R&D tax credits: your reward for facing uncertainty

R&D Tax Credits | Easy R&D

Companies in absolutely any industry can claim research and development (R&D) tax credits. For a successful claim with maximum return, Easy R&D will present to HMRC how your business attempted to or overcame scientific or technological uncertainty. 

But don’t be put off by HMRC’s technical language. You don’t need to be handling test tubes, space rockets, or donning white lab coats and goggles to be undertaking qualifying R&D work.

If you’re looking for some inspiration on overcoming uncertainty, then look no further than these ten household names who, despite facing adversity, never gave up.

Walt’s resolute

In 1919, Walt Disney was fired from the Kansas City Star because his editor believed he “lacked imagination and had no good ideas”.

Disney survived by eating dog food and later commented:

“All the adversity I’ve had in my life — all my troubles and obstacles — have strengthened me. You may not realise it when it happens, but a kick in the teeth may be the best thing in the world for you”.

Fred falls at first

In his first screen test in the 1930s, the testing director at MGM noted that Fred Astaire, born Frederick Austerlitz, “Can’t act. Can’t sing. Slightly bald. Can dance a little”. 

Another memo from the audition read: “I am uncertain about the man, but I feel, in spite of his enormous ears and bad chin line, that his charm is so tremendous that it comes through, even on this wretched test”. Astaire kept the negative note in his Beverly Hills home to remind him of how far he’d come.

A big trucking error

In 1954, Jimmy Denny, then manager of the Grand Ole Opry — a weekly country music concert in Nashville, Tennessee, that’s still going to this day — ditched Elvis Presley after just one performance.

“You ain’t goin’ nowhere, son”, Mr Denny said. “You ought to go back to drivin’ a truck”.

Poitier’s pots and pans

After lying about his age to enter the US Army during WWII, Sidney Poitier left the services and became a dishwasher. At his first audition, Poitier, who grew up poor in the Bahamas, was told by the casting director, “Why don’t you stop wasting people’s time and go back to dishwashing or something?”

Poitier won Oscars for Lilies of the Field in 1964 and Guess Who’s Coming to Dinner in 1967.

Dick declines The Beatles

In 1962, Dick Rowe of Decca Records turned down the chance to sign The Beatles and opted for Brian Poole and the Tremeloes instead, telling the Fab Four’s manager:

“We don’t like your boys’ sound, Mr Epstein. Guitar groups are on their way out. The Beatles have no future in show business”.

Third time unlucky

In the mid-60s, Steven Spielberg was rejected from the University of Southern California School of Theater, Film and Television not once, not twice, but three times. The filmmaker later said:

“Failure is inevitable. Success is elusive”.

The Colonel cashes in

At the age of 65, restaurant owner Colonel Harland Sanders had little money to get through retirement. He started travelling door to door and cooking his special fried chicken recipe on the spot for restaurant owners. He was declined 1009 times.

In 1964, at 73 years old, he sold his Kentucky Fried Chicken corporation for $2 million ($16.7 million today). In 1973, Sanders sued Heublein Inc. — the then-parent company of KFC — over the misuse of his image in promoting products he hadn’t developed. In 1975, Heublein Inc. unsuccessfully sued Sanders for libel after the Colonel described their gravy as “wallpaper paste”.

Winfrey wins

In 1977, Oprah Winfrey was fired as an evening news reporter at Baltimore’s WJZ-TV. She was declared “unfit for television news” because she couldn’t separate her emotions from the stories — an empathetic trait that made her such a hit.

“Think like a queen”, she said. “A queen is not afraid to fail. Failure is another stepping stone to greatness”.

Jobless Joanna

In the ’90s, Joanna was a single mother on welfare who was struggling to make ends meet. She started writing a book in her local cafe in Edinburgh as her baby slept next to her in a pram. 

Joanna approached countless publishers with her story from all over the world, but none were interested, and many criticised it. 

Finally, one paid her a small advance to publish her novel. The story was about a young wizard named Harry Potter, and Joanna is better known as J.K. Rowling.

Dyson sucks it up

You know the frustration when you don’t nail something on the first attempt? Try 5,126 attempts. 

That’s the number of failed and rejected prototypes Sir James Dyson went through over 15 years before creating his first bagless vacuum cleaner wonder in 1993.

The R&D tax credits scheme could even reward you for unsuccessful projects — providing the intention was there. Get in touch with us to find out how R&D tax credits could transform your business.

When it comes to R&D tax credits, you need an expert on your side

team sitting around a table

R&D tax credits could be a valuable cash injection for your business. The daily work you consider as merely “getting the job done” may qualify for the scheme — springing a few pleasant surprises along the way.

The government’s incentive to innovate can give you the funds to hire skilled staff, develop new products, overcome COVID-19 and Brexit-induced supply chain disruptions — or anything else you choose to spend your rebates on. 

Yet HMRC has grown increasingly concerned about errors occurring in R&D tax credits claims. Coupled with the growing pool of “cowboy” R&D advisers, who aren’t regulated and are willing to take advantage, HMRC has introduced measures to improve R&D claims’ quality — including 100 new compliance staff to its R&D unit.

When HMRC challenges

HMRC challenging your R&D tax credits claim could spell bad news for your business. Not only will it delay your funding by several months, but it could also damage your relationship with HMRC, reduce your funding windfall, and embroil your people in lengthy back and forths with tax inspectors.

At Easy R&D, we make the decision to sign off your R&D tax credits claim an Easy one for HMRC to make — protecting your business and its reputation. Our good relationship with HMRC ensures any challenges are in the best possible hands — saving you from a nerve-racking wait on their findings.

Accidental slip-ups

While the minority seeks to abuse the scheme deliberately, unintentional mistakes in R&D tax credits claims are becoming too familiar for HMRC’s liking. They’re often caused by businesses attempting to claim themselves — underestimating the work that goes into getting a claim right.

If HMRC identifies an error, they may charge a penalty based on the tax loss to the Exchequer. The severity of the punishment will depend on whether due care and attention are determined to have been given to the claim. If reasonable care has been taken, a penalty of ‘nil’ may be applied. 

With us, you’ll get a service built around expert consultants, skilled technical report writers, chartered accountants, and meticulous methods to ensure your R&D tax credits claims are successful — with maximum return. Averaging £54,000 per claim, our unrivalled specialist expertise and robust processes will know which costs to include and which not to include, keeping HMRC’s investigation to the absolute minimum — if any at all.

If you think that your business doesn’t qualify for R&D tax credits, then you could be wrong. If you do believe your business qualifies for R&D tax credits, then you could be right. You can find out for sure by getting in touch with us here.

R&D tax credits: five myths and myth-busters

team discussing around a laptop

Despite launching in 2000, the government’s research and development (R&D) tax credits scheme remains largely unheard of. 

It’s estimated that a whopping £84 billion of R&D tax credits go unclaimed every year, and 80% of eligible companies underclaim or don’t claim at all.*

So why are so many businesses not picking up their rewards for innovating? It’s largely down to the myths surrounding the scheme that everyone here at Easy R&D is eager to banish.

Myth 1: Only scientists and specific narrow sectors conduct R&D that qualifies for the R&D tax credits scheme

Truth: Qualifying R&D can happen in absolutely any sector — even those without a scientific or technical foundation. 

The stereotypical image may sit with techies and scientists donning white lab coats and goggles, but we’ve submitted successful claims for jewellers, farmers, carpenters and bakers — to name but a few.

We’ll need to demonstrate that a competent professional worked on your project and faced a scientific or technological challenge, but it doesn’t need to be rocket science. What qualifies may surprise you.

Myth 2: R&D only applies to products and services to sell in the open market

Truth: Developing new products and services, or modifying existing ones, are the most common forms of R&D — but they aren’t the only ways to claim. Even if the R&D is purely for internal purposes, there’s still scope to claim.

Myth 3: You can only claim for the past financial year

Truth: You can claim up to two years before the end of your 12-month accounting period.

Myth 4: You need to spend a minimum on R&D to be eligible for R&D tax credits

This myth stems from the £10,000 minimum spend required when the scheme first launched in 2000. George Osbourne removed this in his 2012 budget, meaning there’s now no minimum needed. 

The PAYE cap, which came into force in April 2021, limits the amount of credit you can claim from the scheme to 300% of your total PAYE/NIC liabilities. 

The reality is that this affects only a minority of companies with high rates of subcontractor work or small companies set up solely for R&D work. The aim is to minimise the number of fraudulent claims.

Myth 5: The R&D needs to be successful to claim R&D tax credits

Truth: HMRC understands that R&D does not always result in success. If the result were predictable, it wouldn’t be R&D at all. Even if the whole R&D project is shelved with no functional outcome for your business, you can still claim. Great, isn’t it?

If you’re a small to medium business that’s subject to Corporation Tax, you can take the first step in claiming back 33% of your R&D spend here.

*Based on data from HMRC.