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New Forest

13/09/2017

Is your company carrying out Research and Development?

Revenue and Customs (HMRC) have recently updated their guidance on claiming R&D tax credit relief and have reminded companies that it is possible to obtain advance assurance that the R&D activities are eligible to make a claim.

HMRC also announced that they will accept amendments to R&D relief claims originally made on or after 9 October 2014 in relation to periods ending between 9 October 2012 and 31 January 2016. These claims can also include eligible reimbursed employee expenses as part of qualifying staff costs, providing a revised claim is submitted by 31 January 2018.

If you are a Small or Medium Enterprise (SME), broadly with fewer than 500 full-time employees and either an annual turnover below 100 million euros or a balance sheet total under 86 million euros, then the tax relief is 230% of the amount spent on R&D. So if your company spent £100,000 on R&D then the profits would be reduced by a further £130,000.

In many cases this enhanced deduction will create or increase a loss which can be set off against other profits or carried forward against future profits. However it is also possible to obtain “cash back” from HMRC at the rate of 14.5%. So if the £130,000 tax relief above has the effect of turning a £50,000 profit into an £80,000 loss then HMRC would refund £11,600 in tax to the company rather than have to wait until future profits are made.

In order to make a claim for R&D tax relief the R&D project must seek to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty. Contact us if you think that some of the work being carried out by your company’s technical staff might qualify as R&D and we can help you make a claim for this generous tax relief.

For further information on R&D tax relief, please contact Alan Rolfe on 023 8046 1200.

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