Deep into a third lockdown thanks to the Covid-19 pandemic and British businesses are struggling. Business Interruption Loans and furlough and job retention schemes have helped, but in most cases not nearly enough. The Prime Minister is cautiously confident that restrictions will end in June but as we all have come to learn, nothing is guaranteed with Covid-19. Adding to the uncertainty is the likelihood that business support will also come to an end in due course.
Fortunately, there is a cash incentive available you might well be in the frame to claim. And unlike the Bounce Back Loan, you won’t have to pay it back. R&D tax credits could be the solution to bumps in your cashflow and provide a sizeable cash injection to help you move forward as the crisis eases.
How R&D tax credits work
To claim R&D tax relief your business must be a UK limited company subject to Corporation Tax.
R&D tax credits were introduced by the Government to reward innovation in business. Some people assume research and development is confined to laboratories but HMRC keeps the definition of R&D helpfully broad.
Small and medium-sized companies in almost every sector are eligible for R&D tax credits, often without realising it. HMRC estimates that 80% of qualifying businesses are failing to take advantage of R&D tax relief.
R&D tax credits return to your bank account up to a third of what you spent on your R&D. Because it can be claimed for two years retrospectively, this can result in a valuable lump sum.
The size of your R&D tax relief
The value of your R&D tax credits rebate will depend on two factors. Your R&D expenditure is one. This will include items such as cost of materials and any software or equipment you had to buy to take forward the research and development. The other factor is what you pay your staff, since HMRC will take into account all wages and salaries during the lifetime of your R&D project, not just those directly involved in it.
Some companies, such as architects and software developers, may employ only a dozen staff but each will command a good salary. Others, such as food manufacturers and those in agriculture, may employ lots of unskilled workers on lower wages. In most cases, the higher the wage bill, the larger your R&D tax relief will be.
On average, Easy R&D’s clients receive £50,000 from a two-year claim.
A speedy pay-out
Time is of the essence during the Covid crisis. The quicker you can access additional funds for your business, the better. R&D tax credits can be a boon. The process of applying for a successful claim is likely to be faster and involve fewer hurdles than negotiating a Bounce Back Loan or grant. And since the money is your entitlement, it’s yours to keep and use in the best way for your business.
Typically, HMRC pays out a rebate on a successful claim within six weeks. Some of our clients have been lucky enough to get their money in 28 days, thanks to the hard work of the tax inspectors during this difficult time.
With the full co-operation of our clients and their accountants, we can often process a claim from first meeting to submission within two weeks. So that’s an average of £50,000 you could have back in your bank account within two calendar months.
Expertise means more money more quickly
Although HMRC has a broad definition of what constitutes R&D, they insist on advances having been made in the realms of science or technology. This requirement has proved confusing and is off-putting to many businesses. But it’s worth remembering most companies in every sector can show some investment in science and tech.
An R&D tax credits expert can quickly spot the qualifying R&D in your business activity. Using one of Easy R&D’s experienced agents will maximise your claim and ensure the process is carried out in a timely manner. Having analysed your R&D, your agent will do all the sums. One of our specialist report writers will then draft the lengthy technical report needed to justify the claim in a way most helpful to the HMRC inspectors.
Easy R&D will help you get the biggest rebate you deserve in the shortest possible time. With Covid-19 still causing uncertainty, that’s got to be good news.
Where do you go from here?
- We’ll chat about your projects
- You upload the necessary information to our secure portal
- We analyse the data on your behalf
- We submit your R&D tax credit claim with HMRC
- HMRC reviews your claim and will notify either you or us if a repayment is due
We take care of most of the claim process, keeping client commitment to a minimum and maximising the claim value that can be received
With a single-minded focus on R&D tax relief and a diverse team of technical experts, we work hard for clients so they can put more back into their company.
Get in touch with our team and find out how you can claim R&D tax relief for your SME.
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