Why R&D Tax Credits should be planned for - not left ‘til the last minute

Maximise, maximise, maximise!

It’s a common theme. A company dives into its next exciting research and development project all guns blazing - but it’s only later that they think about R&D Tax Credits.

So, hold your horses… It’s well worth considering R&D Tax Credits, and how your claim can be maximised, during the course of the project itself - not as an afterthought. Here’s a look at why.

Who can claim R&D Tax Credits?

“No idea is so outlandish that it should not be considered.” - Winston Churchill

Administered by HMRC, research and development (R&D) tax credits provide a generous tax rebate on scientific and technological advancements. Open to all UK companies large and small, eligible businesses can receive as much as 33% of eligible R&D expenditure back, either as a reduction in their Corporation Tax or as a cash credit.

“The total number of R&D tax credit claims that were made in 2020 was 85,900 which is a 16% increase from 2019. This shows us that R&D was still a priority for many businesses, despite the struggles they faced during 2020.” - Myriad Associates

Only limited companies that are registered for Corporation Tax in the UK can make a claim. Public liability companies, partnerships and sole traders are unfortunately not eligible at this time.

By planning for the relief, you can seek expert R&D tax advice before your project starts

Many companies, even small ones with small-scale projects, can easily end up with a pay-out of thousands of pounds. But the bad news is that putting together a successful claim is difficult which makes getting the right R&D tax advice crucial.

They key is in understanding exactly which costs specific to your project you can (and can’t) claim for. R&D tax specialists will also understand the application criteria in detail, and be able to tease out the scientific/technological challenges tackled. It can easily be the difference between successfully achieving R&D Tax Credits and not.

You get your financial ducks in a row

Say you’ve got a number of R&D projects in the pipeline spanning the next few years. But you know that whilst many of the costs will be reclaimable via R&D Tax Credits, there are also costs that aren’t.

By seeking expert advice early on, you’ll be able to spread the claimable/non-claimable costs across the projects, reducing the financial burden. This is particularly important against the ever-looming backdrop of COVID-19 economic uncertainty.

You focus your record-keeping

Keeping accurate records of your R&D project details and costs is crucial if you’re to successfully maximise your R&D tax relief claim.

As part of your application process, you’ll need to write a technical report that describes your R&D project in detail. This includes:

  • What is the purpose of your project?
  • What outcomes did you hope to achieve?
  • What scientific or technical advances were made?
  • How will your project benefit not just your company but the wider field?
  • Would it have been extremely difficult even for professionals in your field to easily solve the problem?
  • Was the project a success or failure, and why?
  • What research, testing, and analysis took place during the development process?

Many of us struggle to remember what we did last week, let alone work that may have happened months ago. By leaving this all to the end of your project you’re stuck with a retrospective viewpoint and it’ll be easy to miss costs off - and lose money.

Although it’s not the end of the world if your record-keeping is less than perfect, by understanding what’s needed for an R&D tax relief claim from the beginning you’ll boost your chances of a rebate dramatically.

Planning a claim also supports your R&D roadmap

A particularly effective way to avoid leaving your R&D tax relief claim to the last minute is to create an R&D roadmap. Not only will this help you see where relevant claimable work has (or will have) occurred, but it also sets out exactly what R&D activities you’ll undertake and how.

It’s all too easy to let long-term R&D plans kind of get forgotten amongst the routine daily business stuff. Dealing with customers, attending meetings and general firefighting make it hard to prioritise longer term innovation projects.

Creating an R&D roadmap forces you to think not only about what R&D you’d like to achieve but also how it relates to a potential R&D tax relief claim. Documenting your thoughts in this way also helps you formulate a plan, and to communicate your goals with employees and stakeholders. This transparency means everyone’s singing from the same hymn sheet.

Think of your roadmap as a living, breathing thing though - not just a static piece of paper. Budgets, costs, objectives and priorities can change, so keep your roadmap updated to keep your R&D on track.

Think R&D Tax Credits could be on the cards?

Tax Cloud is a simple to use, self-service online portal that takes the pain out of claiming R&D Tax Credits. Accessible 24/7 from any internet-connected device, it allows you to enter in your own figures and technical report in such a way that maximises both your chances of success and your claim amount. Not only that, but you’ll be fully supported by the expert R&D tax specialists at Myriad Associates. They’ll even go through your claim with a fine-tooth comb before sending it off to HMRC.

Our team work in all aspects of R&D tax relief for companies up and down the UK, France and Ireland. Developed by Myriad Associates, the Tax Cloud portal not only offers outstanding value for money, but also means your company gets every penny it’s owed.

If you would like to find out more about the R&D Tax Credit scheme and how to apply, take a look at Myriad’s R&D Tax Credits page. It may well be the most financially savvy thing you do this year.

Ready to kick off a claim? Contact us today on 020 7360 4437 or send us a message.

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