Don’t miss out on R&D tax relief!
The government is concerned that many small companies are missing out on generous Research and Development (R&D) tax credits. For the last year, HMRC has been offering companies an advance assurance scheme to check whether or not their activities qualify before they make a claim. So far over 200 applications for advance assurance have been made.
There is a general misconception that R&D involves scientists in white coats but it should be remembered that R&D includes the development or improvement of a product or process. This means that some of the work by your engineers or technical staff may qualify as R&D. For Small and Medium-sized Enterprises (SMEs) the tax credit is 230% of the expenditure on qualifying R&D, and where the company incurs a trading loss, HMRC will provide an immediate cash refund rather than waiting until there is a profit in a future period.
By applying for advance assurance the company’s R&D claim will not be subject to an HMRC enquiry and HMRC will then accept the first three years of claims.
Companies eligible to apply for advance assurance:
- Turnover below £2m
- Fewer than 50 employees
- No previous R&D claims
If the R&D results in a product or process that can be patented there is a further tax break available. The “Patent Box”, introduced in 2013, will provide a 10% rate of tax on profits derived from that product or process.
Please contact a member of our tax team on 01903 234094 if you would like to discuss whether these tax breaks could be available to your business.