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Research and Development Tax Credits

Research and Development Tax Credits

Research and Development Tax Credits (R&D) – How to Maximise Your Business Ideas

Are you a company that is forward thinking, that looks at ways to improve efficiencies in your methods, processes, functions? Is your company involved in designing, making, constructing, manufacturing or bringing into existence products or systems?

If so chances are you are entitled to claim R&D tax credits. Furthermore if you are a small or medium enterprises then you meet the criteria to claim the most generous of the R&D Tax Credit reliefs schemes the government has to offer. Under the SME scheme, you could claim back up to £46 of every £100 you spend. If you are loss making as many start-ups can be you can also claim a more immediate actual cash refund of some of your spend.

Is this a loophole I hear you say! NOT at all, this valuable relief scheme was first introduced 15 years ago and has been tweaked over the years, making it easier for businesses to claim them. So one would think that after all this time every business that is eligible for these would now be claiming them? That is not the case at all! Only 4% of eligible SMEs claimed in 2014.

Many great businesses are missing out on this valuable relief, which translate into a real cash subsidy from the Government. This is extremely disappointing especially if one considers all the publicity and the work done by the Government and HMRC to make them more available.

Why so few companies are claiming?

The main reason is that businesses and their advisers don’t actually understand that some or all of their activities or spend can qualify.

The other reasons are the awareness, design, understanding and administration of the whole system.

The way the system works is this - companies should make a claim for tax credits in their corporation tax return (CT600), all the guidance that a company would ever need in order to determine whether they qualify has been issued by Department for Business, Innovation and Skills (BIS). The BIS guidelines define R&D as taking place wherever a company is engaged in a project which is “seeking to make an advance in science or technology through the resolution of scientific or technological uncertainty”. This definition is very wide and can cover many situations and processes, not only those involving laboratories, white coats and test tubes.

For example, in the building sector certain expenditure on investigating new methods of construction could qualify. It goes without saying that software development and costs of improvement would often qualify. Other examples would include “tweaking” the efficiency of production operations .Improving filing processes and procedures.

Why has the uptake of these tax credits been so low?

The corporation tax return is often prepared by the accountant or tax advisor to the company, who in an ideal world would have a great appreciation and understanding of the company’s processes and procedures.

In reality such an understanding is now often the domain of engineers, and engineers and accountants are often “poles apart” so claims can often be missed and indeed it would seem that many have been over the years and this is why Specialist R&D Tax Reclaim boutiques like us have become so successful.

We don’t claim to do corporation tax calculations – why would we – we are having far too much fun getting “under the skin” of the business and its processes and writing up their detailed reports that clearly show that the spend on certain activities does qualify. We are the ones that are preparing the detailed reports that HMRC find acceptable to justify a valid claim. We want to work “in partnership” and not “in competition” with the many firms of accountants and help them get a better result for their clients.

Think you might qualify?

Firstly talk to your usual advisor, but do not simply take no as an answer. We have helped many companies that were turned down by their advisors.

If having read this article you think you could be eligible and you are told you are not, ask them for the reasons why not. Please note that you can only go back 2 years. Better to get it right now and get a refund for the two years you have missed and get it correct going forward.

Should you wish to know more about these tax credits, or wish to discuss whether or not you may be missing out please contact us on or Tel 01634 883 912