R & D
Research & Development
Has your company spent time and money on its Research and Development in the past two tax years, or is it planning to do so?
Research and Development Tax Relief is available for many businesses working in a multitude of sectors including the automotive sector. Work that you have done (or are planning to do) and in which you have made qualifying investment may be eligible for the relief, and if HMRC accepts the claim, your company could receive a very significant tax rebate.
So what does my company have to do in order to make a claim?
In order to qualify for this tax relief scheme, your company must be carrying out research and development work in the field of science or technology, but don’t let that put you off if your business is in a different sector – the relief is not just for ‘white coat’ scientific research but also for design and engineering development projects that involve overcoming difficult technological problems. This could include creating new processes, products or services, making appreciable improvements to existing ones and even using science and technology to duplicate existing processes, products and services in a new way. We have recently assisted a car tuning / remapping company which was able to submit a claim that it did not know that it had.
Won’t the company just get this rebate automatically?
No, the rules are complex and only certain types of R&D investment will qualify, which is why a formal claim must be submitted, with evidence of the qualifying expenditure.
Why don’t I know about this already?
Your accountants and auditors will almost certainly know about the scheme and may well have advised you about it in the past, but it's a time-consuming process with lots of detail to consider and so unless they are specialists, they might not have delved into the detail and explored the extent of your qualifying investment for which the relief could be made available. That's where our connections can help - they are specialists in this work area and will take the strain away and do the hard work for you. Initially this will mean undertaking a basic assessment to determine in principle whether or not it is likely that a claim can be made, and if so, they will then spend time with your business, collating the information and submitting the claim to HMRC on your behalf. Your time commitment will be kept to an absolute minimum.
So what’s the catch – what will this cost the company?
The cost? If HMRC does not pay your claim, then there is no cost.
If the claim is successful, a fee will be charged, calculated as a percentage of the refund/relief granted, but that fee will not be payable until HMRC actually makes the refund/award to your business. It couldn't be any simpler.
Can the refunds/credits be reinvested in further qualifying R&D?
Yes! Significant refunds and credits are available, and if you wish to do so these can be reinvested in further qualifying projects for a claim in the next financial year, and that cycle could potentially be repeated over multiple years.
What if the company made a loss in the year of the qualifying investment?
Under the SME scheme, for expenditure incurred on or after 1 April 2014, the company may surrender the R&D loss that it incurred in return for a tax credit. Any losses that were not surrendered or utilised under the tax relief schemes may be carried forward to be set against future years’ trading profits under the normal Corporation Tax rules.
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