How Does Using Tax Cloud Compare To Making A DIY Claim For R&D Tax Credits?

The UK government actively encourages innovative companies to invest in research and development (R&D). To help with the costs involved, back in the year 2000 it unveiled its R&D Tax Credits scheme. Open to all UK Corporation Tax-paying companies, it can help finance a huge range of R&D projects and expenditure. But what’s the best way to claim and is it better to use a specialist consultancy service or go it alone? Let’s take a look.

First off, what is the R&D Tax Credits scheme?

Because R&D is all about taking risks that could potentially bring big rewards for the economy, the government offers tax relief on many R&D activities. This is done in the form of R&D Tax Credits.

R&D Tax Credits are offered essentially as a reward for companies that have developed new products, processes or services, or that have or appreciably improved ones already in existence. This is because such activities are likely to increase the wealth creation capacity of the UK and boost tax take.

What kinds of projects are classed as R&D?

Although R&D Tax Credits can mean a substantial financial injection for UK companies, there are still many that aren’t claiming. This is often because companies wrong believe it’s all about science labs and techies in white coats, but this is far from the truth. In fact the scheme is open to all companies in all sectors; all that has to have happened is that a new or improved product or service has come about as the result of technological or scientific research.

Average claims amount to around £65,000 which is money a company could really benefit from - especially SMEs and start-ups. This money can then be spent exactly as a company sees fit, or reinvested to help the business grow.

What can companies claim for?

As long as work is classed by HMRC as R&D then it could well attract a claim. Typical types of eligible R&D expenditure include staffing costs like wages and overtime, certain software expenditure, utility costs, overheads like water, fuel and power, subcontractor payments, prototype payments and much more.

How much a company can claim depends largely on its size, turnover, number of employees and whether it has received previous state aid. For those that come under the SME bracket, relief is offered by means of an enhanced deduction. At the moment this is set at 130% of eligible expenditure, and is given above the normal deduction available. This means that for every £100 of eligible R&D expenditure, an SME can deduct £230 for Corporation Tax purposes.

Larger companies will need to claim under the slightly less generous RDEC branch of the scheme. However, RDEC claims by their nature tend to be higher.

You can find out more about the differences between the SME scheme and RDEC by reading our blog.

Making a claim is pretty straightforward and I can do it myself - can’t I?

Well yes, you certainly can do your own R&D tax relief claim - but should you? We think not. This is because although HMRC is very specific about what can be claimed for, there are still a number of grey areas. It’s not always easy to work out exactly how the rules relate specifically to you. For example, certain costs in relation to fuels and energy used up in the process of the R&D work can be claimed for - but only for R&D work. So how on earth do you detangle R&D costs from your other costs?

Additionally, the process of claiming is notoriously complex and the onus is on you to not only identify your eligible R&D costs but prove to HMRC why you believe they’re eligible. At best you could end up accidentally under-claiming and miss out on relief you’re entitled to. But at worst, an inaccurate or wrongly compiled claim could lead to a stressful and expensive tax investigation by HMRC. You need to get it right - first time. And this is where we come in.

How does Tax Cloud work?

The Tax Cloud portal was set up by the R&D tax relief experts at Myriad Associates. It’s easy to use and can give you a clearer idea of what you could claim.

It works in four simple steps:

1) First of all, you sign up your company, supply us with some details and we’ll verify them automatically.

2) Next, add in the details of the R&D work your company has undertaken, together with the costs you’ve incurred.

3) Now the expert team of accountants and specialists will review your claim before giving feedback and recommendations where applicable.

4) Finally, Tax Cloud will take your project descriptions and costs and create your bespoke R&D tax claim report. Myriad Associates will then submit this report to HMRC on your behalf, and if HMRC raises any queries we will deal with them for you.

Why should I use Tax Cloud specifically?

Tax Cloud can not only save you some serious money, time and hassle, it also offers a whole range of useful features. These include:

  • A totally online service with no face-to-face meetings (so no travelling around)
  • A highly professional, expert service from start to finish
  • The chance to get your claim reviewed by specialists before being submitted to HMRC
  • Low fees with nothing to pay up front
  • Xero integration to help import costs over quickly
  • No minimum contract period
  • Dedicated specialists in SME & Large R&D claims

Get in touch with the Tax Cloud team today

Our Tax Cloud calculator was designed specifically for companies to identify and calculate their R&D costs. Simply enter your own figures to see what you could be owed - it may be more than you think. You can also find out more about the scheme on our R&D Tax Credits page.

Call us today on 0207 118 6045 or use our contact form and one of the team will get back to you

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad are the creators of Tax Cloud, we help enterprises navigate, apply and secure tax incentives and grants. We specialise in R&D Tax Credits, Creative Tax Reliefs, Innovate UK grants, Horizon Europe grants, and R&D Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • Strong track record spanning 20+ years delivering R&D tax credit claims
  • Over £70m claimed and counting
  • Industry leading specialists
  • We employ technical, costing and tax experts and tax experts
  • Confident of delivering value to our clients, we offer our R&D tax services on a success fee-only basis.

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
Jillian Chambers Jillian Chambers Technical Analyst/Writer
Lauren Olson Lauren Olson Technical Analyst Manager
Rabia Mohammad Rabia Mohammad Corporate Tax Associate