Since their introduction in 2000, Research and Development Tax Credits have proved to be a resounding success, with the UK ranked one of the most innovative countries in the world according to the Global Innovation Index 2019.
R&D continues to be a central focus in government business policies, with the most recent update coming in the Chancellors March Budget, where he announced an increase in investment in science, innovation and technology to £22 billion by 2024-25, with targets of increasing to 2.4% of GDP invested in UK R&D by 2027, rising to 3% long term. While investment in the scheme increases, it remains one which is under-claimed and under-promoted.
While the Government’s description of R&D projects is defined as “an advancement in science in technology”, the scheme is not limited to these industries. R&D serves as a reward for innovation, not exclusive to science and technology, but for any business who seeks to improve or create a product or process which will have positive repercussions for their industry and help it grow.
Here at Access2Funding, we have put together a few tips and tricks to help you understand the R&D scheme and how you and your company could benefit from it:
- Don’t assume you aren’t eligible. Don’t be fooled by the ‘scientific or technological advancement’ definition – it isn’t all science and lab coats; R&D can be found in the strangest of places and it isn’t always obvious! Not everything has to be ground-breaking, by simply adapting the way something is done it can make the process far more efficient, which encourages the industry to follow suit. It is this sort of innovation that the economy benefits from, and so should the businesses that come up with it.
- Stay savvy. While grants (capital grants, revenue grants, notified state aid, etc) are appealing, they have the potential to have an adverse effect on your R&D claim. Explore every avenue before you make a decision, as often an R&D claim can result in a bigger cash injection than a grant would.
- There’s no need to wait. R&D Tax Credits have been around for years, and they aren’t going anywhere. As mentioned above, investment is increasing for R&D in the UK, yet millions of potential R&D funding is going unclaimed. While many simply don’t know it exists, it is important to spread the message. As many of the COVID-19 business relief loans and grants have yet to be rolled out, the R&D funding is ready to go, and you can start your claim now.
- Claims can be made retrospectively. When making an R&D claim, HMRC allow you to claim for costs associated with projects for up to two years back. This means that the hard work is already done – no need to prepare applications and proposals for grants or loans, just a few hours of your time to talk about the innovative work already completed. Now is also the perfect time to consider submitting a claim, since a lot of employees have limited work or are furloughed. It is a great use of the extra time, and the return can be substantial.
- Make sure you maximise your claim. It is important that you identify all qualifying costs, as this is how to make the most of your claim. Our average return for our clients is over £34k, but a figure this high can only be achieved by exploring all qualifying costs. It is important you are aware of what qualifies before you submit a claim as it could potentially lose value in the thousands.
- Seek support from someone in the know. Us Brits tend to have a stiff upper lip when it comes to asking for help, but it shouldn’t be something you’re afraid of. A tax specialist who is trained in R&D will understand legislation and HMRC language and write technical claim reports day in and day out, with experience in all types of sectors. They can give you the support you need and contribute valuable knowledge to get the most from your claim.
- Find out who works for you. R&D Tax Specialists are there to make the process easy for you, so make sure they work for you! Often large companies won’t consider smaller businesses and are more likely to turn them away, but don’t let that put you off. Take the time to consider who has you and your business in mind. Your R&D specialist should work and grow with your company, be on hand for you and have the time to maximise your claim potential thoroughly.
- Safeguard your future claims. While HMRC doesn’t expect you to have kept detailed records for past projects, they do expect that you put measures in place to record data for future claims. This can be done by simply creating a designated folder or log so you can keep track of new projects and their timelines. Your R&D specialist should provide the tools and resources you need to safeguard your future R&D claims, so that if HMRC require evidence, steps are already in place to protect your business.
Access2Funding have helped businesses across the UK claim over £18m from HMRC, and also partner with alternative finance providers to support immediate cashflow and long term business growth. Talk to Dawn Coker or one of her team on 0333 990 0125, or visit www.Access2Funding.co.uk
Please note, this content is not produced by the IoD and therefore does not necessarily represent the views or thoughts of the organisation.