Since 2000, companies have been able to claim significant tax relief for undertaking qualifying R&D, however the uptake among smaller businesses has been and remains low. This can mean reduced corporation tax, or a cash payment from HMRC.
The main barrier to claiming is thought to be concern that the R&D undertaken doesn’t qualify, leaving the business with additional professional fees to pay for an unsuccessful claim.
To overcome this, from Autumn 2015 HMRC are introducing the ability for smaller businesses who have never claimed R&D tax credits to gain advanced assurance whether an R&D project would/does qualify, ahead of doing any calculations and making the claim. This should reduce the speculative risk of making a claim for these businesses.
To qualify for R&D tax credits, there are 4 key questions to consider:
– What was the scientific or technological advance?
– What were the scientific or technological uncertainties involved in the project?
– How and when were the uncertainties actually overcome?
– Why was the knowledge being sought not readily deducible by a competent professional?
It is also important to note that there is a requirement for a minimum of £10,000 of qualifying expenses for a claim to be made.
If you believe your company may be eligible to claim R&D tax credits, please contact our team.