R&D Tax Relief continues to be under-claimed or not claimed by many small to medium businesses. Why?
“Because we are not sure of the rules and neither, it seems, is our accountant”
There are four critical rules which guide whether you can claim:
1. Are you taking the financial risk in your development programmes?
2. Does what you are developing involve science or technology?
3. Are there technological or scientific uncertainties at the start of your projects that require trials or testing to be sure that they are resolved?
4.
R&D Tax Relief continues to be under-claimed or not claimed by many small to medium businesses. Why?
“Because we are not sure of the rules and neither, it seems, is our accountant”
There are four critical rules which guide whether you can claim:
1. Are you taking the financial risk in your development programmes?
2. Does what you are developing involve science or technology?
3. Are there technological or scientific uncertainties at the start of your projects that require trials or testing to be sure that they are resolved?
4. Are you seeking to achieve an advance in science or technology?
The risk is fairly easy to understand. Is your business spending the money?
Science or technology can be technical equipment, software, production processes, clever tooling developments, even web-based improved business processes; in fact anything that is based on conventional sciences or technologies.
The uncertainties are trickier to determine and this is where a specialist can advise you. It means that someone who knows what he is doing still needs to conduct trials or tests.
The advance again requires some specialist advice. Essentially, if you can say ‘it used to be done this way but our new solution makes it demonstrably better’, then you’re on the right track.
When it comes to deciding whether you can claim, you really need to talk to a technologist because three of the four rules are often outside an accountants specialism.
It should cost nothing to have a preliminary discussion with an R&D Tax specialist and make the informed decision whether or not to claim. After that, ask your own accountant what’s it worth in cash, corporation tax credits or carried forward losses.
Jaime Lumsden of Vision (SME) Ltd is an associate of RandDTax, a national network of R&D Tax Consultants Email
or call 01536 790907 or visit www.randdtaxcredits.net