The Most Common Mistakes People Make With R&D Tax Credits
We receive a lot of enquiries on our website from companies that have attempted to make an R&D claim themselves but haven’t been able to do so successfully. These companies only figure out that they need help after failing to make a successful claim, which can be a very expensive mistake. Before you start an R&D tax credits claim, consider the following 5 common mistakes, and see how you can avoid them.
Mistake 1: Not making an R&D tax credit claim
Not all R&D projects take place in laboratories, and your R&D team doesn’t need to wear white coats. Any company in any industry may be eligible to make a claim for R&D tax credits, so long as the company is undertaking development activities that seek to achieve an advance in technology. As long as the project contained a level of technical uncertainty for the competent professionals involved – if there were moments where you and your team weren’t sure how to proceed, or you weren’t certain if your technological goal was achievable – that’s a good indication that qualifying R&D activities were taking place.
Mistake 2: Not keeping records
Because you can make claims up to two years after the end of an accounting period (for example, a claim for the accounting period ending 31st December 2016 would need to be filed with HMRC by 31st December 2018), it’s very important to keep records to provide evidence of the technical work performed on each R&D project. These records can help jog your memory when you’re making a claim from a previous accounting period, and substantiate the work undertaken. These records may include CAD drawings and revisions, weekly production schedules, technical specifications, software architecture documentation, versions of source code, and project planning information.
Mistake 3: Not claiming all qualifying costs
There are several areas of R&D expenditure that you can include in your R&D tax credits claim, including costs for staff (salary, employer’s National Insurance and pension contributions, and reimbursed expenses), agency workers, subcontractors, software licenses, and consumable items (light, heat, power, and materials or equipment used or transformed by the R&D process). You don’t want to leave any money on the table, so to make sure your claim includes all qualifying costs, work with your specialist R&D tax credits firm.
Mistake 4: Not including all qualifying activities
There are a number of different R&D activities that are considered eligible for R&D tax credits, including performing feasibility studies, reviewing new and competing technologies, analysing, designing, and developing the technology, and testing the product, process or software. Certain indirect support activities may also qualify, including administration, finance, and personnel services specifically required to support R&D activities. Just as with the qualifying costs, your R&D tax credit expert is your best resource for ensuring that all your qualifying activities are included in your claim.
Mistake 5: Not consulting R&D tax credit experts
The best way to make a successful R&D tax credits claim is to work with a tax consultancy specialising in R&D tax credit claims. There are many companies with specialist knowledge and experience throughout the UK, such as Myriad Associates. If you’re not sure if your company was undertaking qualifying R&D activities, or which of your activities qualify, it’s best to ask an expert in R&D tax credits. The experts will guide you through the claims process, ensuring that your claim is maximised and meets HMRC’s guidelines. Although it is possible to make an R&D tax credits claim through your accountant (or even on your own), your best chance of making a successful claim is through a specialist R&D tax credits firm.
To learn more about R&D tax credits and whether you should make a claim, simply click here and we’ll call you back to discuss your project. Our team of advisors are knowledgeable, professional, friendly, and will help you determine your eligibility at no cost.
- Submitting R&D tax claims since 2001
- 100% success rate
- Over £100m claimed and counting
- Industry leading specialists
- In-house technical, costing and tax experts
- Member of the Research and Development Consultative (RDCC) committee
Meet some of the team behind Tax Cloud