your scope for R&D Tax Relief. For more information, get in touch.
Frequently asked questions about R&D
Below are several questions that we are often asked before undertaking an R&D claim for a client:
Why is Alexander & Co so cost-effective?
Our Research and Development tax team is highly skilled in this area. It comprises qualified chartered tax specialists with a deep understanding of tax.
We only recommend you progress a claim if we believe there is a genuine claim to be made and our success rate is testament to this. We do not waste your time with frivolous claims or make any charges upfront. Our efficacy and expertise enable us to keep our fees attractive.
How much of your time will a claim involve?
All we require is two to three hours of your time to discuss the details of the claim with you. We do all the complicated work, dealing with HMRC entirely on your behalf. Furthermore, we can liaise with you over telephone, email or video call, which will further help in the current climate.
How long will it take to receive a payment of tax credit?
Typically, HMRC will process the claim and make payment within four to six weeks. An R&D tax credit cash benefit will be paid directly into your bank account.
For profitable businesses, your overall Corporation Tax bill will be reduced. If your tax bill has already been paid for the period, a repayment will be received.
For loss-making businesses, an R&D tax credit cash refund will be received.
How can we help you?
Our R&D tax relief specialists can assist with your claim, as claiming yourself can be a complicated and prolonged endeavour. Another bonus is that claims can be made for the past two accounting periods. This often results in a large sum of corporation tax repaid or R&D tax credits.
It is important to find out if you are eligible to make a claim, as you do not want to miss any deadlines and potentially lose out on thousands of pounds.
Contact us for expert advice from a qualified chartered tax specialist
To discuss the scope of making a claim, please get in touch with our qualified tax experts and R&D specialists. There will be no charge for this. To get started, call 0161 832 4841, email firstname.lastname@example.org or simply fill out the quick form below and we’ll be in touch.