R&D tax claims: What you should know beforehand
Can your business claim R&D tax credits?
A lot of businesses from different sectors usually fail to claim R&D tax credits that they are completely entitled to, because they don’t realize they qualify. Some business owners don’t even know that tax relief is a thing that exists, and the ones that do know about it are usually confused by how it all works.
Are you paying corporate tax?
It’s possible for you to qualify for a relief if you file a corporate tax return. Whether you have a small or big business, profit or loss-making it’s still not a bad idea to do some homework to figure out if you qualify as a corporate tax paying business.
Did you invest in your business or project?
If you put some money in your business or project, whether it was a success or not doesn’t matter, chances are you’ll be able to obtain relief. The R&D tax credit qualified expenses covers things such as internal salaries, some software costs and consumables like the money spent on materials, electricity, heat and lighting.
Having an idea of what makes you eligible.
R&D covers a really big range of different activities; this means that a lot of rules can be often left open to interpretation. However, there’s a certain guideline you should follow. The purpose of your project should be to solve an uncertainty of some kind. Whether it’s scientific or technological is up to you, and it also can’t be easily deducted by a professional that works in that field. It’s difficult to truly know if your project qualifies or not, but getting some help from a good and experienced tax advisor can help you have a better idea of where you stand and what you can do about it.
Having ‘competent professionals’ on your project.
You will need to prove and identify to HMRC that ‘competent professionals’ worked on your project. This is important since they can explain what advancements or innovations were made on your project in order for it to be eligible.
Under what regime should I make my claim?
You should know that there are two R&D tax credit regimes that work under different criteria. One is designed for SMEs that have fewer than 500 members in their staff. In order to claim under the SME regime, a business has to be turning over an amount lesser than €100 million, or their balance sheet has to be under €86 million. If the company is larger however, their claims go under the Research & Development Expenditure Credit regime (RDEC).
I need help with my R&D tax claims.
Here at M3 partners we can help you with that. We give assistance with R&D tax credit claims for organisations in a wide amount of industry sectors. Whether you have a large or small business, you can contact us today and learn more.