We have recently been able to secure substantial tax refunds for many of our clients using the Research and Development (R&D) Tax Relief scheme.
The majority of businesses who could be using the scheme to claim one of the most lucrative tax reliefs currently available, simply aren’t. This is mainly due to the confusion and lack of understanding of how to claim.
R&D Tax Credits
The scheme has been developed to encourage innovation in Britain, ensuring those spending their own funds on the innovation are encouraged to do so with little tax burden.
The tax credit works out at roughly 33% for loss-making businesses and while you might not want to be a loss-making business, the theory is that you should be making this claim as you go in order to assist with ongoing costs. Although historic claims can be made there is a two-year window from the end of the accounting period the work is carried out in.
So who should be claiming?
R&D Tax Relief can be claimed by any limited company working to develop new products, processes or services; or enhancing existing ones, are eligible for R&D tax relief. This could mean, for example, developing software or hardware but, it could also mean working on a new service that could influence the behaviour of an industry; innovation comes in many forms.
Ollie Warne from our London branch commented “It costs nothing to check with our team, so ask! It seems so many businesses are meeting R&D requirements but not even realising it or too worried to claim or ask, thinking it may be very time-consuming.”
Case Study – AI Developer successfully claimed £250,000 with our help
After speaking to our team we identified that our client was undertaking qualifying research and development projects which entailed the developing of artificial intelligence systems designed to make algorithms which in turn lead to an increase in the effectiveness of apps we use.
Once established that our client was eligible, our own in-house experts reviewed the information already provided to HMRC by the client and further assisted them to establish how much tax relief they were entitled to.
This entailed identifying the relevant projects and so computing the amount spent on salaries, consultants and other direct costs in developing the system throughout the year.
Subsequently, once the claim was filed and HMRC completed their checks, our client received their credit of over £250,000 just over a month later.